Odfjell Drilling Ltd

Good afternoon everybody and welcome to the Odd Field Drilling Q1 2026 results presentation webcast. My name is James Crothers and I'm the Investor Relations Officer at the company. I am joined today by our Chief Executive Officer Cheta Yozdal and our Chief Financial Officer Oriya Nanda. Before we begin, your attention is brought to the important information slide of our presentation, which would encourage participants to read info. Note that this presentation is only a summary of the quarter, and the more comprehensive course of the report should be read separately. Both that report and today's presentations are available on our website, www.oddfielddrilling.com. Today's call will follow the traditional structure, with Chetil taking us through the key highlights before moving on to our operational review. Chetil will then continue with an overview of the markets as we see it today, before handing over to Erlin, who will go through our financial review. Chet will then summarise the presentation before we open up our Q&A sessions for analysts and investors. As always, the Q&A session will be conducted over both telephone lines and webcast tools. We try and get through as many of these questions as possible, and if we don't get a chance to go through your individual question, I will make sure that I endeavour to follow up to you directly after the call. We make an effort to answer as many of these questions as possible, so we do encourage you to use this feature. With that, I will pass over to our CEO, Kjetil Jørsdal. Kjetil.

Thank you, James, and a very good afternoon, everybody. Today, we are reporting what are excellent financial results driven by a really strong operational performance across our fleet. Due to this performance, we generated a particularly strong bonus contribution, which contributed to a total EBITDA of $154 million from revenue of 284 million dollars. In addition, we have further increased our dividend whilst continuing to deleverage our balance sheet. Q1's dividends will now be 25 cents increasing from 23 cents per share. This is the sixth quarter in a row that we have increased our dividend and this highlights the capability of our fleet to generate significant cash flow. Our leverage ratio is also further reduced to 1.6 times that depth to EBITDA, whilst equity ratio has increased to 55%. Further to this, we remain very comfortable about our contract backlog, with our total backlog now sitting at $2.3 billion, $2 billion of which is firm. as we look at new opportunities to add backlog we believe that the harsh environment market remains very tight and particularly for high spec semi-submersibles in norway and increasingly also in other regions and finally as many of you will know already post period we experience uh experienced an equipment handling incident on deep sea atlantic which resulted in the BOP and riser being dropped to the sea floor and some damage to the rig. As announced, thankfully, the incident did not result in any injury to personnel or cause any impact on the environment. However, it has resulted on the Atlantic being taken off higher. This is an unprecedented incident for our company. And if we move to slide number seven, I will dive into some more details. It is no surprise to you that we are taking this extremely serious. As soon as the incident occurred and personnel, the rig and the local environment were confirmed to be safe. My senior management team and I made sure that we were taking step all steps possible to bring the rig back to full strength. Our team is now completely focused on meeting this challenge head on. Within hours of the incident occurring, we had structured multiple teams to work in parallel on progressing different solutions to bring the rig back on higher. Since the incident, we have made good progress in addressing and understanding the challenge ahead of us. We have located the BOP and we have started the work on recovering it. Our primary focus is on the safe repair of the damaged equipment, compliance to regulatory authorities, and cooperating closely with clients and vendors. Investigation as to the Corsair incidents are ongoing, and together with our equipment manufacturers, we will be sure to implement measures and learnings that are developed as a result. In addition to this, we are also progressing other work streams. That includes that we have pushed the button on getting our spare BOP that we have in stock ready as a plan B. This is in case we are not successful with the recovery or repairs with the primary BOP. Another alternative is a combination of these options. And given the possible scenarios we are considering, we believe it will take three to four months in total before Deepsea Atlantic is ready for operation again. And having the spare BOP ready as an alternative is included in that estimate and is part of de-risking the total timeline. Now, as we move ahead, there can be further findings that improves that estimate, and there can be findings that makes it worse. It remains too early to conclusively state the total financial impact of the incidents. However, with the information that we have in hand, The three to four months is an estimate that we believe in. It is worth noting that the company has insurance in place, which covers replacement or the repair of the damaged equipment, including some operating cost coverage during the process, which we are working closely with our insurers to progress. As was stated in my quote in our press release today, this incident really has been a reminder to us all that unforeseen events can happen in our industry. Despite that, I am very pleased with the response of my team, our clients, and the wider industry to the situation. In addition, I want to give credit to my fantastic colleagues. For those who follow Oddfeld Drilling, you know that I'm blessed with a highly competent and motivated team who are working day and night on this subject now, and I have full confidence that we together will resolve this challenge in the best possible manner. Then moving on to the rest of the operational review. And despite what's happened with the DPC Atlantic, it's worth noting that Q1 actually was a very strong operational core for our business. All of our units were active in Norway and achieved a financial utilization of 96%. In addition, during Q1, our units performed ahead of expectations and delivered very strong bonuses, further bolstering our EVTA generation for the quarter. In addition to what we achieved in Q1, it's worth bearing in mind what we have ahead of us. Currently, we retain over 2 billion of fair backlog coverage with 300 million of priced options. This backlog means that all of our units have firm contract coverage until at least mid-2027, where after our units have priced and unpriced options, which extend into 2030 for some units. Then we take a look at our market review. And last quarter, we noted that we believe that the market was becoming tighter and we maintain this view. Globally, there has been no meaningful changes to supply, and from a Norwegian contracting perspective, most units which could work in our core area are either fully contracted overseas or in need of significant investments to allow them to operate in the NCS. And we see no reason that this should change in the near future, with operational entry barriers into the NCS remaining very high. From a demand perspective, we have also seen continued messages from our client on their intent on arresting production declines by drilling more wells than current levels. Furthermore, we believe that demand will continue to be focused on securing tier one sixth generation harsh environment rigs. In other regions, we see outstanding tenders for work in Namibia and in the UK, and have seen a notable increase in interest among clients for deepwater drilling, which could further reduce competitive supply. There's further incremental short-term exploration work also available with longer-term developments likely to be maturing around 27, 28, in line with our own fleet's availability. In summary, I would say that we feel the market is very well balanced between supply and demand and positions our fleet very well for contracting for the future. With that, I will now hand it to you, Arjan, to go through our financial review.

Thank you, Kjetil. I will start with a summary of the income statement. Our revenues continues to benefit from higher day rates, as well as including the first full quarter of earnings after the acquisition of Deep Sea Burning. Operating revenue in Q126 was $284 million compared to $204 million in Q125. Operating revenue from our own fleet was $254 million while the external fleet generated revenue of 30 million. The reduction in revenue from the external fleet compared to previous quarters is explained by the transition of Deepsea Bergen from the external fleet to the own fleet segments. Q1 EBITDA for the own fleet segment was $150 million, representing a margin of 59%, which is partly supported by a solid achievement of performance incentives in the quarter. The EBITDA for the external fleet segment was $6 million, which is a margin of 20%. Less corporate overhead and other adjustments, the group EBITDA was 154 million. The company delivered a net profit of $73 million in Q1. Before I talk about our robust balance sheet on page 13, I would like to mention that on 17th of April, we got a positive court ruling from Gulatin Court of Appeal in the Oddfell offshore tax case. The Norwegian tax authorities have the right to appeal within one month from the ruling. Then, to the balance sheet development and status. Our net debt is decreasing. Following the increase in debt level in Q4-25 related to the acquisition of Deepsea Bergen, during Q1 reduced our net debt by $25 million, down to $883 million, which corresponds to a leverage ratio of 1.6. The equity ratio is marginally up to 55% out of total assets of approximately $2.6 billion. The available liquidity is $295 million, including undrawn RCF of $227 million. Details of the cash flow for Q1 follows on the next slide. In Q1 2026, we generated $123 million in cash from operations, reflective of a negative change in working capital of $27 million during the quarter. The change in working capital is partly explained by the acquisition of Deep Sea Bergen, higher day rates of the other units, and mainly by changes in payment terms related to personal taxes and social security implemented through changes in Norwegian law effective from 1st of January 2026. Net interest paid was 20 million. which reflects a longer first interest period on parts of our loans due to the refinancing in early December last year. Tax paid was $8 million. Cash flow from investing activities was minus $14 million, where our $4 million was related to periodic maintenance. The remaining 10 million was purchases of fixed assets, where of $5 million were client-specific upgrades covered by lump sum payments from customers in this or adjacent quarters. Net cash flow from financing activities was $61 million, including minor FX adjustments. We used our revolving credit facilities to actively manage our liquidity to reduce interest costs. which resulted in making net repayments of $52 million on the RCFs during the quarter. In addition, we made $12 million in scheduled installments on our bank facilities and leases. Dividends paid in Q1 were $55 million and was related to Q4 results. Finally, On the back of a strong financial result in the first quarter of 26, a robust balance sheet and cash flow position, we are continuing our upward dividend trajectory by declaring a dividend for Q1 of 25 cents per share, which translates to a total dividend payment of 60 million for the quarter. This corresponds to an annualized yield of 9.5% based on yesterday's close. The shares will trade ex-dividends on 27th of May and payment will be made on or around 9th of June. I will now pass back to Kjetil who will summarize our presentation.