Paratus Energy Services is a holding company over offshore-drilling assets — Mexican jack-up rigs contracted to Pemex (the Fontis segment, fully consolidated in FY2025) plus a 50% stake in the Seagems JV — reported in USD under US GAAP though listed on Oslo in NOK. The classification matters: Borsdata tags it 'Financials,' but it is a capital-intensive operating/holding company, so we score it on the operating ROIC/EP frame, not the financials branch. On adjusted figures ROIC is ~22% (NOPAT ~USD 185M / IC ~USD 840M) and economic profit is +USD 93M against an 11% WACC.
But almost every favourable number is flattered. FY2025 sits at a cyclical peak (~99% utilization, fresh higher Petrobras dayrates); the holding structure means USD 122M of Seagems JV equity income inflates 'operating' margins above 100%; and the ~20% FCF yield is a one-off USD 356M Mexican-receivable collection. Two structural events dominate the forward view: the announced Fontis jack-up sale (Mar-2026) at a USD 400M headline but only ~USD 148M cash + USD 15M deferred + USD 237M as a 2.5-year seller loan — after which Fontis becomes discontinued operations and the company is essentially a Seagems-JV-plus-cash shell — and a USD 197.9M 9.00% note maturing mid-July 2026 that was not yet refinanced at the reporting date. Net debt is ~USD 507M. This is a sum-of-the-parts restructuring story with real refinancing and cyclicality risk, not a clean compounder.
The right frame is sum-of-the-parts on the post-Fontis-sale entity (Seagems JV stake + net cash + the seller-loan receivable), not a multiple on peak consolidated earnings. At ~USD 4.9 (NOK 46.4 ÷ USDNOK ~9.44) the equity is ~USD 800M; the cyclical-peak earnings and the financing/structure uncertainty bracket a wide range.
Base USD 5 (≈ current; peak earnings + restructuring uncertainty offset); bull USD 7 if the Fontis sale closes cleanly, the 2026 note is refinanced and dayrates hold; bear USD 3 on a refinancing squeeze, a dayrate downturn or seller-loan impairment.
The market pays today’s enterprise value for roughly -13.8% NOPAT growth over 5 years. The business earns 22% on capital against a 11% cost of capital (spread +11.0 pp); the no-growth value is NOK 79/share (170% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 67 | -5% | +44% | 30% | Fontis sale closes cleanly; 2026 note refinanced; dayrates hold |
| Base | NOK 48 | -13% | +3% | 40% | Peak earnings + restructuring uncertainty offset |
| Bear | NOK 29 | -24% | -38% | 30% | Refinancing squeeze, dayrate downturn or seller-loan impairment |
| Prob-weighted | NOK 48 | — | +3% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 9.50% | 101 | 113 | 121 | 134 | 144 | 170 |
| 10.25% | 89 | 99 | 106 | 117 | 125 | 147 |
| 11.00% (base) | 79 | 87 | 93 | 103 | 110 | 128 |
| 11.75% | 71 | 78 | 83 | 91 | 97 | 112 |
| 12.50% | 63 | 70 | 74 | 81 | 86 | 99 |
Green = fair value above the current price of NOK 46.45. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Peak utilization (~99%) + fresh Petrobras/Pemex dayrates drive current cash flow.
USD 400M headline jack-up sale (mostly seller loan) recycles capital and simplifies the structure.
The 50% Seagems JV is the core ongoing asset once Fontis is deconsolidated.
Cash + sale proceeds could retire the 2026 note and cut net debt.
Paratus is a leveraged, cyclical offshore-drilling holding company whose headline ROIC (~22%) and EP (+USD 93M) flatter a peak year and an opaque JV-equity structure, with a mid-2026 note refinancing and a transformational Fontis sale still unresolved. HOLD, low conviction; base USD 5, sized small.
Re-underwrite after the Fontis sale closes and the 2026 note is refinanced — that is when a clean Seagems-JV-plus-cash valuation becomes possible.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Total operating revenues (consolidated) | 153 | Consolidated Statements of Operations / Note 5 | Total operating revenues line, FY2025 column = 153.2 (FY2024 213.9). This is Fontis/Mexico only and is net of $33.8m amortization of favorable contracts (segment table p.30: contract revenue 187.0 less amortization 33.8 = 153.2). Seagems revenue is NOT here (equity method). |
| Operating income (EBIT, reported) | 163 | Consolidated Statements of Operations | Operating income = 162.7 (FY2024 166.9). Build: revenue 153.2 - total opex 117.2 + share in results from joint ventures 121.8 + other operating income 4.9 = 162.7. Includes the Seagems equity income, hence the matching equity-method asset is kept in IC. |
| Share in results from joint ventures (Seagems) | 122 | Consolidated Statements of Operations / Note 18 | Equity income from the 50% Seagems JV = 121.8 (FY2024 85.2), comprising Paratus' 50% share of Seagems net income 105.3 plus amortization of basis differences 16.5 (Note 18). Sits inside reported operating income. |
| Amortization of favorable contracts (add-back) | 33.8 | Note 4 Segment Information / Note 5 | Non-cash, PPA-type contra-revenue (Seadrill fresh-start accounting): segment Fontis line shows contract revenue 187.0 less amortization of favorable contracts (33.8). Added back to reported EBIT to derive economic adjusted EBIT 196.5; the company also adds it back in its Adjusted EBITDA reconciliation (p.48). |
| Income tax expense | -4.7 | Note 12 Taxation | Income tax expense 4.7 on income before taxes 79.5 = 5.91% effective rate. Bermuda statutory rate is 0% (exempt to March 2035); tax is essentially all Mexican (Fontis). The 5.91% effective rate is used for NOPAT as the genuine economic tax reality. |
| Net income | 74.8 | Consolidated Statements of Operations | Net income FY2025 = 74.8 (FY2024 31.6); basic EPS $0.46. Used for context, not directly for NOPAT (NOPAT is built bottom-up from adjusted EBIT x (1-tax)). |
| Interest-bearing debt (carrying) | 685 | Consolidated Balance Sheets / Note 11 | Short-term interest-bearing debt 193.8 + long-term 491.3 = 685.1 carrying. Notional 697.9 (2026 Notes 197.9 at 9.00% due Jul-2026 + 2029 Bonds 500.0 at 9.50%) less 12.8 unamortized discount/issue costs (Note 11). Used in invested capital and net debt. |
| Cash and cash equivalents | 178 | Consolidated Balance Sheets / Note 6 | Consolidated cash 178.3 at 31 Dec 2025 (FY2024 86.4). Treated entirely as operating (zero excess) given the July-2026 note maturity and lumpy Mexican receivables. Combined-segment cash incl. 50% Seagems was $203.7m. |
| Equity-method investments (Seagems) | 300 | Consolidated Balance Sheets / Note 18 | Equity-method investments 299.9 at YE2025 (FY2024 358.2, which then still included Archer 45.7). At YE2025 this is the 50% Seagems stake, carried after a negative basis difference of -242.7 vs Paratus' 541.7 share of Seagems book equity. KEPT in invested capital as the core operating asset behind the JV equity income. |
| Drilling units and equipment, net | 250 | Note 10 Drilling Units and Equipment | Net carrying value of the Fontis jack-up fleet 249.8 (gross 319.9 less accumulated depreciation 70.1). 30-year useful life, nil residual, straight-line; no impairment in FY2025 or FY2024. The asset-heavy core of the consolidated business (the one being sold). |
| Total equity | 156 | Consolidated Balance Sheets / Statement of Changes in Equity (p.27) | Total shareholders' equity 155.7 at 31 Dec 2025 (FY2024 256.9). Built from additional paid-in capital 1,192.2 + AOCI 1.2 LESS accumulated deficit 1,037.7. The large deficit is Seadrill-legacy; it depresses the equity base and flatters ROIC. |
| Accumulated other comprehensive income (AOCI) | 1.2 | Consolidated Statement of Changes in Equity | AOCI balance +1.2 at 31 Dec 2025 (FY2024 +8.7), moved by -7.5 OCI loss in 2025 (incl. -8.5 reclassification on the Archer sale). Removed from equity to get equity_ex_oci 154.5 for invested capital. |
| Shares outstanding (net of treasury) | 163 | Note 13 Share Capital | 169,550,049 Class A ordinary shares less 6,815,000 treasury shares = 162,735,049 outstanding at 31 Dec 2025. Used for market cap with the verified NOK 46.40 price converted at USDNOK 9.4383. |
| Operating cash flow & capex (FCF build) | 167 | Consolidated Statements of Cash Flows | Net cash from operating activities 166.6 (FY2024 -27.6), boosted by a +147.8 accounts-receivable working-capital release (Mexican collections). Additions to drilling units 5.9. FCF = 166.6 - 5.9 = 160.7; flagged as non-recurring-inflated. |
| Combined-segment net debt & adj EBITDA (APM) | 581 | Alternative Performance Measures | Company management-reporting net debt 581.2 (notional debt 697.9 - consolidated cash 178.3 = 519.6 consolidated, plus 50% Seagems net debt 61.6). Combined-segment adjusted EBITDA 261.2 (consolidated 91.6 + 50% Seagems 169.6); net leverage 2.2x. Noted for context; consolidated net debt (506.8 carrying / 519.6 notional) used for the balance-sheet identity. |
How the mttssn view has evolved — each prior dated note is preserved.