SBM Offshore N.V. (SBMO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for holding, and welcome to the SBM Offshore Half Year 2026 Earnings. At this moment, all participants are in a listen-only mode. [Operator Instructions]. Just to remind you, this conference is being recorded. I would now like to hand the conference over to Mr. Oivind Tangen. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to SBM Offshore's Half Year 2026 Earnings Call. I am Oivind Tangen, CEO of SBM Offshore. And joining me on the call, as always, is our CFO, Douglas Wood. Thank you for joining us today and for your continued interest in SBM Offshore. Please take note of the disclaimer. SBM Offshore entered 2026 with strong momentum and the first half of the year confirms the strength of our model, disciplined execution, robust client demand and continued value creation for shareholders. Our strategy continues to deliver profitable growth from our core offshore energy production activities. New order intake supported by sustained demand for lower carbon, lower-cost deepwater infrastructure and strong project execution reinforces the resilience of our business. Our Fast4Ward program and disciplined investment in new hulls continue to enhance our competitiveness in a market supported by strong fundamentals. This performance is translating into value creation. We are expanding our portfolio, strengthening our financial position, delivering on our shareholder return commitments and supporting clients in developing critical energy infrastructure safely, efficiently and responsibly. While our priority remains to grow the core, we are also selectively applying our offshore expertise, engineering capabilities and life cycle know-how to assess opportunities in the broader ocean infrastructure market. The first half of 2026 was marked by strong execution and solid performance across the business. The resilience of our model, combined with the commitment of our teams, enabled us to continue to deliver predictable outcomes in a dynamic environment. Commercial activity was strong. In the first 6 months of the year, we secured the FPSO SEAP I and SEAP II awards from Petrobras and the FEED contract for ExxonMobil Guyana's Longtail development. These awards reflect client confidence in our execution capabilities and the continued robustness of our Fast4Ward program. Together, they strengthen our position in the lower cost, lower carbon deepwater market and support our long-term growth ambitions. With the outlook for deepwater developments remaining strong, we ordered an additional Fast4Ward hull. We now have 2 hulls under construction to support ongoing tendering activity in addition to the hull allocated to ExxonMobil Guyana's Longtail development. Our operational performance is also reflected in our financial results with directional revenue increasing to $4.9 billion and directional EBITDA reaching $1.3 billion. Supported by strong execution, recent commercial successes and a robust market outlook, we are increasing our 2026 directional revenue guidance to around $7.6 billion and our directional EBITDA guidance to around $1.9 billion. The long-term fundamentals for deepwater remain attractive. Growing global energy needs continue to support demand for oil and gas, while production from existing fields naturally declines. Substantial new developments will therefore be required to help bridge the global supply-demand gap. Deepwater is well positioned to meet this demand. It combines attractive economics with breakeven costs around $20 to $35 per barrel and lower emission intensity than many other sources of oil production. This makes deepwater one of the most competitive sources for future oil and gas supply. As a result, we continue to see strong client demand for large-scale offshore developments. Industry forecasts indicate that the deepwater could account for approximately 30% of new oil production volumes up to 2030, reinforcing our confidence in the long-term outlook for the FPSO market and SBM Offshore's growth opportunities. Deepwater projects provide safe, reliable and affordable energy and are attracting an increasing share of upstream investment. Major operators continue to prioritize offshore developments with around 80% of their exploration expenditure budgets directed towards deepwater. Over the next 3 years, we see a pipeline of more than 40 potential FPSO awards globally, including approximately 16 opportunities that align well with our expertise in large-scale deepwater FPSOs. These projects are concentrated in our core market around the Atlantic Basin, including Brazil, Guyana, Mexico and West Africa. Gas is also becoming a more important element in our new FPSO designs, creating additional opportunities. Larger gas volumes increase topside complexity from gas processing to reinjection or export for domestic use onshore. Our proven track record in managing large gas volumes strengthens our position in this growing segment. Next, to highlight one of the key milestones of the first half, the award of the SEAP I and SEAP II FPSO contracts from Petrobras in the new basin. These awards follow the demanding tender process and demonstrate the competitiveness of our offering. They add significant value to our backlog and reinforce our position in Brazil, a strategic deepwater region. These FPSOs are large, technically complex units with sophisticated gas treatment facilities that enable pipeline quality gas export to shore. They are clear proofpoints of the industry trend where the monetization of gas is becoming an increasingly important part of deepwater development. Given this level of complexity, our standardized Fast4Ward program is key to the derisking of execution while maintaining cost efficiency. The replication of our in-house design across these design one, build two projects improves execution efficiency, enhances schedule certainty and supports disciplined delivery. This is what Fast4Ward is designed to deliver; lower execution risk, stronger cost discipline and improved schedule certainty through standardization and repeatability. Let me now explain how SBM can scale execution capacity for further growth while already managing five projects in execution. Large FPSO projects typically take around 4 years to deliver. Given their increasing size and scope, there is limited room to shorten delivery time lines materially. However, we have clear levers to grow beyond our stated in-house capacity of six FPSOs in parallel while keeping the same core organization and execution discipline. Standardization is central to this approach. A standardized design allows us to enter projects with the same core organization, reducing complexity and optimizing engineering scope during execution. At the same time, strategic relationships and early engagement with suppliers and yards allow us to order long lead times in advance, improving predictability and supporting on-time delivery at scale. Replication is another important enabler. Some clients adopt a design one, build many approach. Combined with the systematic application of lessons learned, this creates design, engineering and procurement synergies across multiple projects. It reduces scope, improves efficiency and allows us to deliver more projects with the same core organization. Partnerships also expand our execution capacity beyond the core organization. Standardization is critical here because standardized work scopes, whether in detailed engineering or topside construction, are easier to place with trusted strategic partners. By remaining disciplined on what we outsource, we can expand capacity while maintaining the quality and consistency of our delivery model. Together, these enablers allow us to scale execution capacity and support further growth in a strong market. In our turnkey portfolio, we are making good progress across five major projects under construction, and we have a well-phased execution plan extending into the next decade. FPSO Jaguar for ExxonMobil is the most advanced with first oil expected in 2027. FPSO GranMorgu for TotalEnergies and FSO Chalchi for Woodside are both more than 50% complete, while the 2 SEAP units for Petrobras are progressing through the early execution phase with contractual handover expected in 2030 and 2031. This space delivery profile supports disciplined growth. GranMorgu is being delivered in partnership with Technip Energies. Chalchi has limited upside scope with a disconnectable turret buoy completed and on its way to Mexico for installation. The SEAPs projects benefit from design replication, improving engineering and procurement efficiency. Looking beyond the current portfolio, the market outlook remains attractive. Our investment in 3 Fast4Ward hulls, one of which has already been allocated to the Longtail development, together with future slot options we maintain with key yards, gives us flexibility to support future client demand while maintaining schedule certainty. On the operations side, our fleet continues to perform exceptionally well with uptime around 99% across 16 operating units, demonstrating the consistency and robustness of our assets. Today, SBM Offshore is the largest FPSO contractor by oil production capacity, producing about 2 million barrels of oil equivalents per day, around 17% of total deepwater production or 2% of total global production. Our focus remains on safe and reliable operations while continuously identifying opportunities to enhance performance across the fleet. By systematically applying lessons learned, we continue to improve asset performance and unlock additional production potential. This has supported successful debottlenecking on recent units in Guyana and Brazil, where we are achieving production records and delivering around 140,000 barrels of additional oil production, above initial nameplate capacity, accelerating value creation for our clients. We also continue to unlock value from our portfolio. During the first half of the year, we completed the sale of FPSO One Guyana and finalized the divestment of a minority interest in FSO Chalchi. In Angola, we continue to see opportunities to extend asset lives. We recently received a notification letter for a 2-year extension of the N 'Goma FPSO, and we have started brownfield work related to the extensions of FPSOs Mondo and Saxi Batuque, further strengthening our long-standing positioning in the country. Looking ahead, we see additional opportunities to enhance fleet performance through operational data. By combining operational excellence with data-driven insights, we continue to improve reliability, efficiency and value creation across the fleet. We have built a digital ecosystem that connects offshore teams, workflows, remote support functions and operational data. By bringing together people, processes and data, we can identify opportunities earlier, improve planning and decision-making and apply lessons learned across the fleet. This supports more targeted predictive maintenance and asset integrity, strengthening performance throughout the asset life cycle. In parallel, we continue to deploy technologies that support smarter and safer operations. Robotics are becoming increasingly important for asset inspection and maintenance, including confined spaces, tanks and hull inspections. These technologies reduce exposure to higher risk environments, improve inspection quality and consistency and support more efficient maintenance planning. Beyond our core FPSO business, we are selectively applying the capabilities built over decades of offshore experience to address global challenges through ocean infrastructure solutions. As land-based solutions face increasing constraints, offshore infrastructure offers growing potential. Modularity, standardization and scalability make the ocean an attractive platform for deploying proven technologies at scale and in new environments. By leveraging our expertise in offshore design, execution and operations, SBM Offshore is well positioned to enable proven industrial technologies offshore. One example is our partnership with Veolia to develop a floating desalination solution, combining Veolia's water treatment expertise with our ocean infrastructure and operating experience. With more than 60 years of offshore experience and a strong track record in standardization and life cycle management, SBM Offshore can act as an offshore enabler of technology solutions in areas such as carbon capture, power, ammonia and freshwater. At the same time, we remain disciplined in capital allocation, risk management and the opportunities we pursue. With that, I will now hand it over to Douglas for the financials.

Thank you, Oivind, and good morning, everybody. So as you've heard, we've delivered a strong set of results for the first half, and that's thanks to the performance of the project portfolio, the fleet, including the impact of the three large vessels we started up last year and of course, the sale of One Guyana and a share in the FSO Chalchi. This great performance from our teams in executing our existing portfolio drives the increase in EBITDA guidance from around $1.8 billion to around $1.9 billion. Then for revenue guidance, the SEAP awards and the Chalchi divestment drive the significant increase in guidance from about $6.9 billion to around $7.6 billion. Now while these awards won't get past the 25% completion stage and impact EBITDA this year, obviously, as you'll see from the backlog, that's to come. And on top of this, the FEED activity we have in hand, plus the market outlook speak to the further strong cash and margin potential. On the backlog, this increased to a record $35.6 billion with the SEAP awards offsetting significant consumption over the first half, where we had the One Guyana and Chalchi divestments on top of the strong underlying operational performance. And then we expect to generate around $8 billion from the backlog on a net cash basis. Net debt was $3.7 billion, lower than year-end, driven by the sale of One Guyana and repayment of the associated financing. And this leads to a pro forma leverage ratio of around 1.6x EBITDA based on the rolling last 12 months EBITDA. As we've mentioned in the past, construction financing that we had in place for Jaguar and likely Longtail and Sale and Operate temporary working capital movements will mean this will fluctuate a bit, but the long-term trend is to structurally lower leverage. Finally, we paid the $100 million 2025 dividend in May and are formally reconfirming today the identical $100 million interim dividend for 2026 to be paid in September. And this, together with the ongoing $270 million equivalent buyback program, means we're on track relative to delivering a minimum $2.1 billion aggregate return for the 6 years 2026 to 2031 inclusive, with the anticipated upside potential materializing as we secure new awards. And next, I'll review the financials in a little bit more detail, starting with the backlog. But this was, as I mentioned, $35.6 billion. It's an increase of around $4.5 billion versus the year-end. So the addition of the 2 SEAP awards more than offset the consumption from the strong operational performance over the first half and the impact from the sale of One Guyana and a share in FSO Chalchi. On net debt, the One Guyana sale resulted in a significant decrease in leverage. The total revenue was around $4.9 billion compared with around $2.3 billion for the first half 2025. The biggest contributor to revenue was Turnkey, above $3.7 billion compared with around $1.3 billion in the year ago period, and the main driver of the increase was the sale of One Guyana. On the Lease and Operate side, revenue was around $1.2 billion versus around $1 billion for the first half 2025. Here, the increase was driven by the contribution of the three large vessels that joined the fleet over the course of last year. Now turning to EBITDA. This was over $1.3 billion, almost double the year ago period, and this increase was driven by Turnkey, where EBITDA was $813 million; that's up by almost $600 million compared with the year ago period. The main driver again being the One Guyana sale. Lease and Operate EBITDA was around $547 million compared with around $500 million in the year ago period. Again, that was mainly due to the contribution of the three new vessels, the impact of which on an EBITDA basis was partially offset by the Aseng and Thunder Hawk left the fleet at the end of last year, plus the comparative impact of the gain on sale of TK we saw in the first half 2025. Finally, other EBITDA was around $50 million negative. It's an increase versus around $40 million negative last year as a result of higher G&A costs to support growth activity. Next, we're reconfirming the direction of travel on deleveraging. We foresee our leverage ratio staying below 3x going forward, but we could see some upward movement this year from the pro forma H1 number as we draw down debt on Jaguar and Chalchi and also depending on the timing of receipt of some large milestone payments relative to project progress at the year-end cutoff point. And that's a facet of the Sale and Operate model being that we can see some large but temporary movements in working capital, which can then obviously impact net debt. But again, we see the trend staying below 3x. Turning to cash and the backlog on a net cash basis. This stood at around $8 billion. As highlighted in the chart we showed at year-end, the sale of One Guyana drove significant consumption during the period. Now while the impact of the SEAP awards was more than enough to offset this on a net cash basis, we also have an impact from the deconsolidation of the share of the Lease and Operate cash flow of FSO Chalchi sold to partners, which meant we ended up a little lower than year-end. Now this illustrates something it's important to bear in mind for the backlog linked to the Sale and Operate model. Thanks to the SEAP awards, the Turnkey net cash backlog has more than doubled to $1 billion. Now this boosts the near-term cash, and that's very clear, as you can see in the chart. Now while the NPVs for Sale and Operate and Lease and Operate projects are similar in absolute net cash terms, the same award on a Lease and Operate basis is much higher as the cash comes much later. So that's why the sale of a portion of the 20-year Chalchi project has a relatively material impact. However, given ongoing FEED activity and the market outlook, we're optimistic we could see an increase at year-end. Then looking more at the charts on the page, we've played out the blue bar on the left, which includes Turnkey and Lease and Operate over time in dark blue on the right-hand chart. And we have averaged net cash over 4-year cycles as Sale and Operate transactions can have a material impact in the early years and introduce significant year-on-year volatility, making a multiyear average a more representative measure of underlying cash performance. As the backlog already includes the 2 new SEAP awards, we've then adjusted the light blue model scenario from February, showing two large FPSO awards for the next 6 years up to 2031 accordingly. So the scenario now has 10 rather than 12 FPSOs. Again, important to note here, we're not planning on shutting up shop and running down the business in 6 years and are confident of more to come thereafter from FPSO awards, but also from diversification into other ocean infrastructure solutions over time. We, therefore, maintained further illustrative waves of awards to the right of the model near-term scenario. Then in the chart on the top right, we have the usual euro per share analysis of the backlog at a range of discount rates, where again, we've maintained the light blue models near-term scenario on top. And looking at capital allocation. As a result of the strong operational performance and the backlog, we remain very much on track to deliver a minimum of $2.1 billion in shareholder returns for the 6 years 2026 to 2031 inclusive. The chart on the left is the same 6-year view as we showed in February for 2026 to 2031 inclusive. We're going to provide a further update for 2027 to 2032 inclusive with the 2026 full year results. During the course of the year, of the $440 million cash return we intend to pay in 2026, we've already paid $100 million in dividends. We've repurchased around 3 million shares for $118 million, and we're formally reconfirming the $100 million interim dividend to be paid in September. The $440 million cash return represents a 7.2% cash yield based on the share price end of June. If you benchmark this to the AEX, this is top quartile. Now as I mentioned, the $2.1 billion, it's a minimum based on the backlog we had in hand at the end of 2025. But obviously, since then, we've made very good progress on materializing the upside with the 2 SEAP awards, and we're working on the FEED for Longtail. So we're optimistic our year-end update will reflect further progress with more to come in the future as a result of the strong market outlook. Finally, to cover the details of the guidance update. 2026 directional revenue guidance is updated from above $6.9 billion to around $7.6 billion, of which around $2.4 billion is expected from the Lease and Operate segment and around $5.3 billion (sic) [ $5.2 billion ] expected from the Turnkey segment. 2026 directional EBITDA guidance is updated from around $1.8 billion to around $1.9 billion. That's it for me. Now back to Oivind to conclude.

Thank you, Douglas. Very clear, as always. And no, we're certainly not planning on shutting up shops. So with that, to conclude, our first half performance demonstrates the resilience of SBM Offshore's life cycle model and the continued strength of the deepwater market, supported by disciplined execution, operational excellence and commercial momentum. We're growing the core with two new FPSO awards in Brazil and a FEED award in Guyana, reinforcing our position in key deepwater markets. The outlook for deepwater remains strong, and we are well positioned to capture our share of future opportunities. To support these opportunities, we recently ordered an additional Fast4Ward hull, bringing the total number of hulls under construction to three. These hulls strengthen our ability to respond to client demand while maintaining execution discipline and derisking delivery schedules. Finally, reflecting our execution performance, operational excellence and recent awards, we have increased our directional revenue and EBITDA guidance for 2026. I would like to thank our clients and stakeholders for their continued trust and support and our teams around the world for their dedication, collaboration and commitment to delivering our strategy. Thank you all for listening. We will now be happy to answer your questions.

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

Firstly, perhaps to make the capacity discussion a little bit more concrete. Is there a particular phase of execution that we should think as the actual constraint, engineering, procurement, fabrication? Meaning if you get awards for the two new unallocated hulls, your headline number of orders will rise to eight rather than the rather of stated capacity? Of course, some will be almost complete. Others will still be in very early stages, so not necessarily an overlap of stages. So can we think about the six number as something applicable to a specific stage of execution rather than for the whole process? And then secondly, on Venus, there is a press article this morning saying that your competitor is now the front runner on the negotiations with Total. I know that you normally don't comment on the current state of bids, but perhaps can you tell us a bit about this prospect. What are the main challenges from an engineering execution standpoint? And where you think you have an edge versus others?

So particular constraints associated with the workplaces of the FPSO. So I guess the thing to think about the workplace is some are done largely in-house, some are done outsourced. So typically, our engineering and procurement is in-house. So that's where the partnership discussion comes into play, and we have a means of scaling up to add to that capacity constraint as it may be. On the supply chain, sort of equipment deliveries and yards, that is where we have time to plan ahead and look at the prospect pipelines and as we go through the commercial processes, scale up accordingly. So when we communicated in the past, it was sort of the sizing of the organization, a number of projects, project management, we can run in parallel. Now as we've gone in and have had very successful deliveries over the last few years and standardization is materializing or the learnings from standardization are materializing, we are able to reassess our view on capacity and expand that capacity beyond the six. So that it's always a function of the pipeline ahead and keeping a cost base in the organization that is optimized. So we don't see any particular constraints, but in terms of award base and historical execution models, that's where the six came in. We can look beyond that in the same very disciplined way and not compromising the quality of the execution. When it comes to Venus, I think I've seen many upstream articles on Venus over the last few years. We don't know the outcome of the prospect yet. So beyond that, I don't think we have any further comments. It has no particular technicalities that compared to others is a good fit for our pipeline -- our portfolio. But beyond that, I don't have technical comments.

We are now going to take our next question, and this one comes from Luuk Van Beek from e Degroof Petercam.

First, a question about the statement that you included in your press release on an increasingly complex and volatile environment. I've seen it for the first time. So can you elaborate why you included it? Are there any specific new challenges, for example, in the supply chain? And the second question is on the impact of the Chalchi on the EBITDA guidance. Is there a significant impact from that? And finally, a question on the taxes, which were very low due to higher deferred tax assets in H1. Can you indicate if there will be any such change in H2?

Okay. Thank you, Luuk. So I'll do the first one, and Douglas will do the other two. So I mean, volatile environment, I think we're just observing a world that moves around a lot, and one could think that, that could impact elements of our operational activities or the commercial prospects. So we like to think that the predictability of our performance, whether it's operational and financial, is a bit of a contrast to that volatility and we like to emphasize that as a strength in our value proposition. And those are based on the parameters that we've communicated on before. So that, I think, is very consistent. And then I'll leave Douglas to two and three.

So Chalchi had a small impact, but not very significant impact on EBITDA in the first half. The tax is really about the One Guyana sale where we basically already paid the tax. So you have a big lot of income with no associated tax to pay.

We are now going to our next question, and this one comes from Philip Ngotho from Kepler Cheuvreux.

I have a few. Maybe just to start with a simple one. Just trying to understand the 2026 guidance and the bridge from the H1 EBITDA. Of course, One Guyana will not be present in H2. You discussed Chalchi just now. Are there any other items that we should be mindful of when looking in modeling H2 EBITDA versus H1? Then my second question is still on Venus as well. I appreciate it's an ongoing process and you're also limited in what you can disclose, of course. But I was wondering to what extent the competitors in the bidding process are maybe also placing more value on strategic entry into the market and willing to accept also lower margins. And we've been reading on about, of course, possible follow-on orders as well in the region. So is winning this first project, therefore, more important than in other bidding processes? And my last question is more on working capital going into year-end and net debt evolution. How much should we expect given the hull investments and any additional cost on SEAP and Longtail, just for more like sort of net debt figure.

All right. Let me take the Venus and then I'll let Douglas take the other two. So as to the commercial strategies of our competitors, I can't really comment. But we've always said that Venus was strategically important to SBM because we would like to be a frontrunner in Namibia. I think we see a lot of exploration activities in Namibia. So we'll see how that market evolves from there on. But as to -- when our own gross margins and the discussions around our commercial strategies, we don't compromise on the return expectations on our prospects. So there's no single prospect that will make us shift from our general appetite for returns to our shareholders. So we keep our discipline there as we do stay disciplined in the way we operate and run the company. So that's as much as I can say about that, I think, and I'll let Douglas talk to working capital and guidance.

Yes. Philip, so on the guidance, as you mentioned, obviously, One Guyana makes a big boost in the first half results. So yes, unfortunately, the year-end isn't going to be double that. But I think there isn't anything really significant other than needing to maintain a very good operational and project performance in terms of the delivery of the around $1.9 billion where we put the guidance. On the working capital, as I sort of mentioned in the remarks, it's quite hard with the Sale and Operate project to project exactly because we can see the timing difference between the money we've invested and when we get paid for it by the clients. And especially when you have like a cutoff period, there can be like a few weeks between you book the expenditure and then you get paid for it a bit later. So there can be a bit of volatility there. Underlying, obviously, we recently announced a new hull. So that's going to be in our working capital. So that will -- there will be some increase associated with that.

We are now going to take our next question, and this one comes from Victoria McCulloch from RBC.

Just one question remaining for me. Can you talk a bit about how you've seen the tender pipeline evolve over the past 12 months? Obviously, the oil price has changed dramatically. The environment around the world has changed, but also it appears that competitive environment has shifted a little bit for you guys. But again, these are long-term projects, decisions aren't made quickly. So what are your customers telling you in terms of the tender pipeline, the opportunities, their appetite? Have you seen a shift in delays or any slowdown because it's hard to make decisions in this environment? Or are you seeing a continued acceleration as this -- I guess, the slides would suggest with the tender pipeline you present?

Victoria, thank you for your question. So in terms of tendering, before a prospect comes to tendering, there's been already a lot of work in exploration and for development to get enough definition before it reaches sort of our pipeline. So that wouldn't really be influenced by the more recent, let's call it, oil price hikes. So it's more about for us remaining on our model of early engagement with our clients and helping clients with -- as when they invite us in with their development plans to gain pace and use the SBM value proposition. And that dynamic hasn't really changed materially. And we see the continued pipeline in Guyana. We see other countries in West Africa, as we've spoken about before as well, emerging with opportunities, and we see Brazil still with a strong prospect pipeline in the years ahead. So for us, really the dynamic hasn't changed that much. What you've seen over the last couple of years is this change from more -- from Lease and Operate to more Sale and Operate, and that has doing something with the competitive landscape. It may bring in other types of contractors, which is where we refer back to our competitive positioning and the life cycle proposition of SBM. So it is competitive. It will remain competitive, but the tender pipeline, and we like to think that the deepwater in the Atlantic Basin, as we said, in the years ahead of us remains very strong.

Just as a follow-up to that, we've also seen a shift in the public commentary around decarbonization, certainly from the majors and throughout the value chain. How much has that impacted, I guess, the work you do that we don't see around decarbonization options? And that tender opportunity and that -- I appreciate it's much longer time line to that and it's much earlier stage, but have you seen a change as the outside environment has seen a change [indiscernible] ?

No. I think from our own perspective, right? So we've been working for many years on lowering the emission intensity of our FPSOs. So that's been an ongoing journey, and we bring that into our offering of reducing the environmental footprint of the FPSOs. And we're also conducting studies right now on modularized carbon capture systems that we are ready to integrate into our future FPSOs as and when they become as part of the specification in the actual prospects. Today, from the prospect in the market and the way the current market is, all the efficiency gains that we've developed and sort of already deployed on FPSOs that remains, of course, a part of the FPSOs of tomorrow. But the next step to carbon capture, we don't see it materializing yet or it may start to materialize. But nothing has really changed dramatically for us. We always want to be environmentally efficient and also deliver on reliable energy solution for the future. So let's see how policies evolve in the years ahead.

We are now going to take our next question, and this one comes from Mick Pickup from Barclays.

A couple of questions, if I may. They're both back of the envelope type questions. So I'm just thinking medium term here. So if I look at your Turnkey order book by year of execution, you've roughly got $3 billion into next year and $3 billion for '28. So if I'm looking on that longer outview, $3 billion already, Longtail adds a chunk as well. You expect to win a couple more units before then. Why would I be wrong in thinking that Turnkey doesn't go towards $5 billion of turnover medium term?

Is that your question?

Is that only question, Mick?

That's the starting one.

Okay.

Okay. All right. Shall I answer?

Yes, yes. Douglas, I don't do the numbers in there, so I stay away from that.

Yes. So just kind of generally, and I mean you can see it from our backlog chart. So the -- what we have in hand is what we have in hand. So that's obviously in the backlog. But what we're saying is there is a lot of potential from the strong market that we see. And that's why we included that model scenario you can look at now. I think we've been very clear that's not a forecast. It's not a target, but I think it gives a level of opportunity that we see. So yes, I mean, if we're successful in capturing a portion of that, yes, you can expect the Turnkey to grow.

Right. And then a follow-up is just looking at your chart at the back on your net cash backlog, you're saying there's $1 billion of net cash coming from Turnkey. So you've got $10 billion of backlog, teens margin. Just talk through the gap to that $1 billion of value. And obviously, tax is a big jump, but is there anything else I should be thinking of?

Yes. So you've got -- like also -- so in terms of like the net cash, we've got Longtail the initial -- some of the stuff associated with the feed in there. So that's like a bit diluted. And then you have the $1 billion net cash, but it's net of overheads. So -- which we've actually extended a bit because we added the SEAP awards. So they take longer. Obviously, we'll be aiming to add more awards in the coming period, which will then consume or offset, if you like, a portion of those overheads. So that's kind of in the mix. You need to -- if you're looking at kind of doing a gross margin type of calculation, you have to add back roughly $100 million overheads a year.