Odfjell Drilling Ltd

Good afternoon, everybody, and welcome to the Odd Bell Drilling Q1 2025 results presentation. My name is James Crothers, and I'm the Investor Relations Officer at the company. As ever, I'm joined today by our Chief Executive Officer, Cheta Yarzal, and our Chief Financial Officer, Froda Cislek. Before we begin, your attention is brought to the important information slide of our presentation, which we would encourage participants to read in full. Note that this presentation is only a summary of the quarter, and the more comprehensive quarterly report should be read separately. Both that report and today's presentations are available on our website, www.oddfielddrilling.com. Our call today will begin with a brief summary of the quarter, with Jeff taking us through some of the key highlights. We'll then move on to discussing our operations during Q1, and then move on to our financial review with Rodan. We'll then summarize the presentation and close the call. Following the presentation, we'll open the Q&A session and we'll invite all participants to submit a question either via the telephone line or electronically by the webcast tools which are available. Today's results are another great course for our business, so I will not delay any more and I'll hand over to our CEO, Chetil, who will take us through some of the key highlights.

Thank you, James, and a very good afternoon to everybody. And as the title says, this has been a very good start to the year. Another record achieved for our company. For the first time since the spin-off of OddFed Technology, we achieved an EBITDA of $100 million from revenue of $204 million. We are constantly breaking financial records at the moment, and as our fleet moves over to even higher day rates, I think we will continue to do that. And as we continue to break records, we have once again increased our dividend, this time to 16 cents per share, up from 12.5% per share last quarter. Looking ahead, we are confident that we remain well placed to continue to increase shareholder distributions, particularly as our SPS cycles is about to complete. And on our SPSs, as some of you may have noticed from our social media channels, we now have three SPSs down and just one more to go. Post-period, we completed the Deepsea Stavanger SPS on budget and ahead of schedule with only a net off-hire time of just nine days. More on that and the Deepsea Nordkapp maintenance later in the presentation. And during the period, we also agreed a new contract for the Deepsea Atlantic, which added nearly 12 months of firm backlog at what we would say are definitely leading edge day rates. This has contributed to our forward backlog now sitting at 1.8 billion for our four owned units. And finally, our balance sheets and liquidity remain strong with further deleveraging happening during the quarter, taking us to leverage ratio 1.4 and an equity ratio of 64%. then we're going to move on to our operations and as per previous quarters the deep sea aberdeen the deep sea atlantic and the stavanger were all working with equinor the atlantic was working on various exploration projects while the aberdeen remained on the breidablik field The Stavanger, in addition to conventional activities, completed two carbon storage wells for the Smeaheia project offshore of Norway. And finally, for our own fleet, the Deepsea Nordkopp was working with AKBP during the quarter in Norway. In our external fleet, the Deepsea on Thai was also in Norway, working with ConocoPhillips, while the Deepsea Mira was operating offshore Namibia for Total Energies. The Deepsea Båstad was mobilizing for much of the period, and post-period, that rig has now received its AOC approval for operations in Norway. And it is now in transit to the field to start its contract with OMV. And finally, the Hercules was in yard in Norway for the entire quarter. Then we're going to look at another update on our SPS and maintenance programs. And as many of you have been aware, we now have three SPSs down and just want to go. This follows the completion of the Stavanger 15-year SPS and upgrade project, which we completed in the early Q2 of this year. This was completed on time and actually ahead of schedule, resulting in just nine days of net off-fire time. I think it's fair to say that this is quite an exceptional result. uh completing the project in such a short time is really valuable to us and ahead of our expectations actually particularly given the complexity of the sbs which included dry docking and significant upgrades and needed needless to say i'm super proud of the teams that were involved in this following the sbs deep system anger has now commenced its five-year contract with rkbp With the Stavanger SPS now complete, we just have the BBC Aberdeen SPS left. We are well prepared for this project and looking forward to complete this one to the same standard as our previous projects. Once Aberdeen is done, there won't be any new SPS projects until December 2028. In addition to our SPS programs, we also were able to complete planned maintenance on the deep sea workup during Q1, which resulted in six days of fire time. This maintenance included upgrades across the vessel, as well as replacements of two of its thrusters. In addition to this, we have also successfully completed the AOC on Bolsta, partly while it was in transit between Namibia and Norway. And I would like to comment that the entire AOC was done in a very timely manner. And what we like is to think in line with ordinary drilling standards. So overall, an extremely busy period operationally for our team, not just drilling, but also delivering on our SBS projects. Then we move to the contract backlog and to what is ahead of us. Our contract backlog now currently sits at 1.8 billion, following the award of the 12-month contract on the Atlantic. which I, as I commented earlier, secured at leading edge day rates. This is a fantastic data point for our sector, and I think it emphasizes the interest in securing odd-field drilling units. The day rates secured on Atlantic continue the trend of our rates climbing every quarter between now and the beginning of 27, which is emphasized particularly on the next slide which we can move on to now and this slide we displayed the yearly distribution of backlog as well as quarterly average day rates for our own fleet on the yellow line and you can see really see the continued growth we have secured Year-on-year revenue is set to climb, while our average OPEX per rig is anticipated to only marginally increase. I think it's also worth reminding stakeholders that on top of these day rates comes a historic average of at least $30,000 per day per rig in bonuses and add-on sales. And of course, at the same time, we will not have the capex that we have experienced in 24 and 25 associated with the SPS projects. So our near-term growth is very well secured. And as you can see, Q1 represents only the start of increasing day rates ahead of us. All right, moving on to the market. and how our look is at the market outlook. And I think, you know, while the macroeconomic landscape has been, I guess you could say, kind of changeable since our Q4 call, our outlook remains positive, particularly in Norway, where lower oil price break-evens have maintained good demand for work in 27. Specifically in Norway, we see... ambitious client base who are looking to address their production declines and if if our clients are to reach their goals in the coming years this is going to require a lot of drilling outcome of this is that we experience specific and direct interest in securing our units in addition there are tenders outstanding in the market and we maintain our view that the demand is expected to increase in the coming years particularly from 26 and onwards and as we previously communicated internationally we don't see a as strong a market as we do in norway there are a few shorter term contracts potentially available in 25 but we also expect longer term contracts to increase as new projects mature into development in the coming years on the supply side we still expect supply to likely to reduce with some retirement of vessels in a sector uh and still we don't see new builds happening at all there are few stranded or incomplete vessels in our sector also which we do not believe is likely to create any meaningful competition in the near to medium term Ultimately, with the first availability in our own fleet in 27, we see very good interest from clients seeking to secure tier one assets in this period. And with that, I will now pass on to Frode to go through our financial review.

Thank you so much, Kjetil. As always, I will begin with a quick summary of the income statement. Operating revenue in Q1 25 was 204 million compared to 194 million dollars in Q1 24. Operating revenue from the own fleet was 163 million, while the external fleet was 40 million. We are continuing to see the effects of higher day rates in Q1 with an EBITDA for our own fleet of 95 million with a margin of 58%. while the EBITDA for the external fleet was 7 million with a margin of 18%. Less corporate overhead and other adjustments, the group EBITDA was $100 million. The company delivered a net profit of 31 million in Q1. Next up is the balance sheet on page 14. Net debt is reduced by 29 million to 475 million during the quarter, with a leverage ratio of 1.4. Equity ratio is 64%, based on total assets of approximately $2.2 billion. The available liquidity is $241 million per end March, including undrawn RCF of 139 million. Details of the cash flow for Q1 follows on the next slide. In Q1, we generated 104 million in cash from operations. Net interest paid was 6 million and taxed 4 million. Cap ex for the quarter was 27 million. That cash flow from financing activities was minus 53 million, where of 8 million in scheduled amortization, and the main part being net repayment of 45 million on the RCF during the period. Dividends paid in Q1 were $30 million related to Q4 results. As indicated last quarter, we are continuing our upward dividend trajectory with dividend for Q1 declared at 16 cents per share, totaling 38.4 million for the quarter. This corresponds to an annualized yield of 11% based on yesterday's close. The shares will trade X dividends from 3rd of June and payment will be made around 12th of June. We see a strong potential for continued increase in quarterly shareholder distributions going forward, given our solid financial position and our increasing free cash flow generation stemming from higher locked-in day rates, reduced capex payments and reduced debt repayments. Before I hand back to Kjetil for the summary, I want to share with everyone that this will be my final earnings call as CFO. As earlier announced, after more than three years, I'm stepping down to a more specialized role, leaving the CFO reins to Örjan Lunde, with a change formally taking place on 1st of June. I will remain with the company in a key financial leadership position and will work closely with Örjan going forward. And I'm confident the transition will be seamless. The company is in an excellent position with strong fundamentals and a very positive outlook. It's been a pleasure serving as CFO, and I'm proud of what we have delivered together as a team. Stepping into a role with somewhat reduced responsibility is a welcomed change for me just now, and it's a completely undramatic one. Thank you to our investors, analysts and everyone else on the call. I look forward to continuing to engage with you all in my new role and appreciate your continued support for the company. With that, I'll pass back to Kjetil, who will summarize the quarter.