Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Odfjell Drilling Ltd (ODFJF, Financial) reported a strong EBITDA of $83 million and revenue of $186 million for Q3 2024, despite downtime from the Deepsea Atlantic.
- The company achieved a high financial utilization rate of 97% for its own fleet, excluding the Deepsea Atlantic.
- Odfjell Drilling Ltd (ODFJF) has a solid order backlog with firm contract coverage of $1 billion until at least mid-2026.
- The company announced a dividend of $14.4 million for the quarter, with plans to increase future dividends.
- Odfjell Drilling Ltd (ODFJF) maintains a robust balance sheet with a leverage ratio of 1.7 and an equity ratio of 63%.
Negative Points
- The Deepsea Atlantic experienced 19 days of net downtime, impacting overall operational performance.
- The company faces potential challenges with the timing of Special Periodic Surveys (SPS), which could affect operational schedules.
- There is uncertainty regarding the exact timing and scale of future CCS (Carbon Capture and Storage) opportunities.
- Odfjell Drilling Ltd (ODFJF) has not provided specific details on the magnitude of the anticipated dividend increase.
- The company is cautious about M&A opportunities, emphasizing that any acquisition must not dilute free cash flow to equity per share.
Q & A Highlights
Q: When should we expect the next contract announcement for your units, given they are contracted through mid-2026?
A: Discussions typically occur 15 months before the contract ends, but there are ongoing talks that could lead to earlier announcements. So, it's possible to announce more backlog soon. - Kjetil Gjersdal, CEO
Q: Can you quantify the need for additional rigs in Norway post-2026?
A: Based on our analysis, there will be a need for at least 1 to 2 additional rigs in Norway from 2026 onwards compared to the current number. - Kjetil Gjersdal, CEO
Q: Are you planning to increase dividends, and if so, by how much?
A: While we can't specify the Q4 dividend, there is capacity to at least double the dividend in 2025 compared to the current level. - Frode Syslak, CFO
Q: Have you considered refinancing with a new bond without amortization?
A: We have several facilities, and while calling the bond before November 2025 is costly, we might consider adjusting repayment profiles or tapping the bond market. However, there are no imminent plans to increase leverage. - Frode Syslak, CFO
Q: Can you elaborate on the CCS opportunity and its differences from oil and gas wells?
A: CCS wells are similar to oil and gas wells in terms of rig requirements and contract terms. Drilling a CCS well typically takes 30-40 days. The opportunity is still in early stages, but we are monitoring its development. - Kjetil Gjersdal, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
