Saipem S.p.

A
"Full Year 2023 Results and Strategy Update Conference Call"
Thursday, February 29, 2024, 10:30 CET

MODERATORS: ALESSANDRO PULITI, CHIEF EXECUTIVE OFFICER AND GENERAL

MANAGER
PAOLO CALCAGNINI, CHIEF FINANCIAL OFFICER
OPERATOR: Good morning, this is the Chorus Call conference operator.
Welcome and thank you for joining Full Year 2023 Results and
Strategy Update Conference Call. As a reminder, all participants
are in a listen-only mode. After the presentation, there will be an
opportunity to ask questions. Should anyone need assistance during
the conference call, they may signal an operator by pressing "*" and
"0" on their telephone.

At this time, I would like to turn the conference over to Alessandro

Puliti, CEO and General Manager of Saipem. Please, go ahead, Sir.

ALESSANDRO PULITI: Good morning and welcome to Saipem 2023 full year results
presentation and strategy update. I'm here with our CFO, Paolo
Calcagnini and with the rest of the top management team. We will
start with a review of the key achievements of 2023 and will then
go through the 2024-2027 strategic plan, including our financial
targets and the expected capital allocation.

Let's start with the highlights of the fourth quarter 2023. I'm
pleased to report that we delivered another quarter of strong
execution. We achieved revenue growth of 20% year-on-year and
16% quarter-on-quarter, largely driven by the contribution of our
offshore activity.

EBITDA growth was also strong at 91% year-on-year and 24%

quarter-on-quarter. In particular, EBITDA in quarter 4, 2023 was
the highest since the last quarter of 2019, and we have grown
EBITDA consistently since Q4 2022. EBITDA margin stood at 8.1%,
reflecting the strong progress made on E&C offshore and the
progressive reduction in the weight of the legacy projects.

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In Q4 2023, Saipem generated €91 million of total cash flow,
reaching a record-level position on net cash of €216 million. The
order intake in Q4 was also very robust, with €5.7 billion
representing a 10% increase compared to the €5.2 billion recorded
in Q3 and implying a book-to-bill of 1.6 times. Once again, the E&C
offshore portion of the order intake continues to be significant. In
summary, Q4 2023 was another quarter of operational delivery and
financial growth, consistent with our objectives.

The work we have undertaken in the last two years has been aimed
at restating a trajectory of profitable growth and cash flow
generation. And that is exactly what we achieved. The strong
trajectory, both in terms of revenues and EBITDA, is now converting
into positive cash flow.

The operating cash flow we have generated in 2023 has more than
offset the negative operating cash flow of 2022. Let's now focus on
the main achievements of 2023. The order intake last year stood at
€18 billion, of which two thirds related to the E&C offshore
projects. The order intake of the year included €3 billion of subsea
activities. We have experienced another order intake growth for
more than 30% year-on-year.

The backlog at the end of 2023 stands over €30 billion, with more
than half of it related to E&C offshore activities, including close to
€4 billion of subsea projects. Our backlog has grown by 24% year-
on-year. The progressive shift of our backlog toward offshore E&C
is a remarkable achievement, which reflects on one hand the
strength of the overall market, but also the ability of Saipem in
capturing opportunities.

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This shift was part of the plan we executed in the last two years
and remains a core pillar of our updated strategy. The current
backlog provides us a high level of visibility in terms of revenues
for 2024-2027 Plan. We will most likely increase the level of
visibility in the first few months of 2024 through some sizable new
awards that we are currently working on.

Progress in the execution of legacy projects continues at a

sustained pace. Those projects today account in our backlog for
less than €2 billion, corresponding to less than 10% of our total
backlog. More importantly, the expected residual cash flow related
to the legacy project is marginal, estimated at €100 million for
2024.

Cash flow generation is becoming almost an obsession here in

Saipem. In 2023, operating cash flow stood at €586 million and free
cash flow stood at €248 million. This has allowed us to reduce our
gross debt by more than €200 million in 2023.

Another important area of work that has kept us busy in the last 2
years has been to transform Saipem into a more reliable and
predictable company. What we are pleased to report is that for the
second year in a row we have met our objectives over-performing
our guidance.

For 2023, we are particularly pleased that we have performed well

in terms of deleveraging and cash flow generation, on top of having
delivered solid results in terms of revenues and EBITDA.

I will now hand over to Paolo for a review of the financial results.

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PAOLO CALCAGNINI: Thank you, Sandro, and thanks everyone for joining the call today.
Let's start from the Slide #9 which shows the 2023 results compared
to 2022. As you can see from the right-hand side of the slide, our
operating cash flow was positive for €586 million despite spending
€380 million on legacy projects. We see it as a remarkable result
that shows how we turn margin improvements into cash generation.

Moving leftward, our net result was €179 million with more than a
€100 million coming from the fourth quarter 2023 which was the
best quarterly net result since Q3 2013. This was also the fourth
consecutive quarter that we have positive net income.

EBITDA grew by 56% year-on-year to €926 million with an EBITDA

margin increasing from 6% to 7.8%. I would also like to point out
that in 2022, we deducted €52 and €70 million of one-off cost from
EBITDA and net results respectively, but there are no adjustments
for 2023 results.

Let's now go through the different business lines and let's start with
Asset Based Services on Page 10. The business line reported €6.1
billion in revenues which increased by 21% compared to the
previous year, showing a good performance across all main regions
in delivering projects. The revenue growth has been particularly
strong in Q4 2023 versus the previous quarter, due to the start of a
few recently acquired projects such as NFPS 2 in Qatar, Mellitah in
Libya, and Sakarya in Turkey.

EBITDA was €614 million, with a margin of 10.1% rising almost 200
basis points compared to the year 2022. The main factors here are
a better revenue mix, more subsea projects and more contribution
from projects that were awarded in 2022 and 2023, that reflect

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improved market conditions, and also due to the high utilization
rate of the main vessels. Plus, the wind offshore projects that we
completed in the past two years, including NNG, have also helped
us to improve the EBITDA margin and cash flows and we expect this
trend to continue in 2024.

Moving to Page 11 and where you see Offshore Drilling results,

revenues grew 32% compared to the previous year. EBITDA was up
73% from €174 to €301 million with an EBITDA margin which is
slightly above 40%, as opposed to 31% in 2022. The performance
improvement came mainly from three factors: two new vessels that
entered the fleet in 2023, namely the DVD and the Perro Negro 11,
the increase of the market day rates, especially for deep-water
vessels, and higher utilization of several key vessels, in particular
the semi-sub Scarabeo 8 and the jack up Perro Negro 8, that went
through maintenance activities in 2022. We expect that both
revenues and EBITDA will grow in 2024 compared to the previous
year because of a combination of higher average daily rates and a
larger fleet and more usage.

Moving to Energy Carriers on Page 12, you can see revenues that
grew by 15% year-on-year, on a relatively stable backlog. Growth
was led by higher volumes in the Middle East, Sub-Saharan Africa
and Americas. Most importantly, growth was also the result of the
increased pace at which projects are being executed and therefore
a signal of healthy operations.

On the other hand, EBITDA margin is still close to zero for the
reasons that we have already discussed during the previous
quarterly presentation. First, the weight of the legacy projects is
still material on overall revenues, accounting for more than 30% of

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the total in 2023. Second, the projects acquired during the new
cycle, let's say the last 11 - 18 months, still have a limited effect
on the P&L of the division, but will accelerate in 2024.

In fact, in 2024, while we expect further progress on the execution

of the legacy projects, we also foresee a higher contribution from
recently awarded projects, such as Hail and Gasha, and stronger
contribution in the overall mix.

Let's have a look at the overall P&L on Slide 13. I would like to
remind you that in 2023 our reported results matched our adjusted
ones because there were no special items. In contrast, in 2022 we
had €52 million of special items on the EBITDA and €70 on the net
results. We have already discussed the net results and the EBITDA,
so I would like to point out some items below EBITDA.

First is net financial expenses that went down from €195 to €167
million in 2023, mainly because of lower interest and fees and more
income on cash in 2023. The reduction in interest and fees was
partially balanced by the increase in hedging cost on currency
exposures because of higher level of activities overall.

The result from equity investments was positive by €60 million last
year, while it was negative for €65 in 2022. The increase in the
result from equity investments is mainly due to the positive results
of non-consolidated companies and by the disposal of non-core and
non-consolidated assets.

Finally, income taxes amounted to €145 million, substantially in

line with 2022, notwithstanding the higher income we reported.
This is due to two factors. First, part of the taxes are withholding

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taxes that are paid on revenues rather than on net results and on a
tax reimbursement on corporate income tax that we received in
2023. For the full year 2024, we expect taxes at around €160 - €180
million.

And moving to Page 14 where you see the cash flows. At the end of
2023, we had a net cash position of €216 million before IFRS16,
with an improvement of €91 million versus the end of the previous
quarter and €160 million versus the beginning of the last year. The
positive outcome was made possible by the generation of €586
million of cash flows from operations driven by strong operational
results and by a reduction in the working capital, that more than
offset the €382 million negative cash flow that comes from the
legacy projects.

CAPEX amounted to €483 million, marginally above the €450 million

of our guidance, but this amount includes the €92 million that we
spent for the acquisition of the Sea Lion 7 in December of the last
year, while the remaining CAPEX were mainly related to the fleet
maintenance. We also had the €145 cash inflow from the sale of
non-core activities, mainly related to the Cidade de Vitoria FPSO
and a few other disposals that occurred in the last year.

Net debt post IFRS16 was €261 million after the effect of €477
million of lease liabilities. I think that the €157 million increase in
the lease liabilities deserves a few words of explanation. Two
factors closely related to our capital light strategy have driven the
increase:

1) we are extending the leasing contracts as we have more clarity

and visibility on the amount of work that we need to do over the

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next two to three years. In fact the average length of the lease
contracts went up by 60% from 0.8 to 1.3 years. In accounting
terms, longer contracts raise the value of the lease liability.

2) we signed contracts for new vessels as we are expanding our

operational capacity. This reflects our plan to avoid investing in
more vessels and to keep our operations adaptable in the medium
term, while still benefiting from the market growth. Our CEO will
talk more about this later in the presentation. The fleet is expected
to keep expanding through leasing agreements in 2024 and this is
meant, as I said, to ensure more capacity to handle the high
demand and backlog for the offshore E&C projects.

Let's now have a look at the liquidity and debt structure at the end
of 2023. We are at Page 15 of the presentation. In Q4 2023, we
repaid €311 million of debt, of which €120 to a tender offer on the
2025 bonds, €150 with the prepayment of banking facilities and €41
of repayments of other financial debts. Overall, in 2023, we have
reduced the gross debt by €237 million and extended the average
debt maturity from 2.6 to 3.1 years.

As you can see from the waterfall chart with the blue bars on the
right side of the chart, our liquidity position substantially covers
our gross debt maturities until the end of 2026. In terms of financial
strategy, as you can see, we have no significant maturities this
year. However, we may pursue some further debt optimization
through new liability management actions on an opportunistic
basis. As we will see later in the presentation, we expect a
substantial cash flow generation in the next four years, 2024-2027,
and this will lead to a reduction in gross debt over the business plan
horizon.

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 I will now hand over to Sandro for an update on our strategy.

ALESSANDRO PULITI: Thank you, Paolo. And let's now move to the strategic update. Let's
focus on the key strategic developments of the last two years. In
terms of strategic refocus, we completed the disposal of the drilling
onshore business, which we deemed no longer having a strategic fit
with Saipem. We have proactively shifted our backlog to offshore
E&C, representing two thirds of the overall order intake of the last
two years, as well as strengthened our value proposition in gas and
low carbon projects.

We’ve continued to be very selective in the E&C onshore

acquisition, by focusing on fertilizing plants and integrated
projects, where we deliver the entire One Saipem to our clients.
And lastly, we have implemented a capital light vessel strategy to
retain flexibilities versus market cycles. This approach will
continue throughout the plan.

On the change management side, we have instilled across the

entire organization a very strong focus on cash flow generation and
a higher finance discipline in making capital allocation decisions.
In addition, we have centralized the bidding process and as such
facilitated the application of the One Saipem approach. We’ve also
focused on reducing our cost base through a rationalization of our
global footprint, something that will also continue in 2024 and
beyond.

Lastly, we have also reinforced management objectives and better

aligned incentives. All these actions represent the foundation of
the plan we are presenting today. Our updated strategy and

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business plan is based on five pillars, namely: Execution Excellence,
One Saipem, Operational and Financial Flexibility, Innovation and
Energy transition solution, and Dividends. All these five pillars are
supported by our focus on health and safety and business ethics.

Let me go through the five pillars in more details. Execution

excellence means maximizing the value creation from the existing
backlog through a stronger integration of Saipem competencies and
the optimization of our asset utilization schedule. One Saipem
means leveraging on our unique capabilities both offshore, onshore
E&C and drilling and continue to win large integrated projects,
some of them might be announced soon.

Operational and financial flexibility means maintaining a capital

light approach on vessel, rationalizing our global footprint,
maintaining a sound capital structure and strong financial
discipline, with the objectives of being more resilient to potential
market downturns. Innovation and energy transition solution means
on one hand to strengthen our commercial focus on offshore wind
but also CCUS, hydrogen and ammonia and it means to further
develop a portfolio of options of other innovative technologies.

Lastly, our new plan entails, for the first time in many years, an
attractive and sustainable stream of dividends being distributed to
our shareholders. We aim to distribute 30% to 40% of our cash flow,
sharing with our shareholders a tangible portion of the value we
create, whilst, at the same time, maintaining flexibility to further
invest in the energy transition.

Let's now focus on a couple of topics that are key to Saipem, namely
our vessel strategy and our readiness in terms of energy transition.

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Starting from our vessel strategy, we are clearly witnessing a
booming market as far as offshore engineering and construction is
concerned. We have decided to tackle the strong demand from our
clients through a flexible vessel strategy based on securing capacity
through leasing, as opposed to buying. This strategy is aimed at
retaining flexibility in order to better weather the market cycles.

As you have seen from our financials, we have increased materially

our leasing commitments in 2023. We have also increased the
average duration of the leases of the E&C vessels from less than
one year at the end of 2022 to 1.3 years at the end of 2023. This
activity will also continue in 2024, as we secure more vessels to
perform the work we have been awarded by our clients. This will
also lead to a further rejuvenation of our fleet.

An example of this approach is the leasing of the JSD, which is the

last generation deep water heavy lift and pipe laying vessel. We
moved very fast with the leasing agreement in 2023 versus our
competitor and the vessel is scheduled to be delivered to Saipem
by mid-2024 and we have already fully booked the schedule of
works until mid-2026, with the project planned in the Far East,
South America and Mediterranean Sea.

As a global and diversified energy service company, Saipem will

continue to play a leading role in supporting its clients in the energy
transition. Our thesis is simple: the energy transition will be
delivered by engineering company that have the technologies and
the strong project management capabilities. Saipem can leverage
on a strong positioning and execution both offshore and onshore
projects and we're also able to deliver both upstream and
downstream solution.

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Over the years, we have gained significant experience in fixed
foundation for wind farms and we have proprietary solution in
floating wind in particular with the STAR 1 design which has been
certified by DNV. We have also a lot of experience in handling CO2,
a field where we have developed a proprietary carbon capture
technology, called Bluenzyme. In the next four years, we will also
make further progress on bio refineries, also through the
agreement with Eni.

Alongside the energy transition, let me remind you that we are

already very attractive in building sustainable infrastructure, such
as high-speed railway and we have a long-standing track record in
fertilizers, also thanks to our proprietary urea technology. In a
nutshell, through our consolidated track record and portfolio
capabilities, we are ready to support our clients in the energy
transition in whatever form or whatsoever pace it will unfold. And
we will do this from a position of strength, backed by a strong
momentum in the oil and gas market.

We are particularly confident about the business plan we are

presenting today as we have already a very high degree of visibility
on the top line. The visibility is likely to increase further in the first
part of this year.

Our 2024 revenues are already 90% covered by the existing backlog
and for 2025, we are 70% covered. Overall, almost two thirds of the
revenues of the entire plan are covered. More importantly, the
quality of our current backlog, the overweight portion of offshore
activities including both E&C and Drilling, and the fact that the
current backlog has mostly been acquired in the last two years, also

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through the de-risk contractual mechanism, make us very confident
in achieving our short-term guidance and medium-term targets.

Our current backlog grants us a very high level of visibility for the
next two years. In addition to execute the current backlog, we
expect to win approximately €50 billion worth of project in 2024 -
2027, which compares well with the €47 billion order intake in the
last four years. The expected order intake for 2024 -2027 is backed
by solid assumption, also considering the strength of the overall
energy cycle, in particular in the offshore market.

The bulk of the order intake is expected in offshore E&C, including

wind, and onshore E&C, together making almost 90% of the total
order intake. We expect €16 billion of the order intake to be
related to low carbon projects, well distributed across offshore
wind, sustainable infrastructure, Blue solution and CO2
management and bio refineries.

It is also important to note that we expect to win several integrated

projects under the One Saipem approach, where we will offer to
our clients both offshore E&C and onshore E&C capabilities, in a
similar fashion to the other projects we won in the past, such as
Hail and Gasha, Quiluma & Mabuqueiro, Baleine, Cassiopeia and
Zohr Field.

For 2024, we expect revenues in a range of €12.7 to €13.3 billion

and to achieve an EBITDA margin of approximately 10%, bringing
forward by one year the profitability target of the previous plan.
Operating cash flow post lease payment is expected in a range of
€740 - €780 million. We plan to spend €440 - €480 million in

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maintenance CAPEX this year. This means a total cash flow of
approximately €300 million for 2024.

As already mentioned, we have a very strong visibility on our top

line with the current backlog making approximately 90% of the
expected revenues for 2024. When it comes to medium-term
targets, we expect revenue to grow at an average annual rate of
4% to 5% from 2023 to 2027, with the bulk of the growth
materializing between 2023 and 2025 and then a flatter profile to
2027.

Our target EBITDA margin in 2027 is 12%. We expect a relatively

stable margin between 2024 and 2025 and a stronger margin
increase in '26 and '27. Overall, throughout the plan, we expect to
generate a total operating cash flow post lease payment of
approximately €3 billion and to spend CAPEX for €1.4 billion. This
will lead to a cash flow generation post lease payment of
approximately €1.6 billion between 2024 and 2027.

Throughout 2024 to 2027, we plan to distribute dividends to

shareholders equal to 30% to 40% of the free cash flow post lease
payment, which means distributing a total of €500 to €600 million,
which is close to a third of the €2 billion equity raised by Saipem in
2022. The portion of the cash flow that will not be distributed will
be utilized to further deleverage the company and possibly to
accelerate investments in asset and technologies to support our
clients in the energy transition.

Thank you for your attention and we can now turn to the Q&A
session.

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Q&A

OPERATOR: Excuse me, this is the Chorus Call conference operator. We will now
begin the question and answer session. Anyone who wishes to ask a
question may press "*" and "1" on the touchtone telephone. To
remove yourself from the queue, please press "*" and "2." Please
pick up the receiver, when asking questions. Once again that’s "*"
and "1" for questions.

The first question is from Alessandro Pozzi from Mediobanca. Please

go ahead.

ALESSANDRO POZZI: Hi, good morning. Well done with this update. The results and
guidance look like well above our consensus. I have a few questions
here – I'll just try to limit myself to a couple. The first one is on the
cumulative order intake of €50 billion: I think a small upgrade
versus last year of €48 billion and it implies like €12.5 billion per
year. What are your assumptions behind this number? Can you talk
about the number of vessels new and leased that you need to
achieve this target? Can you also maybe talk about how you see
your utilization rates across the offshore E&C fleet evolving over
the plan? And whether you have captured some of the potential
opportunities in new regions like Namibia, for example, or Latin
America? And whether it reflects the postponements of projects in
Saudi Arabia as it was announced at the start of the year? Also, I
would be keen to know what type of lease payments you have
backed into the new operating cash flow guidance and if you can
give us maybe more color on where you will spend the CAPEX over
the next few years – I think there is a small increase versus the
previous targets. Thank you.

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ALESSANDRO PULITI: Okay, thank you. I will reply to your first question while the second
one will be handled by Paolo. So, our cumulative order intake
assumption versus our vessel fleet – how the two things they do
match together and which is the expectation. So, the order intake
assumption is based on our current fleet. So, we didn't speculate in
any new vessel coming. Clearly, a new vessel that will come in an
opportunistic way, if this will be supported by the market and the
demand. But what it is in our current and what we presented as
order intake is fully supported by our existing vessel fleet.

Regarding your point on the possible postponement of some project

in Saudi, you know that the plan was containing already when it
was prepared a reduction of the weight of the Saudi order intake
during the plan. So, we were having, for example, expecting an
order intake around 20% less than what it has been the order intake
between the period 2021 to 2023. So, the recent announcement
basically has no effect on the plan that we presented. On top of
that, clearly, I would like also to stress that our asset light strategy,
capital asset light strategy when it comes to vessel, allows you, in
case, to reduce our, for example, number of jack up as necessary
without impact on the plan that we presented.

So, now I will hand over to Paolo for the second part.

ALESSANDRO POZZI: What was the order intake between 2021 and 2023 and are you
factoring in new opportunities like West Africa, Namibia and Latin
America?

ALESSANDRO PULITI: Oh yes, definitely we are factoring new opportunities arising in

West Africa with possible new clients, but also with our historical
clients. Certainly, they are in and they do represent, let's say, real

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 demand that is based upon tenders being issued and so there is no
doubt that we are accounting for them as well.

ALESSANDRO POZZI: And on the orders in Saudi Arabia?

ALESSANDRO PULITI: The orders of Saudi Arabia, as I said before, in the plan – the plan
was already prepared including a certain reduction in the order
intake in Saudi Arabia because, to be honest, we have plenty of
project to be delivered in Saudi Arabia. So, in the next 2 years, we
were mainly focused on delivering of the existing projects which
have been not affected by the recent announcement at all. So, as
I said you before, compared to the previous plan, the current plan
contains around 20% average order intake less than we were
expecting in the previous plan but the reason of that is because we
are focusing on delivering the existing backlog in Saudi Arabia.
Paolo?

PAOLO CALCAGNINI: Yeah. So Alessandro, when it comes to lease payments and leased
vessels, well the lease payments in 2023 were roughly €140, in
terms of cash wise it was around €140 million. The number will go
up to roughly €250 in 2024 and then it will decrease slightly to
around €20 million per year for the remaining 3 years, so ‘25 to ’27.
And the underlying is that we are extending existing contracts and
we are adding new vessels to the fleet to execute the backlog that
we already have in our portfolio. So today we have roughly 40% of
the vessels that are leased on the total and this is a percentage
that will slightly increase over the next 2 years. And we think this
is the way we managed to deliver on the huge backlog while
maintaining flexibility in the medium term because most of those
contracts will expire by the next 2 to 3 years.

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ALESSANDRO POZZI: Okay, thank you very much.

OPERATOR: The next question is from Kate Somerville of JP Morgan. Please go

ahead.

KATE SOMERVILLE: Hi, good morning. Thanks for taking my questions. Yeah, it's Kate
from JP Morgan. Just a quick one on Mozambique, I know there's
been some attacks nearby recently. I'm just wondering about
whether this is still included in your backlog, particularly for 2024,
and whether you're still expecting this to start by the middle of the
year?

And then just an update on the Castorone in Australia for Woodside,

can you confirm that there's no financial impact from that or is that
still potentially a risk?

And then finally, can you just talk a bit more about the outlook for
Offshore Drilling, especially in light of the recent Saudi
announcements? Do you see potential headwinds to daily rates or
utilization? I'm just trying to understand your confidence there.
Thanks.

ALESSANDRO PULITI: Okay, thank you. So, regarding Mozambique, to be honest, we have
little to add from what was very well already clearly explained in
the call of our client, so Total Energies. So, basically, what we can
say is that as contractors, we are gearing up and organizing all the
engineering activities for the restart and the logistic organization
for the restart. And this is what we are actually doing today. And
we hope we will come back by mid of the year. And this is also
corresponding to our assumptions.

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 Regarding Castorone, Castorone suffered two incidents at the
beginning of the year. It's back working since and received on
February 13, the authorization from NOPSEMA, the Australian
relevant authority to restart operation and it's currently working.
But I would like to stress that in both situations, there were no
injury, no threat to safety to people onboard. And the activities
have being resumed according to the updated plan agreed with our
client, Woodside. So that's the situation of Castorone now.

Outlook of drilling – we still see a very strong market for all deep-
water fleet. Actually, we are moving the Scarabeo 9 semi. It's on
its way to Egypt to start a new contract in the country for
Rashpetco, our client there. So, this is a new activity being
restarted. Scarabeo 9 is just out of its five year statutory
maintenance. So, we see things going ahead. And so, our utilization
of the drilling fleet is completed. Now, all the rigs are working.

Regarding the activity in Saudi Arabia, our fleet of jack ups is

currently working and the new rig, the Perro Negro 13, is about to
start its activity coming out from the rig preparation. This is a new
rig we brought under the capital light strategy in the country. So, I
believe that we'll start in the next new weeks activities. And as I
said before, if the client wishes to reduce the number of rigs, we
are ready because our capital light strategy allows us to release rigs
without having impact on our plan, since this will be just returned
to the company which leased to us the rig. So, that's where we are
standing now in terms of outlook of drilling.

KATE SOMERVILLE: Very clear, thank you very much.

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OPERATOR: The next question is from Mark Wilson from Jefferies. Please go
ahead.

MARK WILSON: Yes, thank you and good morning. The first question I'd like to ask
is, within the backlog that you've added this year, you particularly
called out the amount of subsea backlog. And so, that would appear
to be a strategic important point. So, could I ask how you see
expanding the subsea nature of the business? That is a market that's
consolidating into a few main players in terms of the equipment. I
just wonder if there's anything you can speak to on that from a
strategic side of things, that business.

And then the second point, obviously remarkable backlog growth,

€30 billion now, 25% up year-on-year and frankly about 25% above
the record pre-COVID. Do you think it is possible to grow further
beyond that level? Or do you think it's now a case of focusing more
on the execution and maybe maintaining backlog as high as it can
be towards that level given the outlook you've given? Thank you.

ALESSANDRO PULITI: Okay, so thank you. How we do see the subsea market? Clearly
subsea market, it is a market very important for Saipem. We see
there are growing opportunities, and there is a very tangible fact
on how serious we are on the subsea. We took the JSD 6000 new
lease vessel rightly to serve the subsea market with also capability
of pipe laying. So this vessel, it's a vessel that it is multi-purpose
but certainly the main driver that led us leasing this vessel, it is the
growth we see and we expect in the subsea market. And the proof
of that is that we took this new vessel that is already marketed for
the next two years basically with 100% of utilization of the vessels.
So this is the view we have. We expect the subsea to remain strong
and on the basis of already acquired contracts.

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 Focus on the execution; certainly I do agree 100% with you. Our
focus for 2024, as I said this is one, the first pillar of our strategy
for 2024, is to be excellent in execution. We have a very important
backlog. As we said, 90% of our revenues of this year are covered
by existing backlog. There is no other option than to deliver. So this
will be the real focus and our main, utmost let's say, effort will be
in execution certainly for 2024.

MARK WILSON: Thank you very much. Maybe if I could just go back to the first.
Really, I understand obviously you've got a lot of installation
capability with the vessels but in terms of subsea equipment,
whether there's anything you want to do there of a strategic nature
to increase exposure to that side of the market?

ALESSANDRO PULITI: We are not a subsea manufacturer, so we have, as you know, a

commercial agreement with TechnipFMC. They are manufacturers,
so whenever it's possible we work together with them to serve this
market, joining their manufacturing capabilities and our
capabilities for installation. That's how we do see, although we
work also with many other players in the installation.

MARK WILSON: That's great, thank you. I will hand it over.

OPERATOR: Next question is from Guilherme Levy from Morgan Stanley. Please
go ahead.

GUILHERME LEVY: Hi, good morning, everyone. I just wanted to ask, during the plan
to 2027, is there any updated net debt target that we should work
with or how does the company see its optimal capital structure
going forward? Just thinking about the policy to distribute 30% to

22
 40% of cash flow as dividends. You commented a little bit on the
other uses for the other 60% to 70% of that, but I was just wondering
if at some point a share buyback program could make sense.

And then a second question, if I may. The company exercised a

purchase option for a jack up this quarter and I just wanted to pick
your brain on other opportunities to exercise more call options
going forward. How many does the company still have and what's
the rationale to continue doing that going forward? Thank you.

ALESSANDRO PULITI: So Paolo will answer to your first question.

PAOLO CALCAGNINI: So in terms of capital structure, let's do some simple numbers. This
year, the target is to do a free cash flow of €300 million, of which,
given our dividend policy, we expect to pay €100 million roughly to
the shareholders with remaining €200 in our hands. And obviously
€200 will likely go to further deleveraging of the company. We said
a few times that we want to get to a net zero debt position
including IFRS liabilities. We are very close…very, very close, not
yet there. And then we will retain some cash to see if there are any
opportunities for investment, especially in new technologies and in
those markets that have been possibly struggling in the last two or
three years in terms of demand. But this is a flexibility that we
think we need to maintain in the short to medium term. Then when
it comes to your question to buybacks, well it's not an option we
are considering today. Let's see how the 2024 goes and then it's
always something that the companies look at and but the very
strong focus is to generate cash this year and pay the dividend that
has been missing for a while from Saipem.

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ALESSANDRO PULITI: Okay Paolo, so I will answer to the second question regarding
whether or not we have other option to purchase any jack up or
any vessel in our fleet. In the short-term, we have an option to
purchase a jack up that is expiring in the summer, this year. So we
will simply evaluate whether or not it will be convenient at that
time to exercise the option or not. Now you got our strategy
basically completely unveiled and so this also depends how the
market in the Middle East will look like. So that's why I said before
we are not so worried about, because in case there is a reduction
of the market, we will not exercise the option and we will release
the vessel. Or if the market instead will be sustained, we will
exercise the option, take the vessel and continue working. That's
the situation. So in the short-term we have one further option to
be exercised.

GUILHERME LEVY: Okay, thank you so much.

OPERATOR: The next question is from Guillaume Delaby from Société Générale.
Go ahead.

GUILLAUME DELABY: Yes, good morning. I just would like to have an update about your
legacy projects. If I remember correctly the backlog for legacy
project was €1.9 billion at the end of Q3. So where are we today?
And should we still assume that the negative impact on cash flow
from this legacy backlog is likely to be, let's say, between €50 to
€75 million per quarter over the next 4 or 5 quarters? Thank you.

PAOLO CALCAGNINI: So the backlog was at the end of 2023 below €2 billion, it was
around €2 billion in the presentation but is actually a bit lower. And
in terms of cash out, there is a remaining €100 million to be spent.
They will not be spent let's say divided by four in the quarters

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 because it depends on the execution of the projects but we will
spend them by end of this year for sure and how much in the
different quarters will depend on the speed at which we deliver on
the different projects. It depends obviously in the installation
campaigns when it comes to Wind and in the execution of the works
on land when it comes to Onshore projects. But end of 2024, you
will see roughly €100 million of cash out from the legacy projects
with the remaining backlog being very close to zero.

GUILLAUME DELABY: Very clear, thank you very much.

PAOLO CALCAGNINI: Thank you.

OPERATOR: The next question is from Roberto Ranieri from Stifel. Please go
ahead.

ROBERTO RANIERI: Yes, good morning, everyone, and thanks for taking my question.
Just a couple of clarifications. The first one is on net debt. Could
you please elaborate on what the contribution of down payments
from new projects were in the net financial position at year end
and specifically, if you can elaborate or also can disclose also
specifically on Hail and Gasha?

My second clarification would be on Australia. Again, the Australia

incident and if you can share with us how long could be the
additional time to recover, you know, the time lost for this incident
and which the impact will be in terms of cost?

My third one is on strategy, and I'm referring to the One Saipem

strategy and specifically on the operational strategy for Saipem and
specifically also on commercial activities. Could you please share

25
 with us what the chain of control that you have in, you set? Also,
in terms of commercial activities and bidding process? And if the
environment we have in this moment for both the Onshore and
Offshore segment could lead to different policies in terms of
contingencies for the bidding, for setting a price for a project?
Thank you very much.

PAOLO CALCAGNINI: So thanks Roberto for the questions. I'll start from the from the
down payments or advance payments. Well, actually the impact of
the advance payments, the net impact of the advance that we got
on new projects minus the consumption of previously awarded
payments was close to zero in 2023. So the improvement in the net
financial position doesn't come from a net increase in the advance
from clients. When I say that it's close to zero, I mean that it's lower
than €40 million on the entire 2023. It was by the way negative in
Q4 because we spent more of the advance payments than the new
ones that we cashed in.

And then your question on Australia, so on Australia, I mean

it's…you know that projects are typically covered by contingencies
that are meant especially in offshore to cover possible incidents
that may occur when doing our job. So we obviously will have some
costs associated to the incident, this is clear. Some of them will be
covered by our insurance policies and in any case, offshore projects
have typically contingencies that are meant to back possible
incidents up when it comes to the margins. So financially not a big
deal.

ALESSANDRO PULITI: Just to add on, sorry, the incident of Castorone means that we have
to re-lay 400 meters of pipeline out of a 370 kilometers pipeline
should be laid. This gives you the physical and numerical impact.

26
 So it's 400 meters out of 370 kilometers, just to complete the
answer of Paolo.

Paolo, go ahead, please.

PAOLO CALCAGNINI: Yeah and by the way, the 2024 guidance is the best of our
knowledge when it comes to the overall results of Saipem. So they
include all the information we have when it comes to the 2024
results on our overall portfolio including everything.

And then you asked the question on One Saipem, if I understand,

one was on where we stand in terms of integrated offers. I can think
of at least two big integrated offers that we're now working on and
where we are relatively optimistic about the outcome.

And then you asked a question on the bidding process. So basically,

all the bids that are…all the bids go through the scrutiny of the
committee where all the top managers are sitting including the
CEO, CFO, Head of Commercial and all the business line leaders.
And so they are scrutinized with the same criteria when it comes
to analyzing the robustness of the hypothesis, assumptions,
tendering etc., and whatever is above €750 million goes to the
Board then for final approval.

And contingencies, well they depend on the complexity of the bid.

There are certain projects where contingencies are necessary
because it's a riskier project and there are projects where you are
covered by provisions with the client or contractual agreements
where contingencies are typically lower. So there isn’t a straight
answer like contingencies are “x” for offshore or “y” for onshore,
it depends on what type of projects we're bidding for. But

27
 everything goes either to the CEO and top management or to the
Board if it's above €750 million.

ROBERTO RANIERI: Okay, but do you think, just to have an idea on that, do you think
that this context, competitive context in both the offshore and
onshore will allow to have a healthy contingencies for the EPC
contractor or the competition is increasing so basically this is a
good squeeze at this kind of a part of the bidding price? Thank you.

ALESSANDRO PULITI: But including healthy contingency, it is part of our strategy since
beginning of 2022. So it's not whether we will do or we plan to do.
We are doing, we are including today healthy contingencies in the
projects we are carrying out both onshore and offshore because this
is part of our new commercial strategy. And when we speak about,
for example, selective approach for the new order intake in the
Onshore E&C, means exactly selecting those projects where we can
have reduced risk and healthy contingency associated to the
project. That's…when we say selective, this is exactly…this means
that we do not take new project at whatever condition just for the
sake of taking it. Just and this is, okay.

ROBERTO RANIERI: Okay, good. Thank you, very helpful.

OPERATOR: The next question is from Mick Pickup from Barclays. Please go
ahead.

MICK PICKUP: Good morning everybody, probably the best results I've seen on
February 29th, today, thank you. A couple of questions, if I may.
Can we talk about the integrated projects, clearly, you've been
seeing an acceleration of those over recent years and you've now
broken into the Middle East. So can you just talk about the four

28
 that you're highlighting in the Appendix? What type of regions we're
in? What type of projects they are? That is the first question. Thank
you.

ALESSANDRO PULITI: Okay. When we say integrated projects, those are projects where
we do integrate all Saipem capabilities. We are a bit different
between our competitors, actually there is no one single
competitor that has the same portfolio offer as Saipem, so we do
drilling offshore, we do offshore E&C construction, and we do
onshore E&C construction. We build FPSOs and we do operating and
maintenance of some of the facilities we built for our clients. So
what we mean by integrated projects, for example, when we
offer…when we have the opportunity to offer for an FPSO and we
will offer also for the surf activity, for the mooring activity of the
FPSO, for the pipelines that are needed to connect the wellheads
to the FPSO itself, and maybe offering also the operating and
maintenance services for the FPSO itself.

So we can make a unique proposal to the client and this becomes

attractive for the client because we can build in synergies that can
be partially transferred to the client and partially can be retained
to ourselves. So we create win-win situation when it comes to
margin. Then we can have a fast track approach very much
controlled because in that case we do control directly all the
interfaces between the different part of the projects, of the
project being associated.

So we give an advantage to the client that then we can factor

within our proposal. And this has happened in West Africa,
certainly, it has happened in the in the Middle East, it's not a secret
for the Hail and Gasha where we are combining our capabilities in

29
 sour gas management on very complex plants. And those are
partially built on artificial island that this is very much close to our
traditional E&C onshore activity together with our ability to lay
pipeline, cladded pipeline to transport sour gas on which we have
a distinctive, I would say, approach and we are recognized as best-
in-class in this activity. So this is what we mean synergies,
presenting clients integrated offers where we create win-win
situation for the clients and for ourselves.

MICK PICKUP: Okay, thank you. And can I just talk about the offshore drilling
business? I've never seen so little white space on your Gantt chart
for offshore drilling. So I wonder if you could just help us by giving
what you think the order of magnitude of the increase in
profitability in offshore drilling is going to be in 2024?

ALESSANDRO PULITI: So, we didn't present the slide because in 2024 our vessels are all
fully booked, so it would have been a very pretty boring slide on
that point of view. And so they are all under contract, so there is
no…in one sense, there is no possibility to further increase the
revenue stream from this situation. But as Paolo was mentioning,
most of the fleet went through the five year maintenance in 2022
and 2023. So in 2024, for us will be very positive in terms of offshore
because we will have most of the fleet working throughout the year
without the need to enter the five year maintenance. So from there
we will get more revenues.

On the other hand, they are all under contract, you know we are
still at the beginning of the cycle, so all the rigs, they are working
under the contract being signed between the second half of 2022
and the first half of 2023.This is where we stand.

30
PAOLO CALCAGNINI: Mick, if I can add a comment – We typically don't guide on the single
business lines but we can share that you will see some material
increase in revenues and margins this year for the reasons that
Alessandro just explained and then the profile will be flattish for
the remaining years of the plan. So you can expect a material
increase of margins and revenues this year and then the fleet will
be fully booked and fully sold and then the revenues and the
margins will remain flattish for 2025 to 2027.

MICK PICKUP: Yes, clear.

OPERATOR: The next question is from Massimo Bonisoli from Equita. Please go
ahead.

MASSIMO BONISOLI: Good morning and congrats for the set of results. Two questions:
the first on cash flow. I appreciate your renewed focus on cash
flow. According to your guidance, operating cash flow conversion
on EBITDA is moving from almost 60% in 2024 to 40% to 50% range
over the plan period despite the legacy project affecting 2024. Can
you explain the main underlying assumption which results in lower
conversion rates, going forward?

And the second is on low carbon project. I appreciate also the

stronger focus on low carbon project. What kind of margin should
we expect from this source of order ex-offshore wind? So all the
CCS, fertilizers, biofuels – are they more like onshore E&C in terms
of margins?

ALESSANDRO PULITI: Okay. Low carbon projects, yes, we are offering CCS, we are
offering fertilizer, we are offering, as you see, recently even in
blue and green hydrogen. So, which are the margins? As I said

31
 before, they are not treated differently from the other projects.
So they go through the same scrutiny of the offshore and onshore
E&C activities. And we will carry out them only if they do present
healthy contingency and decent margins because we do not treat
them differently and we do not desperate to carry out them if there
are no the two conditions that I mentioned before.

We know that most of them are coming from regulated markets.

They are depending on incentives made available by governments,
by regulators, so certainly, we cannot expect those having same
margins of subsea activities offshore, that's definitely not, but
certainly we will not do them if there are no enough margins. And
certainly, we will never ever accept for those kinds of projects a
risk profile that it is higher than what we currently accept. And this
was the problem of the offshore wind. I can assure you that the
new contract will not include any risk profile like the one was
accepted in the old backlog of offshore wind projects.

PAOLO CALCAGNINI: And on the cash conversion, actually, you should look at the cash
conversion including the lease payments. Otherwise, the picture is
not the best one to be understood. In fact, if you do the free cash
flow post the lease payments on EBITDA, the profile doesn't change
much in the business plan. So it remains on the same ratios that we
had in 2023, or actually a bit better. And so we can go deeper
afterwards, after the call, if you like. But you should calculate the
free cash flow after lease payments, rather than before.
Otherwise, the cash conversion looks a bit bumpy, while it's not.

MASSIMO BONISOLI: Very clear.

32
OPERATOR: The next question is from Richard Dawson from Berenberg. Please
go ahead.

RICHARD DAWSON: Hi, good morning, and thank you for taking my question. And just
one left from me. I'm particularly interested in the offshore wind
projects. And just given the historical execution issues in offshore
wind, how are these new contracts structured so that risks to
Saipem are reduced? Thank you.

ALESSANDRO PULITI: So new contracts for offshore wind, certainly, will have a lower risk
profile. And when I mean a lower risk profile for us means we will
not accept anymore taking risks such as the weather risk or, unless
these risks are very well compensated in another form, weather
risk, soil risk. When we're speaking about foundation, those are the
main. So the new contracts will be based on mechanism to share
those risks with our clients, because there is no way we can sustain
those risks. I believe that the supply chain of the offshore wind
proved to be very much under stress in the last two years. Why?
Because of excessive risk being loaded on the shoulders of the
supply chain, so a new balance has to be found. And clients, with
which we are speaking nowadays, they well understood the
situation.

And this is also now reflected, as you know, on the new expectation
in terms of the new contract for difference that are expected to be
issued that are, for example, in the UK. It's very well known that
most likely there will be around 70% higher in terms of pricing than
the previous one. This is really to accommodate the cost that
otherwise cannot be sustained by the supply chain. And we are part
of that supply chain.

33
RICHARD DAWSON: That's great. Thanks very much.

OPERATOR: The next question is from Kevin Roger from Kepler. Please go
ahead.

KEVIN ROGER: Yes, thanks. I just wanted to come back on two elements. The first
one is on Mozambique. In a worst case scenario, if the project does
not restart this summer because of the terrorist attack that we
have seen recently, what would be the impact on your top line
guidance? Does it mean that you would be in the low end, and this
is why you have provided the range to us? Just to understand the
potential impact.

And the second one is coming back on the cash. I just wanted to
understand, basically, the guidance that you provide between '24
and '27. Because basically, implicitly, you are telling us that you
will generate something like €1.6 billion of free cash post lease.
But when you look at the EBITDA that you are implicitly guiding
with the 2027 EBITDA margin, basically, you would be at something
like €1.7 billion. So even adjusted for the CAPEX, the lease, etc.,
your free cash just in 2027 will be around €800plus. So just trying
to understand why the cash flow generation over the period with
the EBITDA and top line that you are implicitly guiding would be
limited to €1.4 billion. Does it mean that you have included some
important negative working capital movements in the operating
cash?

ALESSANDRO PULITI: Okay, on Mozambique, we'll be very quick. If the worse become
worse, and for whatever reason the project doesn't restart at all,
the impact will be that we will have around €500 million less in
terms of revenues. That's the answer.

34
PAOLO CALCAGNINI: Yeah, so Kevin, yes, the answer is right. There is an assumption
underlying the number that working capital will increase over the
business plan. You know that we typically work with a negative
working capital as a business model. This is very true in onshore,
but it's also true in offshore. And so we are assuming that new
contracts will have lower down payments compared to the existing
backlog. So over the next 4 years, there is some degree of working
capital increase. And that explains, I guess, the difference that you
just pointed out.

KEVIN ROGER: Okay, very clear. Thanks a lot.

OPERATOR: The next question is from Daniel Thompson of BNP Paribas. Please
go ahead.

DANIEL THOMPSON: Hi, thanks for taking my question. Firstly, in Offshore E&C, I wanted
to know how does the mix between surf and shallow water
conventional differ in this plan versus the prior plan with regards
to the targeted order intake? I think the split before that you
presented was just under half on surf. And then the second
question, sorry if I missed it earlier, but just on the Courseulles-
sur-Mer offshore wind project, has the drilling of the monopile
foundation started and is going as expected so far on the first few
holes, and when do you expect to complete that contract? Thank
you.

ALESSANDRO PULITI: Okay, sorry, now you can hear me. So, split between conventional
and surf remains in the range of 50:50 – so just to give you which is
the split between our offshore activity between conventional and
surf. So, new Wind projects, I'm expecting you are speaking about

35
 Courseulles-sur-Mer. So, we expect by the second half of March to
be on location, doing our pre-testing of the equipment, and then
right after starts to drill the first socket for the foundation, for the
monopile foundation. So, this is the current plan. We are expecting
to finish the job by the first quarter/beginning second quarter of
next year.

DANIEL THOMPSON: Perfect, thank you.

OPERATOR: The next question is from Kate O'Sullivan from Citi. Please go
ahead.

KATE O'SULLIVAN: Hello, thanks for taking my questions, and congratulations on the
results. Final quick question from me and following up on your
pipelines and opportunities. Qatar is obviously a significant country
in your backlog. Could you provide any update on your bidding
pipeline there? And in your E&C near-term opportunity slide, we're
seeing the uplift in Africa. Just any further color you could provide
there? Thank you very much.

ALESSANDRO PULITI: Okay, clearly Qatar remains a very important country for us. We
are participating in a number of bids for offshore activities. And we
hope that in the coming months we can have some good news
coming from there, clearly if we win the bidding. The other
question?

KATE O'SULLIVAN: Just around Africa?

ALESSANDRO PULITI: Okay there was Africa. Okay, yes, we are participating to all the
bidding activity around West Africa and possibly even East Africa.
And we are expecting growing activity in the countries that were

36
 mentioned before in the beginning of the conference: Angola,
Namibia are places where we see coming projects and we have a
very good visibility in West Africa in the short-term.

KATE O'SULLIVAN: Okay, thank you.

OPERATOR: We need to wrap up this call as we have gone past 12:00. So thank
you. So management, do you have any closing remarks?

ALESSANDRO PULITI: No, we don't have any closing remarks and we thank all whom
participated to the conference call. Thank you.

37