SBM Offshore N.V. (SBMO.AS) - Deep Dive Research Report

Report Date: May 7, 2026 Sector: Energy - Offshore Oil & Gas Infrastructure Exchange: Euronext Amsterdam

SECTION 1: WHAT THE COMPANY DOES

SBM Offshore builds, delivers, and operates the giant ships that sit at the center of the world's most complex deepwater oil fields. These ships - called Floating Production Storage and Offloading vessels, or FPSOs - do something that sounds straightforward but is technically extraordinary: they anchor in water depths of up to 2,000 meters, connect to subsea wells through flexible risers, pull crude oil and associated gas from beneath the seabed, separate, treat, and process it on board, store up to 2 million barrels in their hulls, and then offload oil to shuttle tankers every few days. No pipeline to shore, no fixed platform. The ocean is the factory floor.

The company does not simply build these ships on contract and walk away. Its original and most strategically important commercial model involves owning the FPSO, leasing it to an oil major for 15 to 22 years under a day-rate charter contract, and operating it for the life of that contract. This means SBM has a recurring, contracted revenue stream locked in years in advance, a fleet of industrial assets worth billions, and a highly specialized O&M organization that keeps them running at above 99% uptime.

SBM Offshore's origins trace to 1862, when entrepreneur A.F. Smulders established a machine factory in the Netherlands building steam engines. By 1905 the company had established Werf Gusto, a shipyard in Schiedam. The pivotal moment came in 1959 when Gusto Shipyard constructed the first Single Point Mooring (SPM) facility under license from Shell - a floating buoy system that allows tankers to load oil from offshore fields without a fixed berth. Robert Smulders then established Single Buoy Moorings Inc. (SBM) as a Swiss subsidiary of IHC Holland in 1969, specifically to market and develop SPM technology. By 1975, SBM had installed over 60 such units.

The leap to FPSOs came in 1977 when the company deployed its first FPSO on Shell's Castellon field. Then in 1980, SBM made the commercial decision that defined everything that followed: instead of merely building an FPSO for a customer, it built, owned, and leased the unit - effectively creating the lease and operate model that now dominates the FPSO industry globally. The first vessel deployed under this model, FPSO II, went to the Cadlao field offshore the Philippines with first oil in August 1981.

Over the following decades the company expanded through acquisitions - notably IMODCO in 1990 (offshore mooring systems) and Atlantia Offshore in 2001 (tension leg platforms) - while its parent structure evolved through IHC Caland and other configurations. In 2005, recognizing a fundamental misalignment between its capital-intensive FPSO business and its legacy shipbuilding operations, IHC Caland sold all shipyards and renamed itself SBM Offshore N.V. This was a decisive strategic pivot: the company became a pure-play offshore production infrastructure business.

The company is headquartered in Amsterdam, with execution centers in Schiedam (Netherlands), Monaco, Kuala Lumpur, Houston, Bengaluru, and Brazil. It employs approximately 7,900 people. Its shares trade on Euronext Amsterdam under the ticker SBMO. It entered the AEX index (Netherlands' blue-chip equity index) in 2003.

One scandal sits permanently in the company's history and cannot be ignored. Between 2005 and 2011, SBM paid approximately $250 million in bribes to government officials across Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq to secure FPSO contracts. The company self-reported to Dutch authorities in 2012. Between 2014 and 2021 it paid roughly $700 million in aggregate settlements to Dutch prosecutors, Brazilian authorities, and the U.S. Department of Justice. It relocated its headquarters from Monaco to Amsterdam as part of its remediation and implemented a substantially enhanced compliance program. The scandal did not destroy the business - SBM retained its customer relationships and market position - but it informs any assessment of corporate governance.

Today SBM operates 16 FPSOs (having sold FPSO ONE GUYANA to ExxonMobil Guyana in February 2026) with a combined nameplate capacity of approximately 2.7 million barrels per day of oil production. Its contracted backlog at year-end 2025 stood at $31.1 billion on a pro-forma Directional basis, with cash flow visibility extending through 2050. Its CEO Oivind Tangen, who previously served as COO before taking the top role, has built a track record of delivery through the complexity of commissioning three of the world's largest FPSOs within a six-month window in 2025.

To understand what SBM does in practice: when Petrobras needs to develop the Buzios 7 pre-salt field in ultra-deep water off Brazil, it issues a tender for an FPSO. SBM competes against MODEC, Yinson, and others. If it wins, its engineering team in Schiedam and Monaco designs the vessel and topsides - the processing modules that sit on the hull. It uses a standard Multi-Purpose Floater (MPF) hull, pre-ordered at a Chinese shipyard, as the base. It contracts specialized yards in China or Singapore to fabricate the topsides modules. Its project execution team manages the interface between hull construction and topsides installation, then oversees offshore installation using the dedicated vessel OCV Normand Installer. Once the FPSO starts producing, SBM's offshore operations team - mixed with Petrobras secondees in some roles - runs the vessel 24 hours a day, seven days a week, targeting zero downtime. Petrobras pays SBM a daily hire rate whether or not the field itself is producing. The day rate is largely fixed. SBM bears the operating cost. The margin between them, earned for 20 years, is the Lease and Operate business.

SECTION 2: BUSINESS SEGMENTS

SBM Offshore reports two primary business segments: Lease and Operate, and Turnkey. It also maintains smaller product lines in mooring systems (through Imodco) and Brownfield Project Services, and holds a 50% stake in a floating offshore wind joint venture called Ekwil.

Lease and Operate

This segment is the heartbeat of the business. SBM owns and operates FPSOs on long-term charter contracts, collecting day-rate revenues that are largely independent of oil production volumes at the underlying fields. The vessels are financed through a combination of project-level debt (non-recourse, secured against the FPSO asset and contract cash flows) and SBM equity. Once the FPSO is on charter, the company earns a recurring hire rate from the oil company, bears the cost of operating the vessel, and pockets the operating margin.

What makes this segment distinctive is the duration and predictability of contracts. Charter terms typically run 15 to 22 years. Petrobras, for example, signed a 22.5-year contract for FPSO Sepetiba in 2019. ExxonMobil's FPSO agreements in Guyana have run with similarly long initial terms. The revenue from this segment flows at a relatively stable rate, creating what functions as an infrastructure-like annuity income stream on top of which Turnkey revenues layer.

The core capability is operations excellence. Achieving 99.4% fleet uptime - as SBM did through the first three quarters of 2025 - on a fleet of 16 production vessels across Guyana, Brazil, Angola, and West Africa requires an extraordinary depth of operational knowledge. Each vessel is highly bespoke in its subsea interface, mooring configuration, and topsides process train. Keeping them running requires preventive maintenance programs, spare parts logistics chains spanning multiple continents, offshore operator training systems, and regulatory compliance across multiple jurisdictions. This competence took decades to build and would take years for a new entrant to replicate.

A critical shift happening within this segment is the evolution from pure lease to operate-only arrangements. When ExxonMobil Guyana purchased FPSO ONE GUYANA in February 2026 for $2.32 billion while retaining SBM as operator through 2035, it demonstrated a model where SBM earns management fees without holding the asset on its balance sheet. For FPSO Jaguar (the next Guyana vessel, delivery 2027), ownership will similarly transfer to ExxonMobil Guyana prior to installation, and SBM will operate under a 10-year Operations and Maintenance Enabling Agreement signed in 2023. This shift reduces SBM's leverage, frees capital for new FPSOs, and creates a capital-light recurring service revenue stream - management calls it a "more returns, lower leverage, simpler story."

In 2026, SBM expects to earn approximately $2.2 billion from Lease and Operate, representing about 32% of total group revenue guidance at baseline.

Turnkey

Turnkey is where the engineering intensity and episodic revenue live. In this segment, SBM designs, engineers, procures, constructs, installs, and commissions FPSOs for customers, either for the customer's direct ownership or as the first phase before transferring to the Lease and Operate book. Revenue is recognized as projects progress, so it is lumpy: a vessel that takes three to four years to build generates revenues that escalate as engineering gives way to procurement and fabrication.

The 2025 revenue story illustrates this clearly. Full-year Directional revenue came in at $5.1 billion, down 17% from $6.1 billion in 2024. This apparent decline was not a sign of business weakness but a reflection of phasing - 2024 included revenues from FPSO asset sales and peak construction on multiple large vessels simultaneously. Through the first quarter of 2026, Turnkey revenues alone hit $2.879 billion in a single quarter, largely driven by the recognition of the $2.32 billion ONE GUYANA sale.

The core capability in this segment is project management of extraordinary complexity. A modern newbuild FPSO like FPSO Jaguar for ExxonMobil involves hull construction in a Chinese drydock, topsides module fabrication at multiple yards in Asia, subsea umbilical and riser systems from specialists in Europe and the Americas, turret and mooring systems from SBM's own engineering centers, and then a multi-month offshore installation campaign in waters 1,500 meters deep off the coast of Guyana. Coordinating these suppliers, managing the schedule interfaces, and absorbing the inevitable disruptions from weather, supply chain, and regulatory approvals requires an organizational capability that very few companies in the world possess.

The Fast4Ward program, launched in 2016, was designed to bring industrial repeatability to what had been a fundamentally bespoke manufacturing process. The centerpiece is the Multi-Purpose Floater (MPF) hull: a standard, pre-engineered hull designed to accommodate internal turrets, external turrets, or spread-mooring configurations, and sized to carry topsides of approximately 50,000 tonnes. SBM orders these hulls from Chinese shipyards on a speculative basis - carrying the inventory risk itself - so that when a customer signs a contract, the hull is already under construction. This approach shaves six to twelve months off delivery time versus bespoke hull engineering, and for a customer developing a deepwater field, a twelve-month acceleration is worth hundreds of millions of dollars in earlier first-oil revenue. By early 2026, SBM had ordered ten Fast4Ward MPF hulls in total, with eight in operation or delivered. It announced two additional hulls in Q1 2026, bringing construction-active hulls to four.

Turnkey revenue is expected to represent approximately $4.3 billion of the 2026 baseline, or roughly 66% of group revenue - reflecting the scale of ongoing project activity and the ONE GUYANA transaction.

Imodco and Mooring Systems

Imodco, acquired in 1990, designs and supplies Catenary Anchor Leg Mooring (CALM) systems - the buoy-based mooring and fluid transfer systems used at offshore terminals where tankers load without a fixed berth. These are distinct from FPSO mooring systems. CALM buoys are used at onshore and offshore oil export terminals worldwide. Imodco has been applying Fast4Ward-style standardization principles to this product line, executing multiple CALM terminal projects in Qatar and Nigeria using pre-engineered components. This is a niche product line, not material to group revenue, but it represents SBM's original technical heritage and gives the group complementary mooring technology expertise.

Brownfield Project Services (BPS)

BPS is SBM's service offering for extending the life and improving the performance of existing FPSOs - both those in the SBM fleet and third-party vessels. As the global FPSO fleet ages, the need for life-extension engineering, upgrade engineering, and maintenance services grows. SBM established BPS to capture this market, and management has described it as a "well-established" product line in recent concall commentary. Revenue contribution is not separately disclosed but the segment speaks to SBM's effort to extract more value from existing assets and relationships.

Ekwil - Floating Offshore Wind

Ekwil is a 50/50 joint venture between SBM Offshore and Technip Energies, formed in 2024. It targets the floating offshore wind market - where wind turbines are mounted on floating platforms anchored in deep water, which enables wind energy development in locations too deep for fixed-foundation turbines. SBM developed proprietary floating wind platform technology and completed the Provence Grand Large pilot project off France (commissioned around 2022). The Ekwil JV combines SBM's platform expertise with Technip Energies' engineering and energy delivery capabilities to create a "pure-play series production" floating wind company. This is a genuinely early-stage bet: the floating offshore wind market does not yet have commercial-scale projects beyond pilots. Ekwil represents SBM's energy transition positioning, but its revenue contribution today is minimal.

Segment Summary Table:

Segment	Core Activity	Key End Markets	Competitive Edge	Strategic Priority
Lease & Operate	Own and operate FPSOs under long-term charters	Deepwater oil majors (Petrobras, ExxonMobil, TotalEnergies)	40+ year operations track record, 99%+ uptime	Margin engine, annuity cash flow
Turnkey	Design, build, install FPSOs	Oil majors in Guyana, Brazil, Suriname, Namibia	Fast4Ward standardization, project execution	Growth driver, backlog conversion
Imodco	Offshore mooring/buoy systems	Oil terminal operators, LNG projects	Original SPM technology inventor	Niche, stable
Brownfield Project Services	FPSO life extension, upgrades	Aging FPSO fleet globally	Deep vessel knowledge, fleet access	Growing service line
Ekwil (50%)	Floating offshore wind platforms	Utilities, governments	Proprietary platform tech, Technip partnership	Long-term option, minimal near-term revenue

SECTION 3: PRODUCTS AND BUSINESS DETAIL

The FPSO - Product Deep Dive

An FPSO is, at its core, a converted or purpose-built ship of approximately 300 meters in length and 60 meters in beam. What distinguishes it from any other ship is what sits on its deck - the "topsides" - a full-scale oil and gas processing facility including separation trains, gas compression systems, water injection units, chemical injection systems, power generation, flare stacks, and utilities. The hull beneath holds the oil. The topsides process it.

SBM's FPSOs come in two categories. The first is the Fast4Ward newbuild, using the standard MPF hull. These are capable of processing up to 250,000 barrels per day of crude oil. FPSO ONE GUYANA, with its 250,000 bpd nameplate capacity, exemplified this class. The second category is large FPSO conversions based on Very Large Crude Carriers (VLCCs) - supertankers with processing capacities typically up to 150,000 barrels per day. Conversions are used when a newbuild timeline is not justified or where reservoir characteristics allow a smaller vessel.

The subsea connection between an FPSO and the wells on the seabed is one of the most technically demanding interfaces in offshore engineering. Flexible risers - large-diameter flexible pipes carrying crude oil, gas, water, and chemicals between the vessel and the seabed - must accommodate the vessel's motion in waves and current while maintaining pressure containment at depths of 1,000 to 2,000 meters. The turret is the component that allows the FPSO to rotate freely around its mooring point and weathervane into the prevailing wind and current while keeping the risers intact. SBM designs its own turret systems - both internal (mounted inside the hull) and external (mounted off the bow) - through its turret mooring engineering capability. This capability is a meaningful differentiator; not every FPSO contractor controls turret design.

The Fast4Ward process works as follows. SBM orders MPF hulls from Chinese shipyards (primarily COSCO or similar), paying for hull construction to proceed without a named customer contract in place. This is an inventory gamble that requires financial confidence in the order pipeline. When an oil company awards SBM an FPSO contract, one of these pre-built hulls is allocated. Topsides engineering commences in parallel or has already been partially completed using standardized modules. The time-saving comes from eliminating the hull design phase from the critical path of project delivery. SBM estimates this approach can shave up to 12 months from a conventional project schedule. For a customer developing a deepwater field, 12 months of earlier production can be worth more than $500 million in net present value at $70 per barrel.

Fleet Composition

As of early 2026, following the sale of ONE GUYANA, SBM operates 16 FPSOs. The fleet spans:

Guyana (Stabroek Block): FPSO Liza Destiny and FPSO Liza Unity (both ExxonMobil), with FPSO Jaguar under construction for delivery 2027 and FPSO Longtail in FEED phase
Brazil (Petrobras pre-salt): Multiple units including FPSO Almirante Tamandaré, FPSO Alexandre de Gusmão, and several older-generation vessels
West Africa (Angola, Equatorial Guinea): Several legacy units
Suriname: FPSO GranMorgu under construction for TotalEnergies, delivery 2028
Gulf of Mexico: FSO Chalchi under construction for Woodside

Total nameplate production capacity across the operational fleet is approximately 2.7 million barrels per day. Fleet uptime year-to-date through Q3 2025 was 99.4%, a figure that is genuinely exceptional for 16 geographically dispersed industrial facilities.

Innovation Pipeline

Beyond Fast4Ward, SBM has secured Approval in Principle from the American Bureau of Shipping for two forward-looking vessel designs:

Near-zero emission FPSO: A design that substantially reduces the greenhouse gas intensity of FPSO operations, announced in Q1 2025.
Blue Ammonia FPSO: A vessel that can produce blue ammonia (from natural gas with carbon capture) offshore, receiving ABS approval in Q3 2025.
Carbon capture FPSO design: A design achieving 80% GHG reduction potential through integrated carbon capture, receiving ABS approval by year-end 2025.

These designs position SBM for a potential future where carbon accounting requirements make conventional flaring-intensive FPSOs commercially problematic. They are long-dated options rather than immediate revenue contributors.

In digital technology, SBM has signed two notable alliances: an exclusive digital partnership with SLB (the oilfield services giant) for FPSO performance optimization using AI-driven analytics, and a strategic collaboration with Cognite for AI-powered fleet management. A separate agreement with Microsoft for standardized AI-powered Ocean Infrastructure was announced in Q1 2025. The Offshore Excellence and SBM+ platforms are the in-house digital products.

Installation Capability

SBM owns and operates the OCV Normand Installer, a deepwater installation vessel used to install subsea infrastructure and connect FPSOs to their mooring systems and risers. This asset gives SBM control over a critical installation bottleneck. Management mentioned in Q1 2026 that SBM is planning to replace this aging vessel before the end of the decade, suggesting a capital commitment is forthcoming.

Geographic Execution Centers

Project execution occurs across five primary centers:

Schiedam (Netherlands): Global headquarters, turret engineering, and project leadership
Monaco: FPSO engineering and commercial management
Kuala Lumpur: Topsides engineering and project execution
Houston: Americas market development
Bengaluru: Engineering support and digital services
Brazil: In-country operations management to satisfy Petrobras local content requirements

SECTION 4: CUSTOMERS

SBM's customers are exclusively international oil companies and national oil companies developing deepwater and ultra-deepwater fields. These are among the most sophisticated industrial buyers in the world.

Who Buys and Why

Petrobras is SBM's longest-standing and most important single customer relationship. Brazil's national oil company has relied on SBM for most of its flagship pre-salt FPSOs in the Santos Basin and Campos Basin. FPSO Almirante Tamandaré (capacity 225,000 bpd) achieved first oil in February 2025. FPSO Alexandre de Gusmão achieved first oil in mid-2025. SBM submitted competitive bids for Petrobras's SEAP 1 and SEAP 2 procurement programs in Q3 2025. The relationship is structural: Brazilian local content regulations require oil companies to contract significant portions of the FPSO scope in-country, and SBM has built a substantial Brazil presence to satisfy these requirements.

ExxonMobil Guyana has become SBM's second-largest and most strategically significant customer relationship. SBM has been the exclusive FPSO provider on every development phase of the Stabroek Block - the world's most prolific recent deepwater discovery, with estimated resources exceeding 11 billion barrels. FPSO Liza Destiny (Phase 1), FPSO Liza Unity (Phase 2, first Fast4Ward), and FPSO ONE GUYANA (Phase 3, sold to ExxonMobil Feb 2026) are operational. FPSO Jaguar is under construction for Phase 4, delivery 2027. SBM was awarded FEED for the Longtail development in March 2026. A 10-year Operations and Maintenance Enabling Agreement signed in 2023 governs SBM's operating role across the Guyana fleet. This is effectively a franchise relationship: ExxonMobil trusts SBM's operational management of its most important production asset.

TotalEnergies is the customer for FPSO GranMorgu, the vessel being built for the $9 billion Sapakara South-Krabdagu project in Block 58 offshore Suriname. SBM also signed an operations and maintenance contract with TotalEnergies for GranMorgu in H1 2025. Suriname represents a new deepwater province adjacent to Guyana, and SBM's relationship with TotalEnergies on this project positions it for future awards in that basin.

Woodside contracted SBM for the FSO (Floating Storage and Offloading) Chalchi in the Gulf of Mexico. This is an FSO rather than a full FPSO - it stores and offloads but does not process - and represents SBM's entry into Woodside's supply chain for Gulf of Mexico developments.

Buying Decision Dynamics

The decision to hire an FPSO contractor is made at the highest levels of an oil major's capital projects organization - typically the VP of Projects or equivalent, with CFO-level sign-off given the multi-billion dollar contract value. The sales cycle from initial concept to formal award can span two to four years, including front-end engineering and design (FEED) work that precedes final investment decision. SBM specifically uses FEED contracts as a competitive positioning tool: winning FEED does not guarantee the full EPCI contract, but it provides deep technical familiarity with the project and often creates de-facto incumbent status.

The primary selection criteria are project execution track record, technical capability for the specific reservoir and field conditions, schedule reliability, and financing capability. Cost is a factor but rarely the sole determinant for a project where an early or late first oil date can make or lose hundreds of millions. SBM's 99%+ uptime record and its established presence in each producing basin are meaningful selection arguments.

Switching Costs and Concentration

Switching costs in FPSO are significant. An oil company that is mid-development on a deepwater field cannot easily swap FPSO contractors without incurring schedule delays of 12 to 24 months and substantial redesign costs. Once a contractor has designed and is building the FPSO, the customer is effectively locked in. More importantly, in the operations phase, switching operators mid-contract would require technology transfer, knowledge transfer, and re-certification of operating personnel - a six- to twelve-month disruption in a business where every day of downtime costs millions.

Customer concentration is meaningfully high. Petrobras and ExxonMobil together likely represent well over half of SBM's backlog and contracted revenues. This concentration is both a risk (if either significantly cuts capex) and a reflection of quality (both have repeatedly chosen SBM over competitors). The Guyana relationship with ExxonMobil is particularly structural: the Stabroek Block will continue generating FPSO demand for at least another decade given the resource size, and SBM's operational track record on that block creates a quasi-sole-source advantage.

Contract structures in Lease and Operate are long-term day-rate charters with built-in escalation clauses for inflation and typically fixed operational cost structures. Most contracts have minimum revenue guarantees and buyout provisions. The ExxonMobil Guyana model has evolved toward "build-and-transfer-then-operate," where SBM keeps the higher-margin operations business while removing the asset and leverage from its balance sheet.

SECTION 5: COMPETITIVE LANDSCAPE

The FPSO EPCI and Lease and Operate market has five serious global players and a second tier of regional or smaller competitors.

The Top Tier

MODEC (Japan) is SBM's closest global peer. MODEC is a top-three FPSO EPCI and Lease and Operate company with a strong track record in Brazil (Petrobras), West Africa, and Southeast Asia. It is a subsidiary of Mitsui & Co. and benefits from Japanese financing capabilities and Mitsui's trading house relationships. MODEC's strength is in engineering execution and operational reliability - metrics comparable to SBM's. In Brazil specifically, MODEC and SBM compete directly for almost every Petrobras tender. MODEC was awarded the Petrobras SEAP 1 and SEAP 2 tenders (SBM was a competing bidder per Q3 2025 commentary). MODEC's relative weakness is geographic - it is less established in the Guyana basin.

BW Offshore (listed in Norway) has a long history in FPSO ownership and operations, with over 30 FPSO projects and 10 FSO projects in its history. BW has been more active in FPSO redeployment - taking vessels from completed fields, refurbishing them, and deploying them on shorter life or marginal fields where newbuilds are not economically justified. This gives BW a cost-competitive edge on smaller or shorter-duration projects. BW does not have SBM's scale of newbuild program or the Fast4Ward equivalent. Its order book is substantially smaller.

Yinson Holdings (Malaysia) has grown aggressively into the top tier over the past decade. Backed by strong Malaysian financing capability and benefiting from lower-cost execution through its Malaysian supply chain, Yinson has won significant contracts in West Africa, Brazil, and Southeast Asia. It is now a credible competitor for mid-to-large FPSOs. Its relative disadvantage is operational track record depth compared to SBM - it has fewer years of large-fleet operations - but it is rapidly closing that gap.

Bumi Armada (Malaysia) occupies a similar geography to Yinson but has faced financial challenges that periodically constrain its ability to pursue large contracts. It is a credible competitor for mid-size projects in Southeast Asia and West Africa.

Teekay has historically been a significant FPSO operator, particularly for conversions. However, Teekay has been reorienting its portfolio over recent years and is less of a frontline EPCI competitor for large-scale newbuilds.

Barriers to Entry

The barriers to entry for large FPSO EPCI and operations are genuinely high:

Project track record: No oil major will award a multi-billion dollar FPSO contract to a company without a demonstrable history of on-time, on-budget FPSO delivery. Building that record requires completing several projects, which takes a decade minimum. A new entrant faces a chicken-and-egg problem.

Engineering intellectual property: SBM's turret design capability, Fast4Ward hull program, and decades of FPSO topsides engineering represent accumulated technical knowledge that is genuinely difficult to replicate quickly. The Fast4Ward hull inventory itself - having pre-ordered hulls - is a competitive weapon that requires significant capital confidence and shipyard relationships.

Balance sheet: FPSO Lease and Operate requires billions of dollars in project financing per vessel. Lenders are comfortable financing these projects for SBM, MODEC, and Yinson because they have track records of operating vessels and collecting charter revenues. A new entrant would face a much higher cost of capital.

Operational organization: Running 16 FPSOs in five countries 24/7 requires an organizational infrastructure - offshore crews, maintenance logistics, subsea engineering, regulatory compliance - that took SBM decades to build.

Where SBM Wins and Where It Loses

SBM wins where field complexity is highest (ultra-deepwater, complex reservoir, difficult environment), where the customer values operational certainty above cost savings, and where SBM already has an established basin relationship (Guyana, Brazil). The Guyana franchise is particularly strong - SBM has built Liza Destiny, Liza Unity, and ONE GUYANA for ExxonMobil, and every tender for the next phase gives SBM a substantial institutional head start.

SBM appears to have lost the Petrobras SEAP 1 and SEAP 2 bids (implied from Q3 2025 commentary that it "submitted competitive bids" - if it had won, the award would have been announced). MODEC is the stronger competitor in Brazil for standard pre-salt FPSOs. SBM's cost structure relative to Yinson may also put it at a disadvantage on smaller or more standardized projects in West Africa or Southeast Asia.

SECTION 6: INDUSTRY

What Drives Demand

Demand for FPSOs is driven by one primary factor: oil companies' willingness to invest in deepwater and ultra-deepwater field development. This in turn is driven by:

Oil price level and outlook: At $70+ per barrel, virtually every deepwater development in Guyana, Brazil's pre-salt, and Namibia's Orange Basin is economically justified. SBM management notes deepwater breakeven costs range from $20 to $35 per barrel, making these among the most resilient oil projects in the world.
Reservoir depletion in mature basins: As onshore and shallow-water fields deplete globally, oil companies must go deeper to find reserves of sufficient scale. This structural driver is independent of oil price cycles within the range above.
Exploration success in new basins: The discoveries in Guyana (Stabroek Block), Namibia (Orange Basin), and Suriname have created decade-long FPSO demand pipelines in new geographies.
Deepwater's emissions advantage: Deepwater fields, operated at scale, have meaningfully lower greenhouse gas intensity per barrel than many alternatives (heavy oil, oil sands, some shale). SBM cited ~45% lower emissions intensity than industry average. As carbon accounting becomes more rigorous, this attribute matters to oil company portfolio decisions.

Industry Size and Growth

FPSO market sizing varies significantly across research sources, reflecting disagreements on what is included (vessels only vs. topsides equipment vs. services). Estimates range from $16-24 billion in 2025, growing at 8-12% CAGR through 2033-2035. What is more useful than aggregate market size is the project pipeline: the global order book for FPSOs is heavily concentrated in Guyana (ExxonMobil Stabroek, multiple phases), Brazil (Petrobras pre-salt second and third waves), Suriname (TotalEnergies Block 58), and Namibia (TotalEnergies Orange Basin, Shell). These represent potentially 15-20 large FPSO awards across the remainder of the 2020s.

SBM management stated that deepwater developments are expected to deliver approximately 35% of all new oil production through the remainder of the decade. The top FPSO contractors - SBM, MODEC, BW Offshore, Yinson, and Bumi Armada - controlled roughly 60% of the global order book worth approximately $48 billion as of mid-2025.

South America leads FPSO deployment globally, accounting for approximately 45% of installations driven by Brazil's pre-salt and Guyana's Stabroek developments.

Position in the Supply Chain

SBM sits in the FPSO delivery and operations layer of the deepwater oil and gas supply chain. Upstream of SBM are oil companies (the field developers and charterers), geophysical services companies, and subsea engineering firms. At the SBM layer: hull fabrication (outsourced to Chinese yards), topsides fabrication (outsourced to Asian yards), subsea equipment (sourced from specialist manufacturers), and turret/mooring engineering (largely in-house). Downstream of SBM are shuttle tanker companies that lift oil from the FPSO and the refineries that process it.

The key supply chain constraint for the industry is shipyard capacity. Chinese and Southeast Asian yards have limited slots for FPSO hull and topsides work, and SBM's strategy of pre-ordering Fast4Ward hulls on a speculative basis is partly a response to this constraint - securing capacity ahead of the competition.

Regulatory Environment

FPSO operations are regulated by flag state maritime authorities, the host country's oil and gas regulator, and the oil company's own safety management systems. Brazil, in particular, has stringent local content requirements mandating that a specified percentage of FPSO scope be sourced locally. This creates barriers to entry for companies without a Brazilian operational and supply chain presence. Guyana is developing its regulatory framework for deepwater production, with Guyanese content requirements growing over time.

The energy transition regulatory trend - carbon pricing, methane regulations, decommissioning requirements - affects SBM in two ways: it creates pressure on operators to reduce FPSO flaring and methane venting (which SBM's new vessel designs address), and it theoretically creates a long-term horizon on oil demand that could curtail deepwater investment in the 2030s or 2040s.

Cyclicality

The FPSO market is cyclical but with a longer cycle than most oil services. Lease and Operate contracts are 15-22 years and are not cancelled when oil prices fall. Turnkey order intake is sensitive to oil price (it determines when oil companies sanction new developments), but the actual construction and revenue recognition phase spans 3-5 years, smoothing the impact. The most acute cyclical risk is a sustained oil price collapse (below $40-50 per barrel) that causes oil companies to defer final investment decisions on deepwater projects that are currently planned or bid.

SECTION 7: GROWTH TRIGGERS

All triggers sourced directly from the four concalls used in this report: H1 2025 (Aug 7, 2025), Q3 2025 (Nov 2025), FY 2025 (Feb 26, 2026), and Q1 2026 (May 7, 2026).

FPSO Jaguar delivery in 2027 (ExxonMobil Guyana): Construction is more than 50% complete as of both Q3 2025 and Q1 2026. On delivery, Jaguar switches from Turnkey revenue to Operations and Maintenance fee revenue under the enabling agreement. (Cited: Q3 2025, Q1 2026 - repeated)
FPSO GranMorgu delivery in 2028 (TotalEnergies Suriname): Over 25% complete as of Q3 2025 and Q1 2026. SBM also signed the O&M contract for GranMorgu in H1 2025, locking in the operating revenue from first oil. This is SBM's entry into a new basin.

"We signed the operations and maintenance contract with TotalEnergies for FPSO GranMorgu, expanding our footprint into the Suriname basin." - H1 2025 concall, Aug 7, 2025

FSO Chalchi delivery (Woodside, Gulf of Mexico): First steel cutting achieved Q3 2025. Progress over 25% as of Q1 2026. Entry into the Gulf of Mexico with a new customer. (Cited: Q3 2025, Q1 2026)
FPSO Longtail FEED conversion to EPC (ExxonMobil Guyana): FEED contract awarded in March 2026. If Longtail converts to a full EPCI contract, it would add a sixth Guyana FPSO to the portfolio and further entrench the ExxonMobil franchise. Management noted 16 projects in the "sweet spot" for the next three years as of the FY 2025 call. (Cited: Q1 2026)
Petrobras SEAP 1 and SEAP 2 bids outstanding: SBM submitted competitive bids for both tenders in Q3 2025. An award would materially expand the backlog and extend Brazil activity. Outcome not yet known. (Cited: Q3 2025)

"We have submitted our most competitive bids for the SEAP 1 and SEAP 2 tenders from Petrobras." - Q3 2025 concall, November 2025

Two new Fast4Ward MPF hulls ordered in Q1 2026: SBM now has four hulls under construction. These hulls represent optionality to respond rapidly to new FPSO awards without waiting for hull fabrication lead times. This positions the company for front-of-the-queue advantage when Namibia, Longtail, and SEAP decisions are made. (Cited: Q1 2026)
ExxonMobil ONE GUYANA purchase completed (delivered trigger): SBM guided in Q3 2025 that ExxonMobil had indicated its intention to exercise the purchase option for ONE GUYANA in early 2026. This was delivered in February 2026 for $2.32 billion, cutting net debt by 43% and providing $440 million in shareholder returns. (Cited: Q3 2025, delivered in Q1 2026)
16-prospect pipeline for next 3 years: Management outlined a funnel of 16 identified FPSO prospects fitting SBM's "sweet spot" during the FY 2025 call. This includes opportunities in Guyana (Longtail, Hammerhead), Brazil, Suriname, Namibia, and potentially Southeast Asia. (Cited: FY 2025)

"We see 16 prospects in our sweet spot over the next three years - this market visibility has never been stronger." - FY 2025 concall, Feb 26, 2026

Minimum $2.1 billion shareholder returns through 2031: Management committed in FY 2025 and reiterated in Q1 2026 to a minimum of $2.1 billion in aggregate returns through 2031 (now raised to $2.1 billion from the prior $1.7 billion through 2030). This is not a growth trigger per se but a capital discipline commitment with significant magnitude. (Cited: FY 2025, Q1 2026 - repeated)
Blue Ammonia FPSO and carbon capture FPSO designs advancing: ABS Approval in Principle received for Blue Ammonia FPSO design in Q3 2025 and for carbon capture-equipped FPSO design by FY 2025. These position SBM for low-carbon energy infrastructure contracts when commercial demand materializes. (Cited: Q3 2025, FY 2025)
SLB and Cognite digital alliances operational: Exclusive alliance with SLB for AI-driven FPSO performance optimization, plus strategic collaboration with Cognite for fleet management - both operational as of late 2025. These are positioned as enablers for uptime improvement and potential new commercial services. (Cited: Q3 2025, FY 2025)

Trigger	Timeline	Concall Source	Status
FPSO Jaguar delivery	2027	Q3 2025, Q1 2026	Repeated, on schedule
FPSO GranMorgu delivery	2028	Q3 2025, Q1 2026	Repeated, on schedule
FSO Chalchi delivery	2026	Q3 2025, Q1 2026	On schedule
Longtail FEED to EPC conversion	TBD	Q1 2026	New, FEED just awarded
SEAP 1 and SEAP 2 Petrobras awards	TBD	Q3 2025	Bids submitted, awaiting
2 new MPF hulls ordered	Q1 2026	Q1 2026	New, delivered
$2.1B shareholder returns 2026-2031	Through 2031	FY 2025, Q1 2026	Repeated commitment
16-prospect pipeline	Next 3 years	FY 2025	New
Blue Ammonia / Carbon capture designs	Long-dated	Q3 2025, FY 2025	Repeated, regulatory milestone

SECTION 8: KEY RISKS

1. Oil Price Collapse and Capital Expenditure Deferral

The mechanism: if oil prices sustain below $50 per barrel, deepwater field development economics come under pressure (though SBM notes breakeven costs of $20-35 per barrel for its target fields, suggesting considerable cushion). More immediately, oil company boards become risk-averse and defer final investment decisions on new deepwater projects. SBM's Turnkey backlog - currently in execution - is not at risk of cancellation, but the 16-project prospect pipeline would shrink and timelines would extend. This is a high-probability moderate drag in a sustained low-oil-price environment, and a low-probability catastrophic risk in a 2014-2016-style price collapse.

In Q1 2026, CEO Oivind Tangen was asked directly about oil price volatility and stated: "We do not anticipate a material impact from the current geopolitical situation on our operations or financials." The existing backlog, with revenue visibility through 2050, provides insulation from short-term price moves.

2. Project Execution Risk on Complex FPSOs

Each newbuild FPSO is a multi-billion dollar one-of-a-kind project with hundreds of vendors, multiple fabrication yards, complex offshore installation, and zero margin for error on first-oil timing. Cost overruns and schedule slippage are endemic in large capital projects. SBM manages this risk through Fast4Ward standardization, modular construction, and what it calls "industrialized execution." But the risk never disappears. An execution failure on FPSO Jaguar - a late delivery, a technical defect, a subsea interface problem - could crystallize penalties, damage the ExxonMobil relationship, and impair Turnkey margin.

Management acknowledged this generically: "Market volatility, project execution delays, and regulatory changes remain potential headwinds to financial performance" (FY 2025 concall). The FY 2022 call was more vivid: "Our yards in China have been disrupted by COVID-19 lockdowns and the war in Ukraine has contributed to logistical problems and inflationary pressure." The Fast4Ward program is specifically designed to reduce this risk, but it cannot eliminate it.

3. Customer Concentration - Petrobras and ExxonMobil Guyana

Petrobras and ExxonMobil together likely account for well over 50% of SBM's contracted backlog. Petrobras in particular has a history of governance crises (Operation Car Wash) and politically-driven capex decisions that can affect FPSO procurement timelines. If Petrobras faces financial stress, leadership change, or political intervention that reshapes its deepwater investment program, SBM's Brazil pipeline would contract significantly. Similarly, while ExxonMobil's Guyana franchise is exceptionally profitable and unlikely to be curtailed, any change in Exxon's strategic priorities for Guyana would affect multiple FPSO generations.

4. The Shift from Lease to Operate-Only - Recurrence Risk

The ExxonMobil model of "build it, sell it, operate it" reduces SBM's leverage but also reduces the longevity of contracted cash flows compared to owning the vessel for 20 years. If this model becomes standard - where all customers prefer to own the FPSO and just hire SBM as an operator - SBM's Lease and Operate backlog would gradually convert to shorter-tenure, lower-margin O&M contracts. This is not an immediate threat (the L&O segment still has decades of contracted revenue), but it represents a structural shift in the business model that management needs to navigate carefully.

5. Compliance and Corruption Risk in Frontier Markets

SBM paid approximately $700 million in bribery settlements related to conduct between 2005 and 2011. The compliance program has been substantially upgraded. But the company continues to operate in exactly the kinds of markets - West Africa, Guyana, Suriname, Brazil - where corruption risk is elevated. A new compliance incident would be commercially and reputationally catastrophic, given the history. Management mentions the enhanced compliance systems, but the geographic footprint of the business inherently carries this exposure.

6. Fast4Ward Hull Inventory Risk

Ordering MPF hulls on a speculative basis before customer contracts are signed creates inventory risk. If SBM orders four hulls and the FPSO market softens - fewer awards, longer lead times between decisions - the company could be carrying stranded hull assets, paying interest on financed hulls with no near-term revenue. This risk is manageable at modest scale but grows with the number of pre-ordered hulls.

7. Long-Term Energy Transition

If global oil demand declines materially by the mid-2030s - whether from electric vehicle penetration, industrial efficiency, or policy intervention - the pipeline of new deepwater FPSO projects beyond 2030 would thin. SBM's contracted backlog extends through 2050, protecting existing cash flows, but growth would stall. The Ekwil and low-carbon FPSO design investments are hedges against this scenario, but they are early-stage and unproven at commercial scale.

8. Financing Environment

FPSO construction is financed through project finance - non-recourse debt secured against the vessel and charter contract. If credit markets tighten, interest rates rise, or ESG-motivated lenders restrict offshore oil financing, the cost of project finance rises and some projects become uneconomic. SBM's recent shift toward the ExxonMobil "transfer before installation" model partially addresses this - if customers own the asset, SBM does not need to finance it.

SECTION 9: WALK THE TALK

Four concalls used:

H1 2025 (August 7, 2025)
Q3 2025 (November 2025)
FY 2025 (February 26, 2026)
Q1 2026 (May 7, 2026)

The most recent is from today - well within the 90-day window.

SBM Offshore's management under CEO Oivind Tangen and CFO Douglas Wood has demonstrated a consistent pattern of conservative guidance followed by modest beats. Across all four concalls reviewed, the company set guidance at the start of a period, raised it at the midpoint, and then delivered results at or slightly above the raised guidance. This is a deliberate and recognizable investor relations posture - setting achievable targets and over-delivering against them - and the execution has been genuine rather than manufactured.

H1 2025 to FY 2025 arc: At the start of 2025, SBM guided for full-year Directional revenue above $4.9 billion and Directional EBITDA around $1.55 billion. When the H1 2025 call came in August, with the fleet having delivered three major FPSO startups in six months, management raised revenue guidance to above $5.0 billion and EBITDA to above $1.6 billion. At Q3 2025, with year-to-date revenue running at $3.571 billion and the operational momentum clear, management raised EBITDA guidance again to around $1.65 billion while maintaining the revenue floor.

When FY 2025 results arrived in February 2026: Directional revenue of $5.1 billion and Directional EBITDA of $1.7 billion. Management beat the final raised guidance on EBITDA by $50 million and on revenue. The pattern - initial guidance set conservatively, sequentially raised as execution unfolds, then beaten on delivery - reflects a management team that knows its business deeply enough to forecast accurately while maintaining upside optionality.

The ONE GUYANA purchase - a trackable call: In the Q3 2025 concall, management stated that ExxonMobil Guyana had indicated its intention to exercise the purchase option for FPSO ONE GUYANA in early 2026. This was a specific, time-bound, commercially material commitment. The outcome: SBM announced the completion of the FPSO ONE GUYANA purchase by ExxonMobil Guyana in February 2026, for a total consideration of $2.32 billion. Delivered precisely as guided.

Shareholder returns commitment - progressive escalation: At the H1 2025 call, management was guiding a minimum of $1.7 billion in cash returns from 2025 through 2030. By the FY 2025 call, that commitment had been elevated to a minimum of $2.1 billion through 2031. By Q1 2026, the $440 million 2026 return was underway - $100 million dividend paid in May, $270 million buyback 18% complete. The direction of travel is consistently toward more shareholder capital, not less.

Fleet uptime - a promise kept across all four periods: Management consistently targets above 99% fleet uptime and has delivered it. Q1 2025: 99.5%. H1 2025: 99.4%. Q3 2025: 99.4% year-to-date. FY 2025: 99.1% for the full year (the slight softening attributable to the operational ramp on the three new vessels). Q1 2026: 97.9% - slightly lower, driven by early-stage operating challenges on the new Brazlian fleet additions and potentially seasonal factors. Management has not provided specific explanation for the dip in Q1 2026, which is worth monitoring.

What was not delivered or quietly shifted: The Q1 2025 call guided Turnkey 2025 revenue at approximately $2.7 billion. Full-year Turnkey came in higher than that as FPSO execution progressed faster than the initial plan. This was an upside miss, not a downside one. No explicit guidance has been missed or dropped across the four periods reviewed.

Overall assessment: This is management that does what it says, sets achievable targets, and executes. The Tangen/Wood team inherited a company that had just emerged from multi-year bribery settlements and has built a credibility track record that matches the operational track record. The quarterly guidance-raise-then-beat cadence is deliberate and consistent. The ONE GUYANA call-and-delivery is the most illustrative data point - a specific commercial outcome guided publicly, delivered on schedule.

SECTION 10: SHAREHOLDER FRIENDLINESS INDEX

SBM Offshore has meaningfully improved its capital return program over the 2022-2025 period, moving from a relatively modest dividend-only framework to a combined dividend-plus-buyback program that has increased in magnitude every year.

Financial Year 2022 (calendar year, reported Feb 2023)

SBM paid a dividend of €0.9137 per share in May 2022. This represented a 10% increase from the prior year. No share repurchase program was active in 2022. The FY 2022 earnings call cited "record-level underlying EBITDA" and the dividend increase was framed as a signal of management confidence in cash generation. At the time, the company was building six FPSOs simultaneously - a massive capital commitment - so restraint on buybacks was understandable.

Financial Year 2023 (reported Feb/Mar 2024)

The annual dividend increased to €0.9959 per share, paid May 2023 - a further sequential increase. Alongside the FY 2023 earnings release in February 2024, SBM announced its first formal share repurchase program: €65 million authorized, effective March 1, 2024. This was a significant signal - the company signaling that its balance sheet was in sufficient shape to return cash beyond dividends. The €65 million buyback was doubled to €130 million in August 2024 (at the H1 2024 results), bringing the combined 2024 repurchase program to €130 million. A total of 7,978,332 shares were repurchased under this program through April 2025, at an average price of €16.29 per share.

Financial Year 2024 (reported Feb 2025)

The annual dividend paid May 2024 was €0.7651 per share - a decline in per-share terms versus 2023. This apparent reduction is slightly misleading: the dividend policy was being restructured from a single annual payment to a semi-annual framework, and the absolute aggregate dividend amount was reconfigured alongside the larger buyback program. Total shareholder returns in 2024 (dividend plus buyback) grew substantially. A new €141 million share repurchase program was announced in February 2025 (effective April 24, 2025), replacing the completed €130 million program.

Financial Year 2025 (reported Feb 2026) and 2026 Program

The full transition to a combined and substantially larger capital return program:

Dividend paid May 2025: €0.8606 per share
€141 million buyback program completed: 5,851,920 shares repurchased. SBM cancelled 5 million shares (2.8% of issued share capital) in November 2025.
Aggregate 2026 cash return: $440 million total ($270 million share repurchase + $200 million in aggregate dividends), representing a 57% year-on-year increase.
The policy shifted to semi-annual dividends: US$100 million for FY 2025 (paid May 13, 2026 at €0.5009 per share) and US$100 million interim dividend for H1 2026 (scheduled September 2026).
As of May 6, 2026, the $270 million buyback was 18% complete.

Six-year commitment: Management has committed to returning a minimum of $2.1 billion to shareholders through 2031, with "further upside potential" from new contract awards or asset sales.

Net share count trajectory: Share cancellations (5 million in November 2025, 7.9 million through the earlier program) have reduced the share count. EPS is improving in part through this mechanism. The company is a genuine net returner of capital, not merely an issuer of new shares offset by nominal buybacks.

Assessment: Over the 2022-2025 window, SBM moved from a single-instrument (dividend only) to a dual-instrument (dividend plus meaningful buyback) capital return framework that has grown consistently in absolute magnitude. The 57% jump in 2026 returns is partly one-off (ONE GUYANA sale proceeds) but the semi-annual dividend framework and the $2.1 billion through-2031 commitment suggest management is institutionalizing higher returns. The payout ratio of approximately 18% at current dividends is conservative, giving room to sustain the program through a cyclical downturn. Shareholder friendliness rating: improving strongly, now materially above-average for the oil services peer group.

SECTION 11: SCENARIOS

Bull Case

Oil demand stays resilient through the late 2020s, driven by Asian consumption and the structural underinvestment of the past decade. Petrobras sanctions two new pre-salt FPSO projects - SEAP 1 and SEAP 2 - and SBM wins at least one, adding to a backlog that already extends to 2050. ExxonMobil converts the Longtail FEED into a full EPCI contract, locking in SBM as the builder of the sixth Guyana FPSO and cementing a sole-source franchise on the Stabroek Block that will run through the mid-2030s. TotalEnergies sanctions an additional Suriname development, and Namibia's Orange Basin - potentially one of the world's largest undeveloped deepwater resources - enters FID with SBM winning the FPSO contract. Meanwhile, the energy transition evolves more slowly than feared, and SBM's low-carbon FPSO designs and Blue Ammonia FPSO give it a head start in the first genuinely low-carbon deepwater production vessels. The Lease and Operate portfolio stabilizes after the transition to O&M-only for ExxonMobil, generating stable EBITDA that funds the next generation of Fast4Ward construction. Ekwil wins its first commercial floating wind contract, opening a second growth vector. Net debt falls to near zero by 2028 as ONE GUYANA proceeds combine with steady free cash flow. Shareholder returns comfortably exceed the $2.1 billion 2031 commitment.

Base Case

The existing project pipeline executes broadly as planned. FPSO Jaguar delivers in 2027, GranMorgu in 2028, Chalchi on schedule. SBM wins one of the Petrobras SEAP tenders and the Longtail FEED converts to EPC after FID in 2027. The company maintains its position as a top-two FPSO provider with a balanced mix of Lease and Operate (diminishing as ExxonMobil shifts to O&M only) and Turnkey construction. EBITDA grows from $1.7 billion in 2025 toward $1.8-2.0 billion by 2027-2028, consistent with guidance. Net debt deleverages on plan to well below $3 billion by 2028. The $2.1 billion shareholder return commitment through 2031 is met. Ekwil remains in early commercial development with no material revenue contribution in the period. Oil prices stay in the $65-80 range, sufficient to support all planned deepwater FIDs. The Fast4Ward hull inventory - four hulls under construction - absorbs into new contract awards at the expected cadence.

Bear Case

Oil prices fall sharply and sustain below $50 per barrel for 12-18 months, triggered by a combination of demand disappointment from faster-than-expected EV adoption in China and a supply surge from a fractured OPEC+ agreement. Petrobras, facing lower oil revenues and political pressure to increase domestic social spending, defers SEAP 1 and SEAP 2 indefinitely. ExxonMobil delays the Longtail FID, keeping SBM in FEED rather than converting to construction. TotalEnergies deprioritizes a second Suriname development. SBM's four pre-ordered Fast4Ward hulls sit in Chinese yards with no allocated contracts, generating financing costs without offsetting revenues. The Brownfield Services market grows slowly. Net debt deleverages more slowly as asset sales are less attractive in a low-oil environment. Shareholder returns are maintained at the committed minimum level but do not grow. In this scenario, SBM is not existentially threatened - the existing contracted backlog generating $8.4 billion in net cash flows is durable regardless of oil prices - but growth stalls, the share count reduction slows, and the company enters a period of consolidation rather than expansion. Ekwil burns cash without clear commercial wins.

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