Q4 2024 SFL Corp Ltd Earnings Call
To call with an overview of the fourth quarter highlights and then our Chief operating Officer, Tim Shirley we'll comment on vessel performance matters, followed by our CFO Aksel Olesen, who will take us through the financials.
Speaker Change: The conference call will be concluded by opening up for questions and I will explain the procedure do so prior to the Q&A session.
Speaker Change: Before we begin our presentation I would like to note that this conference call will contain forward looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 words, such as expects anticipates intends estimates or similar expressions are intended to identify these forward looking statements.
Speaker Change: Forward looking statements are not guarantees of future performance. These statements are based on our current plans and expectations and are inherently subject to risks and uncertainties that could cause future activities and results of operations to be materially different from those set out of port in the forward looking statements.
Speaker Change: Important factors that could cause actual results to differ include but are not limited to conditions in the shipping offshore and credit markets. You should therefore not place undue reliance on these forward looking statements. Please refer to our filings within the Securities and Exchange Commission for a more detailed discussion of risks and uncertainties, which may have a direct bearing on operating results and our financial condition.
Speaker Change: And then I will leave the word over to our CEO Ali at Taco with highlights for the fourth quarter.
Speaker Change: Thank you.
We are now announcing our 84th dividend and continue building our visuals as in maritime infrastructure company with a diversified fleet.
Speaker Change: We reported revenue so more than $230 million this quarter and the EBITDA equivalent cash flow in the quarter was $132 million, which is significantly up from the second quarter.
Speaker Change: Over the last 12 months, the EBITDA equivalent has been $581 million.
Speaker Change: The net income came in at around $20 million in the quarter or <unk> 50 per share.
Speaker Change: And we had positive contribution relating to profit share on capesize bulk carriers and fuel cost savings of $2 $5 million.
Our fixed rate backlog stands at approximately $4 3 billion.
Speaker Change: And importantly to search of this customers with investment grade rating, giving us a unique cash flow visibility and resilience.
Speaker Change: This backlog figure excludes revenues from the vessels trading in the short term market and also excludes revenue on the new dual fuel chemical carrier that operates and approve would still tankers. It also excludes future profit share optionality, which we have seen can contribute significantly to our net income.
Speaker Change: And in line with our commitment to return value to shareholders. We are paying a quarterly dividend of <unk> 27 per share.
Speaker Change: <unk>, 10% dividend yield.
Speaker Change: Most of our vessels are on long term charters and we have over the last 10 years completely transformed the company's operating model, making us relevant for large end users.
Speaker Change: <unk> works working group and vehicle.
Speaker Change: During the year, we renewed and extended multiple existing charters and took delivery of nine new vessels in 2024.
Speaker Change: We also ordered five new large container vessels last year, which added $1 2 billion to a fixed rate charter backlog.
Speaker Change: And we are also in the process of upgrading several other vessels and a chief operating officer, Tim Shirley we'll talk more about that later.
Speaker Change: It has also been a busy year from a financing perspective, where we have effectively address virtually all short term asset debt maturities matching funding with charter tenor.
Speaker Change: In total we raised $1 3 billion in financing, including $220 million of senior unsecured bonds in 2024 and.
And subsequent to year end, we raised a new $150 million senior unsecured bond loan into northern market with maturity in 2013.
Speaker Change: We have had a dispute with <unk> for some time in connection with the condition of the drilling rig happiness. When it was redelivered to us in December 2022.
Speaker Change: Last week, there was a ruling it also district court with CGM was ordered to pay us approximately $48 million in compensation, including interest and legal costs.
Speaker Change: It was a comprehensive case with more than 80000 pages of documentation and a ruling over 112 pages.
This ruling is subject to appeal from both sites within a month of the judgment.
Speaker Change: We have so far not included any potential proceeds as an asset on our balance sheet and the legal costs have been expensed over time into general administrative expenses.
Speaker Change: Separately, there was a K dew tastes due to commence later in 2025 in connection with certain Cogs delivered to us by <unk> in connection with the special survey of happiness and 'twenty targets.
Speaker Change: We disagree on the actual ownership of some of the parts before they were delivered to us and therefore also the compensation claimed by season.
Speaker Change: It will most likely take several months before this case.
Speaker Change: And there is a final ruling.
Trimmed Shirley: And with that I will leave the word over to our chief operating officer trimmed Shirley.
Trimmed Shirley: Thank you.
Speaker Change: Our fleet currently contains 80 maritime assets. This includes vessels reef contracted new buildings.
Speaker Change: In 2024, we took delivery from shipyard of two LNG fueled piece of tea season.
Speaker Change: <unk> tankers <unk> purchased two dual fuel LNG 33000 deadweight ton stainless steel chemical tankers. We also last year placed orders for 516700 Teu container ships in China.
Speaker Change: Also last year, we increased the backlog tumors with new five year charters for certain of our large container vessels, which is a result of our close relationship and cooperation on vessel upgrades and performance enhancements.
Speaker Change: The first two vessels out of the seven have already been upgraded and were delivered to Maersk in Q1 this year.
Speaker Change: On divestments, we have sold one of our old 79.
Speaker Change: You continue ships the green as vessels delivered to buyers in Q4.
Speaker Change: Also gold motion the charter for our eight Capesize bulk carriers recently declared their purchase option for the eight vessels.
Speaker Change: We expect the vessels to be delivered to gold motion early Q3 this year.
Our backlog from owned and managed shipping assets Lufthansa quickly $3 billion.
Speaker Change: On the current fleet is made up of 15 Drybulk vessels 38 container ships 18 tankers, two drilling rigs and seven car carriers.
Speaker Change: We have a diversified fleet of assets chartered to first class customers will mostly long term charterers on the majority of our customer base is large industrial end users.
Speaker Change: Container vessels remain our largest segment with almost 68% of the backlog.
Speaker Change: As mentioned previously we have increasingly been investing and vessel maintenance and upgrades.
Speaker Change: <unk> and especially the EU ever tightening regulatory requirements to reduce emissions from shipping driving the need for continuous improvement.
Speaker Change: Such improvement and investing in assets is also critical for our customers and by doing so puts us in a better position to grow organically with our existing clients by either providing new vessels to the service or by extending with our current fleet.
Speaker Change: We see that particularly the container operators are keen to see such partnership models developing with large upgrade projects, including cargo boost energy saving devices, Brooklyn modifications and even change to the whole firm like new both the spa.
Speaker Change: Have identified major benefits from these investments both in terms of cost savings for our customers and lower emissions.
Speaker Change: In the fourth quarter, 96% of charter revenues from all assets came from time charter contracts and only 4% from bareboat or dry leases.
Speaker Change: In addition to fixed rate charter revenues, we have had significant contribution to cash flow from profit share arrangements over time, both relating to charter rates and cost savings from <unk>.
Speaker Change: In Q4 profit split arrangements that contributed about $1 $8 million, which is lower than a typical quarter due to lower fuel cost spread between heavy fuel oil and very low sulfur fuel oil.
Speaker Change: The charter revenue from our fleet was about $232 million in Q4.
Speaker Change: A total of almost 6800 operating days in the quarter defined as Kelvin a day less technical off hire on dry dockings eight vessels have been in dry dock in the quarter, including major upgrade projects.
As a result of our close relationship and cooperation on vessel upgrades and performance enhancements.
Speaker Change: Our overall utilization across the shipping fleet in Q4 was 98, 3% mainly due to the 108 days spent in dry dock.
The first two vessels out of the seven have already been upgraded and we'll deliver to Maersk in Q1 this year.
Speaker Change: For the rigs the availability was about 67% mainly due to idle period for the Hercules spring.
On divestments, we have sold one of our old 1700, Teu container ships the green as that was delivered to buyers in Q4.
Speaker Change: And on that on the LNG side, the Hercules rig was contracted with Ecuador, Canada until mid November, including demobilization time to Norway. The rig is currently warm stacked and being marketed for opportunities later in 2025 and 2026.
Also Golden Ocean, the charter for our eight Capesize bulk carriers recently declared their purchase option for the eight vessels.
We expect the vessels to be delivered to Golden Ocean early Q3 this year.
Speaker Change: During the fourth quarter, the rig a record revenue of $34 million and costs of approximately $26 million.
Our backlog from owned and managed shipping assets stands at $4 3 billion.
Speaker Change: Going forward, we expect the stacking cost of the rig to be considerably lower than those of Q4.
And the current fleet is made up of 15 Drybulk vessels 30 container ships 18 tankers, two drilling rigs and seven car carriers.
Speaker Change: And for the Lynas the rig recorded its first full operating quarter. After its special periodic survey in May to July last year, and Q4 revenue of $20 2 million.
We have a diversified fleet of assets chartered out to first class customers on mostly long term charters and the majority of our customer base is large industrial end users.
Speaker Change: The rig market index rate increased two 3% in the fourth quarter and costs were $13 million in Q4 compared to $11 8 million in the previous quarter subsequent to quarter end, we got notification from our insurers that we will receive close to $5 million to partly cover the expenses, we incurred for the spud camera repairs.
Container vessels remain our largest segment with almost 68% of the backlog.
Speaker Change: As mentioned previously by <unk>, we have increasingly been investing and vessel maintenance and upgrades.
Speaker Change: <unk> and especially the EU there are advertising regulatory requirements to reduce emissions from shipping driving the need for continuous improvement.
Speaker Change: During the rigs yard stay last summer I will now give the word over to our CFO OXXO Wilson, who will take us through the financial highlights of the quarter.
Speaker Change: Such improvement and investing in assets is also critical for our customers and by doing so puts us in a better position to grow organically with our existing clients by either providing new vessels to the service or by extending with our current fleet.
OXXO Wilson: Thank you and this is early on this slide from our pro forma illustration of cash flows for the fourth quarter.
OXXO Wilson: Please note that this is on a guideline to assess the company's performance and is not in accordance with U S. GAAP and also net of extraordinary and noncash items.
Speaker Change: We see that particularly the container operators are keen to see such partnership models developing with large upgrade projects, including cargo boost energy saving devices portfolio modifications uneven change to the whole form like new bulbous bow.
OXXO Wilson: The company generated gross charter hire of approximately $232 million during the fourth quarter were approximately $85 million coming from our container fleet, which was down from the previous quarter due to scheduled dry dockings and efficiency upgrades on some of our large container vessels.
Speaker Change: Have identified major benefits from these investments both in terms of cost savings for our customers and lower emissions in.
OXXO Wilson: This includes approximately $1 7 million and profit share related to fuel savings on seven of our large container vessels.
Speaker Change: In the fourth quarter, 96% of charter revenues from all assets came from time charter contracts and only 4% from bareboat or dry leases.
OXXO Wilson: In the fourth quarter. The company sold the 2005 built feeder container vessel <unk> for approximately $10 8 million and with the gain of approximately $5 4 million.
Speaker Change: In addition to fixed rate charter revenues, we have had significant contribution to cash flow from profit share arrangements over time, both relating to charter rates and cost savings on fuel.
Speaker Change: In Q4 profit split arrangements are a contributor at about one $8 million, which is lower than a typical quarter due to lower fuel cost spread between heavy fuel oil and very low sulfur fuel oil.
OXXO Wilson: Subsequent to quarter end. The company has agreed to sell the sister vessel Aegean is approximately $9 5 million with expected delivery to the buyer in the second quarter of 2025.
OXXO Wilson: The expiry of the current charter.
Speaker Change: The charter revenue from our fleet was about $232 million in Q4.
OXXO Wilson: The vessel is debt free and the gain of approximately $4 million is expected to be recorded in the second quarter.
Speaker Change: Had a total of almost 6800 operating days in the quarter defined as Calvin a day less technical off hire on dry dockings eight vessels have been in dry dock in the quarter, including major upgrade projects.
OXXO Wilson: The car correctly, it's generated approximately $2 6 million of gross charter hire in the quarter, including profit share from fuel savings.
OXXO Wilson: Thank you fleet generated approximately $42 million in gross charter hire from approximately $3 7 million in the previous quarter as all five tankers acquired in 2024 now have been delivered.
Speaker Change: Our overall utilization across the shipping fleet in Q4 was 98, 3% mainly due to the 108 days spent in dry dock.
Speaker Change: For the rigs the availability was about 67% mainly due to idle period for the Hercules spring.
OXXO Wilson: As a further six drybulk vessels over eight are employed on long term charters the vessels generated approximately $23 million in gross charter hire in the fourth quarter, including approximately 900000 profit share generated from eight capesize vessels on long term charters to Golden Ocean.
Speaker Change: And on that on the LNG side, the Hercules rig was contracted with Ecuador, Canada until mid November, including demobilization time to Norway. The rig is currently warm stacked and being marketed for opportunities later in 2025 and 2026.
OXXO Wilson: The seven vessels employed in the spot and short term market contributed with approximately $7 4 million and that charter revenue compared to approximately $8 4 million in the third quarter.
Speaker Change: During the fourth quarter, the rig recorded revenue of $34 million and costs of approximately $26 million.
Speaker Change: Going forward, we expect the stacking cost of the rig to make considerably lower than those of Q4 and.
OXXO Wilson: Subsequent to quarter end Golden Ocean exercise its purchase option for eight capesize vessels for $112 million in aggregate the vessels will be delivered to go north and during the third quarter of 2025 and the net cash proceeds after repayment of debt is estimated at approximately 50 million.
Speaker Change: And for the Lynas the rig recorded its first full operating quarter. After its special periodic survey in May to July last year, and had Q4 revenue of $22 million.
Speaker Change: The rigs market index rate increased two 3% in the fourth quarter and costs were $13 million in Q4 compared to $11 8 million in the previous quarter subsequent to quarter end, we got notification from our insurers that we will receive close to $5 million to partly cover the expenses, we incurred for the spot can repairs during the <unk>.
OXXO Wilson: <unk>.
OXXO Wilson: In the fourth quarter, our energy assets generated approximately $55 million and contract revenues compared to approximately $6 million in the third quarter as the Hercules finished his contract.
OXXO Wilson: Canada in mid October.
Lauren this is under long term contract the conical Phillips in Norway until May 22009, and during the quarter revenues from the rig was approximately $20 million compared to approximately $16 million in the third quarter.
Rigs yard stay last summer I will now give the word over to our CFO OXXO Wilson, who will take us through the financial highlights of the quarter.
OXXO Wilson: Thank you Mrs. Early on this slide from our pro forma illustration of cash flows for the fourth quarter.
OXXO Wilson: Our operating and G&A expenses for the quarter was approximately $104 million compared to approximately $99 million in the third quarter, mainly due to scheduled dry dockings and delivery of new vessels.
Please note that it is on a guideline to assess the company's performance and is not in accordance with U S. GAAP and also net of extraordinary and those noncash items.
OXXO Wilson: This summarizes to an adjusted EBITDA of approximately $132 million compared to $106 million to $7 million in the previous quarter.
OXXO Wilson: The company generated gross charter hire of approximately $232 million during the fourth quarter were approximately $85 million coming from our container fleet, which was down from the previous quarter due to scheduled dry dockings and efficiency upgrades on some of our large container vessels.
OXXO Wilson: We then move on to the profit and loss statements as reported under U S. GAAP for.
OXXO Wilson: For the fourth quarter. We report total operating revenues according to U S GAAP of approximately $229 million compared to approximately $255 million in the previous quarter.
OXXO Wilson: This includes approximately $1 7 million and profit share related to fuel savings on seven of our large container vessels.
OXXO Wilson: The operating revenue decrease is primarily driven by the hurricane is concluding its contract with <unk> in Canada in mid October.
OXXO Wilson: In the fourth quarter. The company sold the 2005 built feeder container vessel <unk> for approximately 10 $8 million and booked a gain of approximately $5 4 million or <unk>.
OXXO Wilson: During the quarter. The company recorded a profit share income for approximately $2 6 million from fuel savings from some of our large container vessels.
OXXO Wilson: Subsequent to quarter end the company has a greater sale the sister vessel edge nodes, approximately $9 $5 million with expected delivery to the buyer in the second quarter of 2025 of the expiry of the current charter.
OXXO Wilson: Later in the eight Capesize drybulk vessels on charter to Golden Ocean.
OXXO Wilson: During the quarter, we had an increase in vessel operating expenses, mainly due to scheduled dry dockings and new vessel deliveries.
OXXO Wilson: The vessel is debt free and the gain of approximately $4 million is expected to be recorded in the second quarter.
OXXO Wilson: Furthermore, result was impacted by nonrecurring and noncash items, including a gain of approximately $5 4 million in connection with the sale of the feeder container vessel <unk>.
OXXO Wilson: The car correctly, it's generated approximately $2 6 million of gross charter hire in the quarter, including profit share from fuel savings.
OXXO Wilson: Mark to market effect from source of approximately $2 million negative mark to market effects from equity investments of approximately 500000 net decrease in approximately 100000 on credit loss provisions.
OXXO Wilson: Thank you fleet generated approximately $42 million in gross charter hire up from approximately $37 million in the previous quarter as all five tankers acquired in 2024 now have been delivered.
OXXO Wilson: So overall and according to U S. GAAP. The company report a net profit of approximately $20 million or <unk> <unk> per share compared to approximately $44 5 million or <unk> <unk> per share in the previous quarter.
OXXO Wilson: As a further six in drybulk vessels over eight are employed on long term charters the vessels generated approximately $23 million in gross charter hire in the fourth quarter, including approximately 900000 in profit share generated from our eight capesize vessels on long term charters to Golden Ocean.
OXXO Wilson: So moving on to the balance sheet at.
OXXO Wilson: At quarter end, <unk> had approximately $135 million of cash and cash equivalents.
OXXO Wilson: The seven vessels employed in the spot and short term market contributed approximately $7 4 million and that charter revenue compared to approximately $8 4 million in the third quarter.
OXXO Wilson: More of the comfort of marketable securities of approximately $4 6 million. In addition to that pre vessels with an estimated market value of approximately $75 million.
OXXO Wilson: Subsequent to quarter end Golden Ocean.
OXXO Wilson: <unk> has recently completed the financing arrangements of approximately 1 billion with approximately 280 million being drawdown during the quarter.
OXXO Wilson: Size is purchase option for eight capesize vessels for $112 million in aggregate the vessels will be delivered to go Molson during the third quarter of 2025 and the net cash proceeds after repayment of debt is estimated at approximately $50 million.
OXXO Wilson: During the fourth quarter the company paid the second installment of approximately 5% relating to the new building order for 516800 Teu container vessels with scheduled delivery in 2020.
OXXO Wilson: In the fourth quarter, our energy assets generated approximately $55 million and contract revenues compared to approximately $6 million in the third quarter as the hurricanes finish is contracts that are in.
OXXO Wilson: The remaining balances do closer to delivery and we expect this to be financed by pre and post delivery loan facilities subsea.
OXXO Wilson: Subsequent to quarter end the company successfully placed a new sustainability linked bond of $150 million in the Nordic market in anticipation of new investments and general corporate purposes.
OXXO Wilson: In Canada in mid October.
OXXO Wilson: This is under long term contract the conical Phillips in array until May 22009, and during the quarter revenues from the rig was approximately $20 million compared to approximately $16 million in the third quarter.
OXXO Wilson: Based on the Q4 numbers the company has a book equity ratio of approximately 28%.
OXXO Wilson: And to conclude the board has declared the 84th consecutive cash dividend of $10 <unk> per share, which represents a dividend yield of approximately 10%.
Our operating and G&A expenses for the quarter was approximately $104 million compared to approximately $99 million in the third quarter.
OXXO Wilson: Due to scheduled dry dockings and delivery of new vessels.
OXXO Wilson: The company has a strong balance sheet and liquidity position.
OXXO Wilson: Summarizes to an adjusted EBITDA of approximately $132 million compared to $106 7 million in the previous quarter.
OXXO Wilson: Next I will address the majority of all short term asset debt maturities.
OXXO Wilson: <unk> funding, which are the tenders.
OXXO Wilson: In total we raised approximately $1 3 billion financing, including $220 million in senior unsecured books of.
OXXO Wilson: We then move on to the profit and loss statements as reported under GAAP.
OXXO Wilson: For the fourth quarter. We report total operating revenues. According to U S. GAAP of approximately 229 million compared to approximately $255 million in the previous quarter.
OXXO Wilson: Subsequent to quarter end with a new $150 million senior secured bond in the Nordic market maturity in 2013.
OXXO Wilson: The operating revenue decrease is primarily driven by the hurricane is concluding its contract with <unk> in Canada in mid October.
OXXO Wilson: Our fixed charter rate backlog currently stands at approximately $4 3 billion.
OXXO Wilson: Through adding approximately 2 billion during 2024.
OXXO Wilson: During the quarter the company recorded profit sharing income.
OXXO Wilson: Two thirds of the backlog is the customers with investment grade rating given our strong visibility on our cash flow going forward and with that I give the word back to the operator, who will open the line for questions.
OXXO Wilson: The $2 6 million from fuel savings from some of our large container vessels are car carrier under eight capesize dry bulk vessels on charter to go north from there.
OXXO Wilson: During the quarter, we had an increase in vessel operating expenses, mainly due to scheduled dry dockings and new vessel deliveries.
OXXO Wilson: Thank you OXXO, we will now open for a question answer session for those of you who are following this presentation through soon please use the raise hand function under our reactions in the toolbar to ask a question. When your name is called out. Please let me hear speaker to ask your question. Thank you.
OXXO Wilson: Furthermore, the result was impacted by nonrecurring and noncash items, including a gain of approximately $5 4 million in connection with the sale of the feeder container vessel <unk>.
Mark to market effect from <unk> of approximately 2 million negative mark to market fix from equity investments of approximately 500000 net decrease in approximately 100000 on credit loss provisions.
Gregory Lewis: And we will have our first question from Gregory Lewis. Please limit your speaker to ask your questions Hey, Thank you and good afternoon, everybody and thanks for taking my questions.
OXXO Wilson: So overall and according to U S. GAAP. The company report a net profit of approximately $20 million or <unk> <unk> per share compared to approximately $44 5 million or <unk> <unk> per share in the previous quarter.
OXXO Wilson: <unk> actually had a set a few today.
OXXO Wilson: The first is going to be around the semi submersible rig the Hercules.
OXXO Wilson: Clearly the rig back to work at a good year in 'twenty four.
OXXO Wilson: So moving on to the balance sheet at.
OXXO Wilson: I believe it's currently warm stacked outside of off of Norway.
OXXO Wilson: At quarter end, <unk> had approximately $135 million of cash and cash equivalents.
OXXO Wilson: Was hoping you could kind of couple of questions around the Hercules. One is how should we think about that that opex cost.
OXXO Wilson: Furthermore, the comps are marketable securities of approximately $4 6 million. In addition to debt free vessels at an estimated market value of approximately $75 million.
OXXO Wilson: As that rig is warm stacked off of Norway, and as we think about budgeting for 2025 or how are you thinking about budgeting that expense for 2025, just given some of the prospects.
OXXO Wilson: <unk> has recently completed the financing arrangements of approximately 1 billion with approximately $280 million drawdown during the quarter.
OXXO Wilson: During the fourth quarter the company paid the second installment of approximately eight 5% relating to the new building order for 516800 Teu container vessels with scheduled delivery in 2028.
OXXO Wilson: That youre seeing for that rig may be as things start to warm up or the weather improves in the north sea as we kind of move in the summer.
OXXO Wilson: Remaining balances do closer to delivery and we expect this to be financed by pre and post delivery loan facilities.
OXXO Wilson: Thanks, Craig.
OXXO Wilson: No.
OXXO Wilson: The rig just concluded very successful drilling campaign in Canada for <unk>.
OXXO Wilson: Subsequent to quarter end the company successfully placed a new sustainability linked bond of $150 million in the Nordic market in anticipation of new investments and general corporate purposes.
OXXO Wilson: This is a rig that is one of a handful of rigs that are capable of drilling.
OXXO Wilson: <unk> and ultra deepwater and ultra harsh environments.
OXXO Wilson: And based on the Q4 numbers the company has a book equity ratio of approximately 28%.
OXXO Wilson: S has drilled in.
OXXO Wilson: That will conclude the board has declared the 84th consecutive cash dividend of $10 seven per share, which represents a dividend yield of approximately 10%.
OXXO Wilson: And the Arctic.
OXXO Wilson: Before and.
OXXO Wilson: And can do it again so.
OXXO Wilson: The issue right now is that that market is a little slow at the beginning of 'twenty five.
OXXO Wilson: The company has a strong balance sheet and liquidity position.
OXXO Wilson: And.
OXXO Wilson: <unk> addressed the majority of all certain asset debt maturities.
OXXO Wilson: And we believe there are more prospects.
OXXO Wilson: <unk>.
OXXO Wilson: Matching funding with charter tenors.
OXXO Wilson: In the second half and onwards, so I would say if you talk to market analysts. They would say that 2026 looks very promising so for now we are keeping during idle. The reason why it is in the location where it is that it's very close to where it has a true edge.
OXXO Wilson: In total we raised approximately $1 3 billion financing, including $220 million in senior unsecured books a.
OXXO Wilson: Subsequent to quarter end, whereas the new $150 million senior secured bond in the Nordic market the maturity in 2013.
OXXO Wilson: Our fixed charter rate backlog currently stands at approximately $4 3 billion.
OXXO Wilson: Also we're taking the opportunity while it is idle now to do some upgrades for the rig which makes it more attractive.
OXXO Wilson: Adding approximately $2 billion during 2024 to.
OXXO Wilson: Two thirds of the backlog is the customers with investment grade rating in our strongest ability on our cash flow going forward.
OXXO Wilson: In the long run so we don't risk.
OXXO Wilson: Having to take the rig out of business when it's working to do some upgrades that has to do with everything from.
Speaker Change: I give the word back to the operator, who will open the line for questions.
Speaker Change: Thank you Mark So we will now open for a question answer session for those of you who are following this presentation to assume please use the raise hand function under reactions in the toolbar to ask a question. When your name is called out. Please let me hear speaker to ask your question. Thank you.
OXXO Wilson: The very latest drilling control systems, and frankly, many of them in what they call a sixth and seventh generation rigs at the same issue. So we are dealing with it now beforehand.
OXXO Wilson: And also some other upgrades that we've been seeing which makes them more attractive.
Speaker Change: We will have our first question from Gregory Lewis.
OXXO Wilson: More than $100 million on the rig in early in early 2023, and that's great. We believe this is driving me attractively positioned but a very soft first quarter definitely.
Speaker Change: Speaker to ask your questions.
Speaker Change: Thank you and good afternoon, everybody and thanks for taking my questions.
Speaker Change: <unk> actually had a fed a few today.
Speaker Change: The first is going to be around.
OXXO Wilson: First half of would say so our expectation is not to that that rig will be back working until later in the year.
Speaker Change: The semisubmersible rig to Hercules.
Clearly the rig back to work category year in 'twenty four.
OXXO Wilson: Okay, Great Great and then I did want to bounce around a little bit.
Speaker Change: I believe it's currently warm stacked outside off of Norway.
Can I can appreciate that.
OXXO Wilson: The stability of the dividend.
Was hoping you could kind of couple of questions around the Hercules. One is how should we think about that that opex cost.
OXXO Wilson: It's kind of we look at.
OXXO Wilson: We went back and looked at say 2023, it looked like the dividend was what's really funded call. It mid 40% payout of free cash flow.
Speaker Change: Okay.
Speaker Change: As that rig is warm stacked off of Norway, and as we think about budgeting for 2025 or how are you thinking about budgeting that expense for 2025, just given some of the prospects that.
OXXO Wilson: In 2024 that dip down into kind of like a high <unk> percentage of free cash or operating cash flow payout.
Speaker Change: <unk> that youre seeing for that rig.
OXXO Wilson: Realizing that.
Speaker Change: As things start to warm up or the weather improves in the north sea as we kind of move in the summer.
OXXO Wilson: The dividend is a decision that the board.
OXXO Wilson: As always focused on and always thinking about.
OXXO Wilson: <unk>.
Craig: Thanks, Craig.
OXXO Wilson: As we think about the stability of that dividend.
Speaker Change: <unk>.
Speaker Change: The rig just concluded very successful drilling campaign in Canada for Ecuador.
OXXO Wilson: How should we be thinking about that I E.
OXXO Wilson: We are in this range there is.
Speaker Change: This is a rig that is one of a handful of rigs that are capable of drilling.
OXXO Wilson: For in this kind of 30 40, maybe even 50% pay out of operating cash flow dividends pretty pretty should we expect it to be stable or asked another way.
Speaker Change: Both in ultra deepwater.
Speaker Change: Welcome to <unk>.
S has thrilled and.
OXXO Wilson: What could what could trigger a decision to move the dividend higher or lower.
Speaker Change: And the Arctic.
Speaker Change: Before and.
Speaker Change: And can do it again so.
OXXO Wilson: Yes. Thanks.
Speaker Change: The issue right now is that that market is a little slow at the beginning of 'twenty five.
OXXO Wilson: You're absolutely correct that the dividend assessed on a quarter over quarter basis. So we cannot guide specifically what will be next quarter dividend, but generally I would say that the dividend discussions in the company and when the board is more has more to do with the long term prospects and if you look at the Companys opera.
Speaker Change: And.
Speaker Change: And we believe there are more prospects.
Speaker Change: <unk>.
Speaker Change: In the second half and onwards, so I would say if you talk to market analysts. They would say that 2026 looks very promising so for now we are keeping during idle. The reason why it is in the location where it is that it's very close to where it has a true edge.
OXXO Wilson: <unk> model, yes, we have we have this legacy asset.
OXXO Wilson: Frankly, I mean, the reason why we have this asset and the operating mode, where it is because it wasn't a bareboat charter.
Speaker Change: Also we're taking the opportunity while it is idle now to do some upgrades for the rig which makes it more attractive.
OXXO Wilson: And our Counterparties sea drill failed.
OXXO Wilson: They went through chapter 11, and we ended up taking the rig back because that was the best solution for the company at the time. If you look at the generally if you look at the rest of the business.
Speaker Change: The long run so we don't risk.
Speaker Change: Having to take the rig out of business when it's working to do some upgrades that has to do with everything from.
OXXO Wilson: Now we have two thirds of our of our backlog with investment grade Counterparties.
OXXO Wilson: That's a fundamental change in the business model and we have.
Speaker Change: The very latest drilling control systems, and frankly, many of them in what they call a sixth and seventh generation rigs at the same issue. So we're dealing with it now beforehand.
OXXO Wilson: More than 70 vessels, if we net out the gold notion vessels, which will go out of the fleet in the third quarter and frankly called notion assets. There also.
Speaker Change: And also some other.
Speaker Change: Upgrades that we've been seeing what makes them more attractive.
OXXO Wilson: Legacy assets I mean, they are on an operating model, where where we just we just we just more I would say more of a financial nature of that and operate in either but if you look at the rest. It's all long term business. Its all would stray restore counterparties. So we have a very stable cash flow fundamentals in the business and yes.
Speaker Change: More than $100 million on the rig in early in early 2023 and three.
Speaker Change: We believe this is very attractively position, but a very soft first quarter definitely or sorry, first half I would say so our expectation is not to that that rig will be back working until later in the year.
OXXO Wilson: The drilling rig.
OXXO Wilson: Some very.
Speaker Change: Okay, Great Great and then I did want to bounce around a little bit.
Speaker Change: A lot of noise in the cash flow and more even more noise in the end net income because of U S accounting rules square.
Speaker Change: Can I can appreciate that.
Speaker Change: The stability of the dividend.
OXXO Wilson: When the rig is mobilized saying you can.
Speaker Change: It's kind of we look at.
OXXO Wilson: And not recognized revenues, even though you are compensated to revenues and then everything is piled up on top of a drilling days, so youll have lower higher lower higher lower higher revenues structures, which which creates a bit of a noise but.
Speaker Change: We went back and looked at say 2023, it looked like the dividend was what's really funded call. It mid 40% payout of free cash flow.
Speaker Change: In 2024 that dip down into kind of like a high <unk> percentage of free cash or operating cash flow payout.
OXXO Wilson: I think we should yes, we are managing the rig.
Speaker Change: <unk> upgraded we spent a lot of capital on it we have this legal case that you may have noticed that.
Speaker Change: As you know realizing.
Speaker Change: The dividend is a decision that the board is always focused on and always thinking about.
Speaker Change: We're so far seasonal has been ordered to pay us a compensation.
Speaker Change: As we think about the stability of that dividend.
Speaker Change: Effectively compensate us for the cost we had back in 2023.
Speaker Change: How should we be thinking about that I E.
Speaker Change: But the rest of the model and the rest of the business is quite stable and.
Speaker Change: Hey.
Speaker Change: Or in this range. There is we're in this kind of 30 40, maybe even 50% pay out of operating cash flow dividends pretty pretty should we expect it to be stable or asked another way.
Speaker Change: Very predictable I would say in nature, So I would say it sort of.
Speaker Change: Half.
Speaker Change: The <unk> model is a model I would say of the it's a tale of two decades as you can call. It is from 2004 to 2014 ish.
Speaker Change: What could what could trigger a decision to move the dividend higher or lower.
Speaker Change: Yes. Thanks.
Speaker Change: That's the financial structures more verbal type deals.
Speaker Change: You're absolutely correct that the dividend assessed on a quarter over quarter basis. So we cannot guide specifically what will be next quarter dividend, but generally I would say that the dividend discussions in the company on when the board is more has more to do with the long term prospects.
Speaker Change: And from there onwards, we are we have switched to bottle more toward operating model, where we where we are.
Speaker Change: Basically.
Speaker Change: Ron the vessels, we do repeat business and typically with very strong counterparties. So.
Speaker Change: If you look at the Companys operating model, Yes, we have we have this legacy asset frankly, I mean, the reason why we have this asset and the operating mode, where it is is because it wasn't a bareboat charter.
That's really what I can say is it's difficult to be more specific on the Hercules.
Speaker Change: We'll market that rig we are marketing that rig.
Speaker Change: And and we hope to find work for it but we cannot be specific on on when on what exactly we are bidding on and when exactly we can we can notify the market about the contracts. Okay that was super helpful.
Speaker Change: And our Counterparties sea drill failed.
Speaker Change: Went through to chapter 11, and we ended up taking the rig back because that was the best solution for the company at the time. If you look at that generally if you look at the rest of the business.
Speaker Change: I did have I did want to keep going.
Speaker Change: And I saw that.
Speaker Change: Now we have two thirds of our of our backlog with investment grade Counterparties I mean, that's a fundamental.
Speaker Change: You kind of.
Speaker Change: We're flagging and maybe that.
Speaker Change: The strength of your Counterparties, maybe this quarter more than most a couple of question I have gotten a little bit. This morning was around tariffs and.
Speaker Change: Could change in the business model and we have you know.
More than 70 vessels, if we net out the gold notion vessels, which will go out of the fleet in the third quarter and frankly gold notion assets. There also.
Speaker Change: Don't think I think I know the answer to this but as we think about as you built this container ship.
Speaker Change: Legacy assets I mean, they are on an operating model, where where we just we just more I would say more of a financial nature of that and operating theater, but if you look at the rest. It's all long term business. Its all good stride with strong counterparties. So we have a very.
Speaker Change: Portfolio and even the car carrier portfolio.
Speaker Change: Obviously, it's.
Speaker Change: I don't know if theyre interested in a volatile I don't know what the word is in the U S.
Speaker Change: But regardless.
Speaker Change: Stable cash flow fundamentals in the business and yes.
Speaker Change: These tariffs that people are reading about the question that I have gotten a little bit. This morning was around and I think the people in shipping have seen this in other industries around force majeure or Hal.
Speaker Change: Drilling rig I've had some vary.
Speaker Change: A lot of noise in.
Speaker Change: And the cash flow and more even more noise in the end net income because of U S accounting rules square.
How how certain things can create force matures as.
Speaker Change: As we look at these car carriers and container ships around tariffs, regardless of where these tariffs potentially go up.
Speaker Change: When the rig is mobilized saying you cannot recognize revenues, even though you're compensated for revenues and then everything is piled up on top of the drilling days, so youll have lower higher lower higher lower higher revenue structures, which which creates a bit of a noise but.
Speaker Change: I would think that that should provide no impact.
Speaker Change: For existing charters, but.
Speaker Change: If you could kind of clarify that our work there any wrinkles I think that might be super helpful. This morning.
Speaker Change: We should yes, we are managing the rig.
Speaker Change: Yes. Thank you I mean, if you look at the car carriers, we have just to start with that.
Speaker Change: <unk> upgraded we spent a lot of capital on it we had this legal case that you may have noticed that.
Speaker Change: Trading on the U S. This is Volkswagen group.
Speaker Change: It's a very strong.
Speaker Change: So far <unk> has been ordered to pay us a compensation.
Counterparty and they are our counterparties. So we can say if there are any issues there they will absorb that and I think frankly, they have good economic capacity to do that.
Speaker Change: To effectively compensate us for the cost we had back in 2023.
Speaker Change: But the rest of the model and the rest of the business is quite stable and.
Speaker Change: Very predictable I would say in nature, So I would say it's sort of.
Speaker Change: But also I would like to add that when you look at the car trade.
Speaker Change: Yeah.
Speaker Change: That's a market yes, we have you have you have.
Speaker Change: SSL model is a model I would say of the it's a tale of two decades is you could call. It is from 2004 to 2014 ish.
Speaker Change: Volumes going from Asia, So far.
Speaker Change: Sorry, I'm, sorry from Europe to the U S. But you also have a lot of volume going from the U S and back.
Speaker Change: That's the financial structures more bearable type deals.
Speaker Change: So it's not like the car factories have Dr producing all sorts of brown.
Speaker Change: And from there onwards, we are we have switched to bottle more toward operating model, where we where we are.
Speaker Change: Variations in each reflect the market that typically have a trade where we are.
Speaker Change: The logistics on C as been very effect effective for them. So so the Dunbar, yes of course that if this this evolves I mean, what then happens too.
Speaker Change: Basically.
Speaker Change: Ron the vessels, we do repeat business and typically with very strong counterparties. So.
Speaker Change: That's really what I can say, it's difficult to be more specific on the Hercules.
Speaker Change: The vehicles that are being produced locally in the U S. For instance, and I think it's a little too early to tell.
Speaker Change: We'll market that rig we are marketing that rig.
Speaker Change: And whether or not this is what.
Speaker Change: And we hope to find work for it but we cannot be specific on on when on what exactly we are bidding on and when exactly we can we can notify the market about the contracts that.
Speaker Change: What can we say leverage to start.
Speaker Change: Cautions at a different level, it's difficult to say, but from our perspective, our counterparty is.
Speaker Change: There is folks Fogging group.
Speaker Change: So we don't think we are.
Speaker Change: That was super helpful.
Speaker Change: I did have I did want to keep going.
Speaker Change: Very exposed from that perspective same thing goes for for the liner side our line of companies going there are.
Speaker Change: And I saw that.
Speaker Change: You kind of.
Speaker Change: We're flagging and maybe that.
Speaker Change: There are Papa Lloyd.
Speaker Change: Chris Cline MSC, we have very strong coroner parties, who have made a lot of money over the last few years and are quite robust so.
Speaker Change: The strength of your Counterparties, maybe this quarter more than most a couple of question I have gotten a little bit. This morning was around tariffs and I don't think I think I know the answer to this but as we think about as you build this container ship.
Speaker Change: And also.
Speaker Change: The trade.
Speaker Change: Between say, China, and the U S has changed fundamentally since the.
Speaker Change: Portfolio and even the car carrier portfolio.
Speaker Change: What we call. The 2018 19 trade war, if you can call it that between between U S and China, where you at that point of time had around 10% of the volumes going from China to the U S and therefore had quite a bit of an impact.
Speaker Change: Obviously, it's.
Speaker Change: I don't know if theyre interested in a volatile I don't know what the word is in the U S.
Speaker Change: But regardless.
Speaker Change: These tariffs that people are reading about the question that I have gotten a little bit this morning was around.
Speaker Change: In the meantime trade.
Speaker Change: Trade patterns have changed and right now.
Speaker Change: The people in shipping have seen this in other industries around force majeure or how how certain things can create force matures.
Speaker Change: China to U S has diminished quite.
Speaker Change: Dramatically on the container line side. So so yes, it has an impact but it's much less than it was six seven years ago. So.
We look at these car carriers and container ships around tariffs.
Speaker Change: We monitor this closely but they're at the same time, we have very strong counterparties. We are not directly exposed to that this is our customers who are potentially exposed.
Speaker Change: Wireless of where these tariffs potentially go I would think that that should provide no impact.
Speaker Change: For existing charters, but what I would if you could kind of clarify that our work there any wrinkles I think that might be super helpful. This morning.
Speaker Change: And we are quite confident that they can easily serviced our charter rates to us.
Speaker Change: Thank you I mean, if you look at the car carriers, we have just to start with that.
Speaker Change: Okay Super helpful guys, I actually see a Henry so I'll turn it over thank you very much.
Speaker Change: Trading on the U S. This is Volkswagen group.
Speaker Change: Thank you.
Speaker Change: It's a very strong.
Speaker Change: Thank you and then we will take our next question from Matt Miller. Please limit your speaker and ask your question. Please.
Speaker Change: Counterparty and they are our counterparties. So we can say if there are any issues there they will absorb that and I think frankly, they have good economic capacity to do that.
Speaker Change: Hi, good afternoon. Thank you for taking my questions.
Speaker Change: You announced Golden Ocean will be exercising their purchase options on eight capesize.
Speaker Change: But also I would like to add that when you look at the car trade.
Speaker Change: As you're thinking about redeploying the net proceeds should we expect you to focus on Drybulk investments or are you willing to reduce your exposure to that sector.
Speaker Change: As the market, yes, we have you have you have.
Speaker Change: Volumes going from Asia. So first of all I'm, sorry from Europe to the U S. But you also have a lot of volume going from the U S.
Speaker Change: Hi, Thank you Jenny.
Speaker Change: Generally I would say we are.
Speaker Change: So it's not like the car factories have theyre, producing all sorts of brown.
Speaker Change: Segment agnostics, so for us it's all about doing the right deals with the right structure, the right Counterparties and with the right type of economics.
Speaker Change: Variations in each reflect the market that typically have a trade where the logistics arm C. As been very effect effective for them. So so the number so of course that if this this evolves I mean, what then happens too.
Speaker Change: Would love to do more in the dry bulk space.
Speaker Change: And.
Speaker Change: If we can find the right the right structure around that.
Speaker Change: And if you look at the segments that we're in I mean, yes, we have liners.
Speaker Change: The other vehicles that are being produced locally in the U S. For instance, and I think it's a little too early to tell.
Speaker Change: There, we see a significant.
Speaker Change: Interest from from company, it's been a very logistics mindset, you can be with <unk>.
Speaker Change: Whether or not this is.
Speaker Change: What can we say leverage to start discussions at different levels, it's difficult to say, but from our perspective. Our counterparty is there is spokes Fogging group.
Speaker Change: Loves to do the same more of the same in the Drybulk sector.
Speaker Change: And we've done a few deal in the tanker segment.
Speaker Change: I would say the only segment, where we are not questions right now is LNG.
Speaker Change: So we don't think we are.
Speaker Change: That has more to do with.
Speaker Change: Very exposed from that perspective same thing goes for for the liner side our line of companies going there are.
Maybe.
Speaker Change: As we see it may be a lot of players chasing deals in that segment and therefore.
Speaker Change: There are hopper Lloyd Maersk line MSC, we have very strong counterparties, who have made a lot of money over the last few years and are quite robust.
Speaker Change: That segment Hudson.
Speaker Change: For us hasn't been attractive enough from a running yield perspective.
Speaker Change: Our residual exposure after the charter period perspective. So we are we have no we have not sort of allocated that capital for anything in particular.
Speaker Change: And also.
Speaker Change: The trade.
Speaker Change: Between say, China, and the U S has changed fundamentally since the.
Speaker Change: Nothing specific it's all about deal by deal and we monitor that these markets as we go but maybe maybe also generally I would say that if you look at that deal that is one of our obviously I'd call. It a legacy deal.
Speaker Change: What we call. The 2018 19 trade war, if you can call it that between between U S and China, where you at that point of time had around 10% of the volumes going from China to the U S and therefore had quite a bit of an impact.
Speaker Change: It's sort of a.
Speaker Change: More of a financial profile really than a true operating profile.
Speaker Change: In the meantime trade.
Trade patterns have changed and right now.
Speaker Change: China to U S has diminished quite dramatically on the container line side. So so yes. It has an impact but it's much less than it was six seven years ago. So.
Speaker Change: And.
Speaker Change: If you look at the <unk>.
Effective cash flow coming from those vessels compared to the equity that we don't get released we believe that we can actually reinvest that with a better return than then keep rolling back deal. So this is we are we are quite neutral to that I mean, we wouldn't mind working with gold notion that's been it's been.
Speaker Change: We monitor this closely but they're at the same time, we have very strong counterparties. We are not directly exposed to that this is our customers who are potentially exposed.
Speaker Change: Working quite smoothly, but we also believe we can very effectively reinvest that capital in other assets and get at least as good return on the capital.
Speaker Change: And we are quite confident that they can easily serviced our charter rates to us.
Speaker Change: Okay Super helpful guys, I actually see a Henry so I'll turn it over thank you very much.
Speaker Change: That's very helpful. Thank you.
Speaker Change: I also wanted to ask about the suitable award.
Speaker Change: Thank you.
Speaker Change: Thank you and then we will take our next question from Milan.
Speaker Change: You cannot provide much commentary on the $48 million on a ruling but should the ruling the appeal when should we expect when should we expect to hear from the next.
Speaker Change: Please limit your speaker and ask your question. Please.
Speaker Change: Hi, good afternoon. Thank you for taking my questions.
Speaker Change: Ruling.
Speaker Change: You announced Golden Ocean will be exercising their purchase options on eight capesize.
Speaker Change: Sure.
Speaker Change: This is actually here.
Speaker Change: In the ruling itself is public so it's in the region. So everybody can read that ruling.
Speaker Change: As you think about redeploying the net proceeds should we expect you to focus on Drybulk investments or are you willing to reduce your exposure to that sector.
Speaker Change: The.
Speaker Change: The timing for the appeal is can peel off until the 15th of March. So we will then know if it's appealed and then.
Speaker Change: Hi, Thank you John.
Speaker Change: Generally I would say we are segment.
Speaker Change: It will be moved on to call. It the second circuit then that could.
Speaker Change: Agnostics so for US it's all about doing the right deals with the right structure with the right Counterparties and with the right type of economics.
Speaker Change: Potentially it take up to another 12 months before that that case is scheduled so it could take some time still yeah.
Speaker Change: Would love to do more in the dry bulk space.
Speaker Change: And.
Speaker Change: If we can find the right the derived structure around that.
Speaker Change: Thanks for the color that's everything for me. Thank you for taking my questions.
Speaker Change: And if you look at the segments that we're in I mean, yes, we have liners.
Speaker Change: Thank you and we'll take our next question from Doug about please.
Speaker Change: There, we see a significant.
Speaker Change: And ask your question.
Speaker Change: Yes. Good afternoon, guys, a very quick one from me and a significant upgrades or capex required to the Hercules if it's ever going to work.
Speaker Change: Interest from from company, it's been a very logistics mindset.
Speaker Change: Loves to do the same more of the same in the Drybulk sector.
Speaker Change: And we've done a few deal in the tanker segment.
Speaker Change: Uh huh.
Speaker Change: Offshore Norway.
Speaker Change: I would say the only segment, where we are not questions right now is LNG.
Speaker Change: Thank you.
Speaker Change: Thanks.
Not particularly I mean, <unk> has worked in Norway in the past so it but.
Speaker Change: That has more to do with.
Speaker Change: Maybe.
Speaker Change: As we see it may be a lot of players chasing deals in that segment and therefore.
Speaker Change: But that under another call it manager.
Speaker Change: Going back in with onshore drilling.
Speaker Change: That segment Hudson.
Speaker Change: For us hasn't been attractive enough from a running yield perspective.
Speaker Change: Who is it.
Speaker Change: It may be the premier operator on the Norwegian Continental shelf.
Speaker Change: Our residual exposure after the charter period perspective. So we are we have no we have not sort of allocated that capital for anything in particular.
Speaker Change: And we and frankly also we took the line us the ordering we have the harsh environment Jackup that was also taken into Norway and switched banishment from from <unk> to <unk> technology. So they are effective with a wider group was done in a very efficient.
Speaker Change: Nothing specific it's all about deal by deal and we monitor that these markets as we go but maybe maybe also generally I would say that if you look at that deal that is one of our obviously I'd call. It a legacy deal.
Speaker Change: <unk> monitor.
Speaker Change: We there is there are always some some investments to be made but we think.
It's sort of a.
Speaker Change: More of a financial profile really than a true operating profile.
Speaker Change: Third to numbers who've seen from from other settings, I think there are quite a manageable.
Speaker Change: And.
Speaker Change: Typically what you see when you when you bring rigs into Norway. The oil companies are generally willing to compensate the companies for the effect of investments of taking them.
Speaker Change: If you look at that.
Speaker Change: Effective cash flow coming from those vessels compared to the equity that we know get released we believe that we can actually reinvest that with a better return than then keep rolling back deal. So this is we are we are quite neutral to that I mean, we wouldn't mind working with gold notion that's been it's been.
Speaker Change: Into that.
Speaker Change: That environment so so.
Speaker Change: We don't think that would be material, but.
Speaker Change: Working quite smoothly, but we also believe we can very effectively reinvest that capital in other assets and get at.
Speaker Change: Well.
Speaker Change: There will be investment for sure.
Speaker Change: If and when.
Speaker Change: At least as good return on the capital.
Speaker Change: Our contract is awarded we will inform the market about what.
Speaker Change: That's very helpful. Thank you.
Speaker Change: Let me say.
Speaker Change: Both the charter rates.
Speaker Change: Also wanted to ask about the Ctrip will award I am guessing you cannot provide much commentary on the $48 million on a ruling but should the ruling of the appeal.
Speaker Change: And mobilization fees.
Speaker Change: And investments required to two two to get the job done effectively on the from a drilling perspective.
Speaker Change: Should we expect when should we expect to hear from the next.
Speaker Change: Alright, thanks for the color.
Speaker Change: Ruling.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: We have also received a question on the side here.
Speaker Change: Is actually here.
Speaker Change: I mean, the ruling itself is public so it's the Norwegian so everybody can read that ruling.
Speaker Change: Shipping segment do you see as the most potential slash profitable in the next two to three years.
Speaker Change: The.
Speaker Change: The timing for the appeal is.
Speaker Change: Pillow until the 15th of March. So we will then know if it's appealed and then.
Speaker Change: Okay.
Speaker Change: And you know, it's a difficult question and the reason why it's difficult is that we don't focus on spot market. We focus on long term charters. So now you're seeing the deals. We've done is typically five 710 year charters, so which means that we're not really exposed to the short term.
Speaker Change: It will be moved on to call. It the second the circuit then that could.
Speaker Change: Potentially it take up to another 12 months before that that case is scheduled so so it could take some time yet.
Speaker Change: Thanks for the color that's everything for me. Thank you for taking my questions.
Speaker Change: Market. So so so spot market isn't so relevant but if you look at new business development.
Speaker Change: Thank you and we'll take our next question from Perl Goodbye.
Speaker Change: Your speaker and ask your question.
Speaker Change: It typically.
Speaker Change: The sweet spot when we get deals done and we get.
Perl Goodbye: Yes. Good afternoon, guys, a very quick one for me are there any significant upgrades or capex required to the Hercules if it were to work on that.
Speaker Change: <unk> is a setting where we have an attractive investment or enter point, where we have a structure where.
Speaker Change: Offshore Norway.
Speaker Change: Our our customer.
Speaker Change: Thank you.
Perl Goodbye: Thanks.
Speaker Change: Good day.
Speaker Change: Not particularly I mean, this rig has worked in Norway in the past so.
Speaker Change: In the front and loose money saved from day, one so hopefully it's like the spot market. If that's where they are facing is a little over.
Speaker Change: But that under another call. It manager so going back in with onshore drilling of I would say who is may.
Speaker Change: And then in the long run and you've got to get to an effective cost of capital.
Speaker Change: It may be the premier operator on the Norwegian Continental shelf.
Speaker Change: We have over the years now built quite efficient funding structures for core assets.
Speaker Change: And we and frankly also we took the line us the ordering we have the harsh environment Jackup that was also taken into Norway and switched banishment from from <unk> to <unk> technology. So they are effective with a wider group was done in a very efficient.
Speaker Change: We have funded ourselves provided would say primarily in the Asian capital market, where we have seen very attractive funding rates for long term.
Speaker Change: Florida structures with very strong counterparties.
Speaker Change: We believe that we can structure deals that are quite attractive.
Speaker Change: And.
Speaker Change: <unk> monitor.
Speaker Change: And Thats why we are insulated from that perspective from the short term market fluctuations.
Speaker Change: We.
Speaker Change: There is some some investments to be made but we think.
Speaker Change: Third to numbers who've seen from from other settings. So I think there are quite manageable.
Speaker Change:
Speaker Change: And that's sort of the nature of our business, but if you look at shipping in general I would say that most shipping segments. In particular, if you look at the big volume shipping segments being dry bulk which is the biggest tighter.
Speaker Change: Typically what you see when you when you bring rigs into Norway. The oil companies are generally willing to compensate the companies for the effect of investments of taking them.
Speaker Change: Smaller than Drybulk, but.
Into that.
Speaker Change: That environment so so.
Speaker Change: You have a very low order book historical order book generally so and you have a <unk>.
Speaker Change: We don't think that would be material, but.
Speaker Change: <unk> reduction in shipment to capacity and you also have structural issues like in Japan, and Korea, where you have workforce issues, which.
Speaker Change: Well.
Speaker Change: There will there will be investment for sure.
Speaker Change: If and when.
Speaker Change: Ah contract just awarded we will inform the market about what.
Speaker Change: Could be a different making it difficult to two people even also amid the current reduced volumes of production. So from that perspective, I think shipping is.
When you say both charter rates and.
Speaker Change: Mobilization fees and investments required to two two to get the job done effectively on the from a drilling perspective.
Speaker Change: Very interesting spot, where you have true shortage of shipbuilding capacity you have had an order book, where you want if you order a ship today anywhere if you want to.
Speaker Change: Alright, thanks for the color.
Speaker Change: We have also received a question on the side here, which shipping segment do you see as the most potential slash profitable in the next two to three years.
Speaker Change: Volume of ships, new builds you will have to wait until 2029.
Speaker Change: We're talking five 4% to five at least four years to get these delivered.
Speaker Change: And historically, it's always been the ship owners, who is doing it to themselves typically ship owners as soon as you see some lightning and the market ship owners would run out and order a lot of vessels to be put in the spot market and then what I think and because then when they get delivered suddenly there are too many vessels.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And you know, it's a difficult question and the reason why it's difficult is that we don't focus on spot market. We focus on long term charters. So now you're seeing the deals. We've done is typically five 710 year charters, so which means that we're not really exposed to the short term market. So so.
Speaker Change: And.
Speaker Change: And the shift in the charter rate collapse.
Speaker Change: To do that now it will take a long time. So I think we've been in a very interesting spot from a from a supply perspective.
Speaker Change: So spot market isn't so relevant but if you look at new business development.
Speaker Change: It typically does.
Speaker Change: That the sweet spot when we get deals done and we get.
Speaker Change: And then we just have to hope that the demand side is keeping up in China or in Asia.
Speaker Change: Is a setting where we have an attractive investment or enter point, where we have a structure where.
Speaker Change: Which is really where the volumes are going there is so much noise about the U S.
Speaker Change: Our our customer.
Speaker Change: Don.
Speaker Change: And trade wars, but volumes from a shipping perspective is more Asia.
Speaker Change: Good day.
Speaker Change: In the front and loose money saved from day, one so hopefully it's like the spot market. If that's where they are facing is a little over.
Speaker Change: Centric than U S centric.
Speaker Change: I think it makes.
Speaker Change: Maritime transportation quite to truckload.
Speaker Change: And then in the long run and you've got to get to an effective cost of capital.
Speaker Change: We have over the years now built quite efficient funding structures for core assets we have.
Speaker Change: Thank you Willa.
Speaker Change: We also have another question here, what's your view regarding the huge delivery backlog of container ships in the coming years do you think it will affect your profitability in 'twenty six 'twenty seven.
Speaker Change: Funded ourselves provided would say primarily in the Asian capital market, where we have seen very attractive funding rates for long term.
Speaker Change: Farther structures with very strong counterparties.
Speaker Change: So we believe that we can structure deals that are quite attractive.
Speaker Change: Surely speaking I think regarding the backlog of container ships.
Speaker Change: And.
Speaker Change: And Thats why we are insulated from that perspective from the short term market fluctuations.
Speaker Change: Any effect on our fulfill in 2027, we do not believe.
Speaker Change: There will be a major impact to us.
Speaker Change: And that's.
Speaker Change: Our container fleet is mainly chartered out.
Speaker Change: That's sort of the nature of our business, but if you look at shifting in general I would say that most shipping segments. In particular, if you look at the big volume shipping segments being dry bulk which is the biggest tighter.
Speaker Change: Until 2030 or 20 29.3 on the vessels that are still open we expect.
Speaker Change: There is good interest in the market still.
Speaker Change: A smaller than drybulk, but.
Speaker Change: And we see that there is a strong interest for for good and large container assets from all the operators still may sound surprising, but it's what we see.
You have a very low order book historical order book generally so.
Speaker Change: A significant reduction in shipbuilding capacity and you also have structural issues like in Japan, and Korea, where you have workforce issues, which.
Speaker Change: So demand is still good.
Speaker Change: <unk>.
So so this.
Speaker Change: I mean for us to look at the huge order book as you call it from from the Big miners there.
Speaker Change: Could be a different making it difficult to two people. Even also the current reduced the volumes of production so from that perspective, I think shipping.
Speaker Change: It's definitely a demand there still so far as we can tell right now we do not.
Speaker Change: We do not see a big drop in the rates or definitely not in our profitability in the next.
Speaker Change: Very interesting spot, where you have true shortage of shipbuilding capacity you have had an order book, where you want if you order a ship today anywhere if you want to.
Speaker Change: For four to five years based on our current backlog.
Speaker Change: Yeah.
Speaker Change: Volume of ships, new builds you will have to wait until 2029.
Speaker Change: Thank you Tom.
Speaker Change: Then I would like to thank everyone for participating in this conference call. If you have any follow up questions to the management. There are contact details in the press release or you can get in touch with us through the contact pages on our webpage www Dot <unk> dot com. Thank you everyone.
Speaker Change: We're talking four to five at least four years to get these delivered.
Speaker Change: And historically, it's always been the ship owners, who is doing it to themselves typically ship owners as soon as you see some lightning and the market ship owners would run out and order a lot of vessels to be put in the spot market and then what.
Speaker Change: Because.
Speaker Change: Then when they get delivered suddenly there are too many vessels and.
Speaker Change: And shipped in the charter rate collapse.
Speaker Change: To do that now it will take a long time. So I think we've been in a very interesting spot from a from a supply perspective.
Speaker Change: And then we just have to hope that the demand side is keeping up in China or in Asia, which is really where the volumes are going there is so much noise about the U S and.
Speaker Change: And trade wars, but volumes from a shipping perspective is more Asia.
Speaker Change: Centric than U S centric.
Speaker Change: I think it makes.
Speaker Change: Maritime transportation quite attractive.
Speaker Change: Thank you Willa.
Speaker Change: We also have another question here, what's your view regarding the huge delivery backlog of container ships in the coming years do you think it will affect your profitability in 2006 and 'twenty seven.
Speaker Change: Surely speaking I think regarding the.
Speaker Change: The backlog of container ships.
Speaker Change: Any effect on our fulfill in 2627, we do not believe.
Speaker Change: There will be a major impact to us.
Speaker Change: Our container fleet is <unk>.
Speaker Change: Mainly chartered out.
Speaker Change: Until 2030, now or 2029 23 on the vessels that are still open we expect.
There is good interest in the market.
Speaker Change: Still.
Speaker Change: And we see that there is a strong interest for for good and large container assets from all the operators still may sound surprising, but it's what we see.
Speaker Change: So demand is still good.
Speaker Change: <unk>.
Speaker Change: So so this.
Speaker Change: I mean for us to look at the huge order book as you call. It from from the Big miners there was.
Speaker Change: Definitely a demand there still so far as we can tell right now we do not.
Do not see a big drop in the rates or definitely not in our profitability in the next four to five years based on our current backlog.
Speaker Change: Yeah.
Tom: Thank you Tom.
Speaker Change: I would like to thank everyone for participating in this conference call. If you have any follow up questions to the management. There are contact details in the press release or you can get in touch with us through the contact pages on our webpage Www <unk> Corp. Dot com. Thank you everyone.