Archer Limited

Good morning everyone and welcome to this first quarter 2025 result announcement from Archer. Today we have the pleasure of having CEO Dag Skindlo and CFO Espen Juranger with us who will take us through the report. Dag, the word is yours.

thank you and good morning everyone and uh thank you to arctic for hosting the streaming today i will today go through the first quarter 2025 give you some color on that and try to take question along or at the end i think you know so please please feel free to ask questions uh usual for looking statements warnings uh before i start i think it's important for for for us to say the highlight for us in q1 is that we start paying dividend now we have confirmed today that we are starting to pay dividend about 5.5 million dollars now for q2 it's a direct wheel around 11 a little bit about uh the share price today but it's really a testimony to the job we have done in the last few years growing the business growing the ability but most importantly growing our cash contribution significantly over the last few years we have refinanced and now we are able to pay dividends so i know for a lot of shareholders that has been a long long journey but now we are here and we are confident that we will continue to pay dividend and that we have a good cash flow going forward So with that, just to remind you all, Archer, typically, well services and brewing services, we are a well company. We focus on the well. We have about $1.3 billion of revenue, and we have about 5,000 employees. We are operating about 40 locations globally. To the financials first, we have, as you can see, grown quite significantly the last few years. If we meet our guidance for this year, we will have grown about 24% since 2022, in a mix of organic growth and true M&A. So I think that's quite good. We have a target this year to grow a bit there by 15% to 25%, and we reiterate that guidance today. Leverage ratio has come down significantly in the last few years. We are now targeting about between 2.1 and 2.3 at the end of the year. And then we have our long-term target to go between 1.5 to 2. Also, and maybe the most important number, is the cash contribution, which we expect to be well above $100 million in 2025. On our businesses, our biggest business is the wealth services and platform operation business, our core business, historic business, represent about 75% of our global EBITDA. Platform operations is where we operate our clients' drilling facilities, maintain them, and secure that they drill the wealth they target from their production platforms. Just as a reference, we drill about 20-25% of Equinor's global wealth every year. Wealth services is the most versatile and global business we have. About 60% of the revenue is outside of Europe, so it's a global business. We have conveyance, coil tubing and wireline, and we have a broad portfolio of downhole tools. We focus typically on maintaining the wellbore or the old well and closing it down. That's our focus. That's why we maybe separate a little bit from many of our competitors. Renewable services, we launched that in the last few years. We now have a business of around $100 million plus of revenue this year. We have about 10% WDR margin and we are cash positive from our renewable segment. We are very pleased with that. We think we went in at the low entry point and low risk and that's where we want to be. We want to build a service industry, not necessarily take big technology bets. Land drilling, come more back to that, but we are the largest land driller and worker company in Argentina. I'll come back a little bit more to some details around that later. So that's Archer, $1.3 billion of revenue, good cash generation, quite a global spread operation. First quarter, I think it's important to highlight we had good growth. Revenue is up by about 11% since the same quarter last year. And EBITDA, 9% since last year. I'll come back more to that later. That's a good growth compared to where the rest of the oil service industry is seeing the growth in that period. Same, you see same trend for revenue and EBITDA. last five months key part we refinanced in q1 as most of you know we have a new 425 million dollar secured bond zero secure bond at nine and a half percent coupon five years maturity which then matures in 2023 we mentioned already the cash distribution of 5.5 million dollars knowing q2 And then we won a number of large contracts since the end of the year. I'll come back more to some of them afterwards, but really it underpins, you know, that we are growing, we are winning contracts, we get visibility on the years ahead, and we are deepening our relationship with our customers. We do more scope. than we have previously done. So we are succeeding in our drive to deliver larger projects and longer projects for our clients. So that is the key part for our wealth services division, is to move into the long contracts, not so much wealth to wealth and competition on frame agreements. Here, as we said, today, if you look at the share price, that is yesterday morning, I think it's around 11%, and probably this morning too, around 11% direct yield. Quite well positioned versus the larger competitors. You know, we have on the pair 2, 3, 4, you know, you have the typical large one with Schlumberger, Halliburton, Baker, Weatherford. Etc. And on the right, Pier 1 is another competitor. An Norwegian competitor of ours is having the highest yield. And we think, you know, this clearly probably illustrates that, you know, we have a good cash, you know, trust that we have a good cash flow generation. Secondly, probably that you could argue that our share price is somewhat undervalued based on that cash flow. Very happy with that. I think if you, on 28th of May, all shareholders will get their first distribution from Archer. Very happy. Want to reiterate a little bit also on the position and why we are a little bit different from many other oil service companies. We are positioned in what we call the brownfield and the late life space in the oil service sector. This means that this is areas where the platforms and infrastructure is built. This is OPEX-driven decisions. This is where the oil company generates the cash flow from their production in brownfield. This is where they take the cash they generate in brownfield to invest in dividends to the shareholders, buybacks, and their investments into greenfield. This is where the oil companies, our clients, take their money from to fund that. We have many, many years. It's the lowest cost per barrel. So as long as the marginal cost is lower than the marginal revenue per barrel, they will keep operating this. So we see a long time within the Bromfield operations for decades to come. This is also according to our client's plans. And also, if you look at the energy transition, this is a focus on P&A and DECOM. We have a growing market for at least the next 25 years. So our job is to take the biggest portion of that share that we can take. That's why we have the strategy to gradually transition off to production assets to do the big scope of DECOM and P&A. and lastly we have a service in renewable services and that's a good place we are we don't plan to invest very much more at this stage but try to see how we can grow that service business over time and you know if the oil price really the oil service really comes down I'm sure renewable will be a very nice place to be because we need energy from somewhere Maybe about the financial history of Archer. You can go back to 2017. We were at the 7% margin, about $55 million of EBITDA. If you look at the updated guidance for 2025, we will be around 12% EBITDA margin this year. and generated between $155 and $170 million. So quite a steady growth over time. I think we all had a hit from a good growth into 2019, and then COVID-19 hit us. It's not so easy to see it when you look at Arches Financials, but you can see it. Actually, our wealth services and platform operation had increased EBITDA in 2020 versus 2019. The impact for us, the 1% margin drop into 2020 and 2021, was linked to the stop in activity in Argentina, which was severely hit by COVID. But this illustrates a little bit of how resilient we are to oil price changes. No one will argue we are totally insulated or nothing can happen and all our clients are spending the money. But relative to everyone else, we are very well-placed. And I think you can see over here where we're taking the five large wealth service companies in the world, Schlumberger, Halliburton, Baker, expo and and weatherford you know if you look at their change from the same quarter last year sorry, from Q4, they are down by 24% in average on the adjusted EBITDA. Well, we on the reported EBITDA is down by 8%. To look from a year ago, the average is down by 12%, and we are up by 8%. So it doesn't reflect necessarily that we are better or smarter, but we are differently placed in the cycle. So we are less exposed to some of the countries and some of the greenfields that are... competitor exposed to so you know we don't have much exposure to saudi we don't have much exposure to uh to mexico etc and we don't have much onshore you know if you pick those big ones they all have big exposure some of these places We do have some exposure in the US, but quite limited compared to the rest here. So we think we have a good track record in the short term and the long term of actually delivering stable financial returns. That also gives us the confidence to keep our guidance and keep believing that we're going to grow next year as well. I always talk about the P&A market. Why? Because it's growing. It's doubling in the next 25 years. The biggest market is actually our home market. 35% of the global market is our home market, Norway and UK. UK spending today, if you look at $30 billion in a five-year period, the industry is spending $6 billion on decom, globally, offshore decom. About one-third of it is in the UK alone. If you look at the Norway, Archer is executing the only large platform P&A contract in Norway. It's the start for a platform. That's Archer managing the whole operation on behalf of Equinor in terms of drilling well and all the well services. We are managing the project. It's going to finish, I think, in summer 27. And we have just been awarded the only large subsea P&A project in Norway, which is Equinor. We'll come back to that later. similar in the uk we're just finishing off taka we are working on on on fulmar the first phase of fulmar the project with repsol and then we got the large contract now for 130 wells with repsol on a seven or five plus two year contract so we are definitely a leader in our home markets and we are expanding that into focusing on some of these growing markets some technologies are very relevant and i'll come more back to that of course we are early into some of these areas you know deep water golf mexico hasn't started it's probably going to start 29 or 30 but the position and grow the service gradually track record a reputation in that market for the clients is very important that's why you bought what WFR last year. And I think either in Q2 and Q3, you'll see one nice announcement for us where we're winning a P&A project in the Gulf of Mexico. And it's also interesting to be a little bit in Gulf of Mexico on the shelf because what is happening is what we call the boomerang effect in the US is where BP and Chevron and also the room goes on Exxon is getting back like 500 wells. They sold off acreage to smaller companies that went bankrupt and now they're having them back. So if it was the smaller companies operating and closing down the wells, we would not be a service provider. It's quite the cutthroat basic services. But when you have the majors being part of those campaigns, there are also interesting bits and pieces of work for us. So we are actually, through WFR, doing the cut and pull, which are part of the P&A's campaign for BP's 300 assets. So we are involved in the business and we need to grow that business. These are some of the major contracts. I'm not going to go into details on this slide, but really, we have, as we said, the P&A contract. Just to understand that, it's about $150 million. I think Equinor announced $1.8 billion. So we say $150 billion that they expect us to do. And the only two companies who got awarded that contract that's going to be a sub-C P&A supplier to Equinor, according to the awards, is Archer and Baker Hughes. Schlumberger did not win anything, Halliburton did not win anything, and Bedford did not win anything. And Oldfield Technology did not win anything. So we are, you know, the guys that are leading, and our job is to continue to lead. I think the game is heating up, and people are taking notice of the work we win. I think we have quite strong drive also from the majors to get into this space. Fission contract in Gulf of Mexico. I think to hear it here is not a big deal to say that it was a shell deepwater Gulf of Mexico. This is the $50 million contract for WFR that we got announced. The Repsol contract, I'll come more to that. And also the Pan American, I'll come back a little bit to later. So a lot of contracts that underpins the growth, not only this year. The sub-CPA is for 26 onwards for execution. uh the the contract for repsol really starts more towards the end of the year and will be next year and the year after and the year after so we're adding two activity from our existing activity level so yeah maybe more on the subsea just to be clear you know we got awarded 27 wells as a scope Heidun and Snorre is quite exciting for us. Equinor gives us a lot of responsibility all the way from weld engineering to planning and offshore execution. Before we got to, you know, most companies only get to do the offshore execution and their portion of the offshore execution. But our joint venture with Elemental allows us now to take the bigger contracts and try to integrate from well engineering all the way to technology and execution. And that's a very important part of the sales process we're doing now is to bring technology and solutions very early interval engineering because if you do that the traditional way well engineer really prepare packages for procurement the first you know six or nine months and then they go for procurement and then they get all the feedback and then they finalize the engineering we can get all the right information about the best way to abandon the wealth from the people who does it offshore and has the technology right in the first time and you cut the period quite significantly and you can optimize the uh the execution on the i want to mention that maybe it's a bit technical but on that flx project i talked about start for day Equinor had, in their own planning, planned to spend 900 days on that program. When we worked with the planning and technology and solutions, we qualified three new products that we could use for 21 of their wells, of their 30 plus wells. We developed a total new product for them, and we convinced them to buy a pooling unit. That reduces the number of days that Ecuador is going to do to about 600 days. So you go from 900 days of a P&E activity to 600 days if you plan it well with the right technology and the right people. That's the opportunity cost that traditional model will not give you. So this is what we try to sell to our clients. It's quite convincing, but it's quite hard for them to buy. It's easy for Equinor because they have so many contracts with us already that they can just award as part of the contracts you already have. But to go for these tenders is not so easy for oil companies. So this is a part of our job is to change the way they buy. And I think Subsea is, as I say, it's a new revenue stream for us. We haven't really done Subsea P&A project before. It's hardly been done, any Subsea project, to be honest with you, in our own core. We've done some other places in the world. So this is kind of also a new revenue stream for us. We've been focusing on the platform P&A. Now we're moving into Subsea. And we have quite a few technology solutions coming up that we think is going to set us in the forefront. of sub cpna when i say sub cpna is basically you don't have the platform and and a rig a platform to drill to do the pna you have to bring a a typically for subsea pna you have to bring a floater if it is if it's a deep water you know to bring us a a semi or drill ship and you can imagine what those costs are per day So if you can optimize and reduce the number of days it takes, or we are working very hard, and I think so many industries are working very hard on, is to take that scope away from the rigs and do more and more on the vessels. So this is going to happen. We are confident. It's just a matter of how fast it goes. and how it develops in the different geographies because clients have different risk appetite for what they want to do and how they want to abandon the wells and the regulation is different from different places in the world if you go five ten years out I'm not sure how much rigs will be used for PNA for some series yeah Really what we said all the time, Archer, you know, production area, Brownfield, late life, MP&A. So like on Repsol, we have the platform drilling contract today. So really for platform drilling, platform operation is not a big change, just continuation. We had two more years, I think, Jespen, on the current contract. Now we've got five plus two. So we have extended that contract. But the big thing is, today, we don't do hardly any weld services for Repsol. But now we're going to do all the weld services that we have, conveyance, coil tubing, wireline, and all the downhole tools. So this is a growth. If you go and look into our financials for next year, you should start seeing the benefits of this contract. And again, this is what we have been telling our clients for some years now. We want to industrialize the process. We need to streamline it. It's all about the cost, drive down the cost for the operator. And you can win the work. You need to be cost effective. It's not about expensive new technology. It's not like for a new well where the most important part is how much oil you find and how can you produce that most efficiently. Can you increase your recovery factor? It's extremely important to have the right solutions. You are willing to spend a lot of money to get to the restaurant the right way with the right production profile on your well construction on pna you just want to do that as cheap as possible within the regulatory framework a little bit about argentina uh let's talk about the so first as we have said always there's two areas in argentina you have the soap very conventional or you basically drill uh horizontal wells Sorry, sorry. Vertical wealth. Only verticals. Very mature. Lots of issues. Very marginal for our clients. Has been marginal, I think, for quite some time. Know that they need to spend them on your new wealth in Vakumerta. As we say, you know, they put $1 down in Vakumerta and get $2 back. Probably in the south, you put $1 in and you get $0.80 back. that's why they're reducing activity in the south it's it's not as black and white as i tell of course it's different areas there as well and different but this is the problem so we have through a lot of discussions now with our clients reduced activity quite dramatically uh we'll take out about 75 million dollars of annual revenue from our 35 percent of our our global revenue or 20 of the revenue in argentina is going to reduce be reduced going forward they're doing all the restructuring now in the in in q1 and the most knowing q2 i think we finished uh we more or less finished all reductions and we have actually reduced the head count by more than 500 people The good news, this was a margin business also for us. So now when we take out that business, we reduce our maintenance capex, we reduce our indirect cost. And going forward, it's not a negative. And we actually just reduced our continued liability in the country. So for us, it's very tough, of course, to have more than 500 colleagues go home without work. We had a good relationship with our clients and our unions and the government. And in the end, most of these expenses were paid by the clients. And actually, Pan American decided to pay 20% more than their statutory had required in order to get it happen quickly and with as little... unrest and challenges as possible so it is a constant negotiation between us and our clients and the government how to do these type of big changes we came out very well as in care i'm very pleased with the end result of course it's a bit uncertain when it happens and and and so forth on but we have the experience so if you look at our business going forward vacumerta is going to be a lot of drilling in the next three five ten years the investments in pipelines are taking unfortunately in the short term a lot of the cash flow from our clients they're building oil pipelines so soon they will have uh the ability to assess one million barrels here per day that's the increase but really it's one and a half the new pipeline just the one pipeline has the capacity to one and a half million barrels export per day and also in two agreements with gulag for two uh flng vessels that will come and the first one will come already in the end of 26. so we believe that towards the end of this year or definitely next year there's going to be high demand for rigs right now the oil companies are holding Still quite a tight lid on the activity. They've added a little bit of capacity, but they are basically spending their cash flow on the pipeline rather than increasing the drilling. But when they have line of sight for the end date and the contract dates, they will ramp up the drilling. So that's a very good area to be in. So we are very confident. And if you look at the financials in Argentina, as we said, 55% of our revenue going forward is in Vakumerta. But 85-90% of the EBITDA and the cash flow comes from Bacomert. Again, it's a very marginal business in the south of Argentina. The bond, I'm not going to talk too much about that. We presented that quite a few times before. Very happy with that. We upsized the bond. We had good investors, long-only funds coming in and giving us a good horizon on our maturity. We mature in 2030. We agreed to also do some amortization due to our discipline, in a way. We wanted to show that we want to reduce our leverage. So we can pay our interest expenses, we can do amortization, and we can pay dividend, and we can do a little bit more deleveraging depending on the investment opportunities we get either in companies, M&A, or in good growth assets. So I think we have enough room to balance those factors. And this gives a lot of comfort that we're not going to go out in the market yesterday or in the next three months with all the uncertainty in the world right now. Guidance, I think we have talked about it already. We're guiding a down. As I said, a lot of that is from Argentina. $75 million annually comes from Argentina. That's quite a lot. We have less reimbursable and also a little bit of the small changes. But overall, it's really maintaining our EBT. We have some ups and downs. We have some downs in Argentina because of redundancies. We are taking some of that cost. uh but from a cash flow point of view we are quite quite quite well organized there uh we up the guidance a little bit on capex but it's important to say and i don't think it's clear for everyone else we are basically reducing maintenance capex in argentina and we are replacing it by growth capex for other things and that will benefit us next year and the year after So it's a, it's better Cape expand knowing if it's more, it's at least not maintaining all that. So that didn't really give much of a return, but now we can put it into asset that has a high return on capital. short payback that's that's the that's the switch we're doing uh yeah guidance 2.1 to 2.3 still at the end of this year i think esp will tell us that we are in the midpoint uh and that i guess assumes that we keep paying dividend for the rest of the year yeah so at this level so i think that's a fair assumption Last, just to remind everyone, we have, and I think we have shown that, a very resilient business model. We have seen a steady growth since 2017 to 2025. Margin steadily growing, not really impacted that much of COVID-19. We're not going to say we're not going to be impacted of a big recession or an oil price of 40, but the 50 or 55 or 60 are still going to do quite well. you know we can manage that activity that oil price level uh we are refinanced we're paying dividend so if you look at the yield right now i think it's one of the more attractive yields that you will find out there and and we at least are confident and i think the the board is confident and i think the the main owners are confident that this is something we can continue with uh so you you either buy the share because you want 11 I shouldn't use the word guaranteed because it's forward-looking, isn't it? A good return with quite high visibility on it, or hope that also you can get it faster with the sheer appreciation. then we are reiterating our growth there's a small mistake it says 2005 on the bottom there that's the mistake we noticed this morning but uh that happens sometimes in in in we are in different locations and then this goes a bit fast in the end so uh hopefully you can excuse us for that i think the uh the one that was published alan had 20 25. So that was really all for today. Espen, do you want to come up in case of questions?

OK, thank you, Dag. I think we can start with questions starting here in Oslo with the audience being present.

I can take the first question. Working capital had a little bit of an unfavorable development in the first quarter after being quite strong in fourth quarter last year. Can you give us some background on what happened in the quarter and how we expect that throughout the year?

Yes, that is mainly explained by two items. It's the days outstanding on accounts receivable. As you said, they were very strong in Q4. We had 47 days outstanding in Q4 and we're up by five days in Q1 to 52. which is more the normal between 50 to 52 days outstanding is the normal on the accounts receivable. So I think that explains the large portion of the increased working capital. And then the other part is that we invested in some inventory items for growth

outside internationally in well services those two are the main explanation on on the increased working capital in the quarter and just to have said that you know we have we build like close to four million dollars in average per month per day you know and the contracts are and the rails are finished you can build typically you know okay on the same argentina so the days of standing is is is can fluctuate quite a lot during the during the month And the data point at the end of a quarter is quite incidental, to be honest with you. If it's 48 or 50 or 52, it has no underlying reasons to be high or low. It's just some bit of timing. We have no bad debt. We have not had any bad debt in Archer since we started. Since I started, we probably written off $500,000 or something in nine years. So it's not a trend or anything that you should expect. I think a lot of clients actually paid early in December. And now we're a bit unlucky on the end of the quarter. I think you will see probably in 50 days or something as an average is a good number.

And then when it comes to 2026, it's obviously early days still. But for 2025, you say that you expect a ramp up in the second half of the year. Based on the visibility you have today, is it fair to assume that, let's say, second half 2025 represents a run rate for full year 2026?

As you know, Martin, in this world, the 26th seems like far away. I think what I can say is that we think we have a good backlog and visibility that this will continue into next year, as we see today. And remember always, Q1 has less days. So when you see everyone reporting not a run rate in q1 that's how the business is you know it's less days so let's say for us that is a base a lot of a day rate business you know all the drilling and all the uh platform operations a day rate business as soon as you lose one day in a quarter you basically lose three million dollars over there three three plus million dollars over there so Q1 will always be weaker. And then in addition for Q1, you always have a Norwegian winter that typically is a little bit less than in the summer. Secondly, you have the summer vacation in Argentina in January. So Q1, if you look for us, is always a bit weaker. But by the time you get to Q2 and Q3, we think we're back to the new run rate, Martin. Thanks.

You presented some one-off costs in Argentina this quarter. Is this something that will continue? Will we see any more one-offs as a result of the news flow there? Or how should we think about this?

You will see some more one-offs in Q2, as we finalized. It's still a little bit uncertain how everything will be accounted for, because again, there's a lot of different charges that goes to our clients to get them to pay. So it's a little bit of accounting technicalities. But yes, we have some exceptions also in Q2, but we also think we might have some exceptions on the positive side in Q2. But from a cash flow point of view, you will not see that effect because we are also selling some assets to our clients to pay for it. So that's how they are partly funding it. They're partly funding directly and also partly through some asset sales.

It's fair to say it will be less than what we have been. Yes, that's correct. Okay.

And in terms of I mean, this wasn't relevant for this particular quarter, but has there been any any changes in sort of your ability to extract cash from Argentina?

No, we can take out cash. We have done that. I don't know how much we did in Q1. Two million. Yeah. So we have a plan for the year, as we said, but more than $10 million this year to take out. We have a special ambition of 15. So let's see what we are able. But it's not going to be because of capital restrictions. It's more our cash flow from the business. Not that we are reducing it and we have to fine tune. But we still have the ambition to take out $10 to $15 million this year. There's no restrictions. Thank you.

Okay, we can take some questions from the webcast as well. Can you clarify why the revenue guidance was lowered while the EBITDA guidance was maintained?

So first of all, as we said on the big portion reduction, about $75 million come from Argentina, where we basically have very low margins. So then the mix changes a little bit. Secondly, the mix of what we see on the product sales we have and the forecast of product sales helps on the margin side. And then reimbursable, there's also less reimbursable in our forecast right now. based on client activity we basically have zero margin so when the revenue falls it doesn't change the ability on reimbursables so it's a very marginal you know impact on the revenue we are losing it's not the good revenue from value services on on good product sales anything like that okay have you taken any precautionary measures to address any potential slowdown in the market Of course, in Argentina, we are taking quite drastic reductions in the whole structure, the whole indirect structure, the investments in equipment in the south of Argentina. So we're quite tough there. At the same time, we continue to grow. yeah so we have quite good visibility and that's also why we have increased our our our capex of course in the us onshore the small business we have us onshore we are more careful so they are not buying any capex or we are holding the headcount let's say not to grow and we are washing it i would say as we have to do in u.s land people can say from week to week but maybe from day to day when you receive your letters from your clients that they won't reduce the rates but really we are lucky we are with a major also onshore in the us and so far they are largely holding their activities so we actually had a very good month on the shore in the us in march which was a bit counter intuitive but sometimes it's just the number of wells that they get problems with and they need the services from us more than the market so I think overall we are watching very carefully I think the good thing in Archer we have always had a very low overhead cost structure we all has been mean we always have the ability to cut capex and investments if if activity is not there we have shown historically we are able to do that and I think that's that's where we are we are quite confident at this moment

Okay, next question. Could you give an update on the startup timing for the Emerald?

I cannot give you that. We are in negotiation with our clients and we haven't quite decided that with them yet. So I think I shouldn't say that. But I think we have our assumptions for the full year. We know what we have there and we are quite well balanced in what we think.

Okay. Regarding the two FLNG vessels in Argentina, what impact do you think this will have on drilling demand in Vaca Muerta?

If you believe Rista, I think we're going to have double the rig count by 2030. We probably think it's going to be 10 to 15 extra rigs between 2026 and 2027. That's our local estimates. So when they build the pipeline, there's no way the oil companies are not going to fill them. So the question is just how many rigs. And I think it's not only about the capacity of the pipeline. It's also when they phase them in, in terms of a cash flow. and what the global market is in terms of oil prices so our estimation is that this is supporting what we have said all along that probably between 26 27 we will have another 10 to 15 rigs added in the vacuum earth field And if you look at just YPF, if you look at their investment presentations, they alone are estimating 10 next year. We don't think they're going to do 10 next year. That's our view. But let's see what happens. So there is clear need for more rigs in the country.

Do you have any rigs that you can add or would you have to buy them first or build them first?

We will not build new rigs or buy new rigs. A new rig like that is a $35 million investment. I would say we have two rigs we can upgrade. They're not ideal, but that is a possibility depending on how tight the market gets. We can upgrade those two rigs. And then we are in discussions with two international drillers to lease us rigs. So we'll see what comes out of that. But that's a way to grow for us without investing more capital.

okay next question when do you intend to repay the rcf you mean the clean down on the rcf yeah the rcf has like four and a half years maturity so um i think we we have the overdraft that we use for like seasonality but uh i think that as dog said that will have a clean down in in the agreement so that will We haven't sort of planned for when it will happen, but for sure we will do that according to the requirement.

Okay, next question. Can you provide guidance on dividends for the remainder of 2025?

uh with i think the expectation is that we will continue at the current level that the board will approve the same level in q into for q2 and q3 so we'll continue at this level but as everyone here knows that that is the discretion of the board given the situation at any point in time but i think the board would not have started at this level without seeing that that is something that is sustainable and that we can continue on and the idea from the board and the owners is that we can increase that over time as our earnings increases

okay there seem to be no further questions so uh thank you very much dog and nespan for the presentation and i wish everyone a nice day thank you everyone for joining today