Multi Year Offshore Contracts And Brazil Drilling Program Will Support Long Term Upside

Catalysts

About Ventura Offshore Holding

Ventura Offshore Holding operates offshore drilling rigs and managed vessels serving deep and ultra deepwater oil and gas projects, primarily in Brazil and Southeast Asia.

What are the underlying business or industry changes driving this perspective?

• Multi year contracts across the fleet, including DS Carolina contracted at least until 2029 and Atlantic Zonda contracted until 2028 with optional years to 2031, provide long visibility on day rate revenue and support planning for earnings and cash flow.
• The company reports an industry leading cost structure with average OpEx of US$109,000 per day for Catarina, which, if sustained as contracts roll and new work is added, can support EBITDA margins and net income resilience across cycles.
• Brazil continues to be a core hub for deep and ultra deepwater activity, with 25% of the worldwide fleet already operating there and multiple active tenders like Búzios and Mero, which, if Ventura secures additional work, could drive higher utilization, backlog and revenue visibility.
• Growing interest in new offshore regions in Brazil, including the equatorial margin, Pelotas and Santos basins with significant block acquisitions by major oil companies and a dedicated US$3b Petrobras plan for 15 exploration wells, points to a multi year drilling program that could support Ventura's long term rig employment, day rates and backlog.
• Southeast Asia offers steady floater demand with ongoing and potential work for SSV Catarina in Indonesia, India and Malaysia, and current ENI options that, if exercised and followed by new contracts, can support sustained utilization, revenue and smoother earnings over time.
• Strong Q2 2025 financial metrics including adjusted EBITDA of US$18.2 million, net income of US$24 million, a US$46.6 million cash position and a US$657 million backlog, combined with potential refinancing tied to a long term Victoria contract, provide room for balance sheet optimization that could influence interest expense, net income and financial flexibility.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Ventura Offshore Holding compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Ventura Offshore Holding's revenue will grow by 8.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 32.2% today to 28.4% in 3 years time.
• The bullish analysts expect earnings to reach $111.7 million (and earnings per share of $1.07) by about July 2029, up from $99.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $83.5 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 6.6x on those 2029 earnings, up from 3.1x today. This future PE is greater than the current PE for the NO Energy Services industry at 6.5x.
• The bullish analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.39%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Delays in final investment decisions by oil companies and the push out of project execution into 2026 and 2027 may reduce near term contracting opportunities for floaters in both Brazil and Southeast Asia, which could leave rigs idle at contract roll off and weigh on revenue and earnings.
• The current tightening of Petrobras' tone on CapEx, combined with the possibility that future tenders such as Búzios, Mero or the pool process are slower or smaller than expected, could reduce long term rig demand for Ventura, putting pressure on day rates and EBITDA margins.
• Growing technical requirements in Brazil such as managed pressure drilling systems for key fields like Búzios and Mero require significant CapEx of around US$25 million for Victoria and potentially other rigs. If this spending is not matched by higher day rates or long contracts, it could drag on free cash flow and net income.
• Operational issues like the recent BOP pull and lower than targeted uptime on SSV Catarina, alongside periods when contract structures only pay 90% of the day rate, highlight the risk that future technical downtime or maintenance windows, including SPS work and contract preparation, can reduce financial uptime and weigh on margins and earnings.
• Ventura's exposure to a concentrated set of customers and basins, particularly Petrobras in Brazil and ENI in Southeast Asia, means weaker activity, changes in tender requirements such as drillship only tenders, or non exercise of Catarina option wells could reduce utilization and backlog visibility, with a direct impact on revenue stability and long term earnings power.

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Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Ventura Offshore Holding is NOK50.24, which represents up to two standard deviations above the consensus price target of NOK42.42. This valuation is based on what can be assumed as the expectations of Ventura Offshore Holding's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK50.24, and the most bearish reporting a price target of just NOK38.22.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $392.8 million, earnings will come to $111.7 million, and it would be trading on a PE ratio of 6.6x, assuming you use a discount rate of 10.4%.
• Given the current share price of NOK28.2, the analyst price target of NOK50.24 is 43.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.