SBM Offshore's Buybacks: The Arithmetic Behind the Headline

SBM Offshore's share buybacks are doing more than returning cash. They're quietly rewriting the per-share math of a business the market still thinks of as cyclical.

On August 6, SBM Offshore reported that directional revenue more than doubled in the first half of 2026, hitting $4.9 billion, and directional EBITDA surged 92 percent to $1.31 billion. The company raised full-year revenue guidance from above $6.9 billion to around $7.6 billion and lifted EBITDA guidance from $1.8 billion to $1.9 billion. Net debt fell 35 percent to $3.7 billion. Pro-forma backlog set a record at $35.6 billion.

And in the middle of all that, a EUR227 million share repurchase program — announced in late February — had already reached about 44 percent completion, with roughly 3 million shares retired at an average price of EUR33.50.

The competitive article frames this as "nearing the halfway mark." The story isn't the progress bar. The story is what the buybacks are accomplishing against the backdrop of a balance sheet that transformed while most investors were still watching the prior cycle.

To understand the point, you need to see the two halves of SBM Offshore's business, because they earn cash in very different ways.

The turnkey segment designs and builds massive floating production, storage and offloading vessels — FPSOs — for oil majors. Revenue here is lumpy. A single vessel sale can register billions. In H1 2026, turnkey accounted for $3.7 billion of the $4.9 billion total, driven by the February sale of FPSO ONE GUYANA to ExxonMobil Guyana and construction progress on several other projects. The $813 million of turnkey EBITDA is solid, but it doesn't repeat on schedule.

The lease and operate segment is where the predictability lives. SBM Offshore owns and operates 16 FPSOs with a combined production capacity of over 2 million barrels per day — roughly 17 percent of global deepwater output. These units generate contracted, fee-based revenue from day to day. H1 2026 lease and operate EBITDA was $547 million, up 10 percent from a year earlier, supported by three large vessels added to the fleet in 2025. Full-year 2026 lease and operate EBITDA guidance sits around $1.2 billion.

This is the recurring cash flow engine. And the buybacks are working against it in a direction most readers overlook: fewer shares.

SBM Offshore's current share count sits at roughly 165 million. The previous buyback program in 2025 retired 6.2 million shares at an average price of EUR22.85. This current program has already eliminated another 3 million shares. That's nearly 9.2 million shares gone in roughly 18 months — about 5.7 percent of the total. At the current price near EUR34.76, the remaining ~EUR127 million of buyback authority can retire roughly another 3.7 million shares if completed at today's level.

Here's the calculation that matters. Annual lease and operate EBITDA of roughly $1.2 billion, running through a steadily shrinking share count, means the per-share claim on the company's most predictable cash flow grows even if that cash flow itself is flat. A 5.7 percent share reduction on flat lease and operate EBITDA translates to roughly a 6 percent increase in per-share earnings power from the recurring business alone.

You can see the effect in the numbers. H1 2026 EPS of $4.90 per share, up from $1.57 a year earlier, is well ahead of the 92 percent EBITDA growth. Part of that gap is lower debt costs from the balance sheet repair. Part of it is the denominator shrinking. Both work for the remaining shareholder.

The balance sheet repair is what makes the buybacks credible in the first place. At the end of 2023, directional net leverage stood at roughly 5 times EBITDA. By mid-2026, it's 1.6 times. Over 70 percent of the remaining $3.7 billion in net debt is non-recourse project financing — meaning the lenders look to the specific FPSO's cash flow, not SBM's corporate balance sheet. The company has $2.4 billion in cash and undrawn credit lines, clears all covenants with margin (solvency ratio at 35 percent against a 25 percent floor; interest coverage at 6.6 against a 4.0 requirement), and has no refinancing risk this year with over 90 percent of interest rates hedged.

A company that carried 5x leverage buying back stock would be reckless. A company at 1.6x with a fortress liquidity position doing it is disciplined capital allocation. The difference between those two readings is years of executing this business model.

The shareholder return commitment formalizes the discipline. SBM Offshore targets a minimum of $2.1 billion returned over the six years from 2026 through 2031. This year alone, the company plans $440 million in aggregate returns — $200 million in dividends and the $270 million buyback; the $200 million in dividends splits into a $100 million payout in May and another $100 million interim dividend in September. Management's own calculation, based on the end-June share price, puts the implied annual cash yield at 7.2 percent. That's above what most energy infrastructure names offer and it's paid on top of a business running at a roughly 27 percent directional EBITDA margin.

Where the risks live. The working capital drag is real and worth watching. In H1 2026, roughly $450 million was consumed by investments in new hulls and the upfront capital of sale-and-operate contracts. That's not a permanent feature of the lease and operate business, but it does mean free cash flow in the construction-heavy period runs below EBITDA. The turnkey overhead runs about $100 million a year, and if new awards slow, that cost isn't fully covered by the existing net cash backlog. And the $35.6 billion revenue backlog looks large — until you note that $8 billion of it is net cash backlog from 10 FPSOs, averaging about $430 million of annual free cash. The rest is revenue without corresponding cash receipts, mostly from construction contracts and early-stage engineering work.

Competition for new FPSO awards is intensifying. MODEC, SBM's closest peer in the floating production space, reported H1 2026 EPS of $3.28, up from $2.12 a year earlier, on back of similar momentum in the deepwater sector. SBM identified 41 potential FPSO awards globally through 2029 but faces active bidding on high-value projects like Namibia's Venus development. Losing ground there would matter for backlog regeneration once the current order book works its way through.

The buyback itself carries a mirror risk. At the current price of around EUR34.76, SBM has been repurchasing near the top of the program's price range. The 2025 average buyback price was EUR22.85. That means the dollar efficiency of this year's program — the number of shares retired per euro — has dropped. Still, the authority is set in euros, the cash flows are in dollars, and the forward exchange rate locked in at the program's launch gave them a buffer. The program runs through February 2027, and the mechanical execution through a third-party agent means the company doesn't call the timing.

So where does this leave the investment case? SBM Offshore is a business that generates roughly $1.9 billion of EBITDA annually on a backdrop of $35.6 billion in backlog, with a lease and operate segment that produces $1.2 billion of that on a relatively contracted basis. The balance sheet moved from stressed to comfortable over three years. The share count is shrinking. The per-share claim on the recurring business is getting richer.

The question for the investor isn't whether the buyback is on track. It's whether the current share price already prices in the full arc of the backlog, the lease and operate yield, and the continued share reduction. At a market cap of roughly $5.4 billion, the implied enterprise value multiple sits well below the leverage-adjusted quality this business now demonstrates. Whether that gap closes through earnings expansion, multiple expansion, or buyback-driven accretion — or whether it narrows because competition erodes the award pipeline — depends on execution over the next two years.

What's clear from the data is this: the buybacks are doing real work. Not just as a signal. As arithmetic.