Viridien - comment

Q1 was a lot weaker than expected operationally, and the bonds will be marked lower today. However, quarterly operating cash flow was boosted by working capital inflow of $11m vs our expectation of ($32m), and lower than forecast capex meant Free Cash flow was $40m (vs $20m). Viridien also repaid $41m of SSNs in the quarter, and finished Q1 with $123m in cash and $125m in undrawn RCF. Management reiterated its FY guidance as it expects authorisations will be pushed into Q2, assuming an easing of concerns at oil producers about the economic impact of the conflict. The super trend of fixing supply chain vulnerabilities and energy security remains supportive.

DDE Revenue $152.8m (-29%), EBITDAS $87.8 (-29%); the fall was largely due to survey projects not being signed off whilst the Gulf conflict was ongoing. The projects were not Gulf-related, but with the economic outlook still uncertain, the NOCs and Oil majors remain cautious.

SMO Revenue $61m (-30%), EBITDAS ($5m) (-137%) was also impacted by the Gulf; management reiterated that the Saudi portion of expected revenues this year would be modest. However, this part will not return until the conflict has subsided. A bright spot is the New Business segment (beyond oil and gas), which accounted for 20% of Q1 Revenue.

Working Capital management was strong and added $54m in cash vs Q1 25. There are still issues with Pemex invoices, but progress was made. All of the Pemex 2025 bills have been paid, but some of the 2024 bills are still outstanding. Pemex is now paying, but the process is slow even post the government bailout.

Management remains bullish about the rest of the year and has maintained its guidance of $100m net cash flow.