Hello, welcome to the Odfjell Technology Ltd. Q3 2022 investor call. My name is Laura. I will be your coordinator for today's event. Please note this call is being recorded. For the duration of the call, your lines will be on listen-only. You will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Gert Haugland, to begin today's conference. Thank you. Thank you. Welcome to Odfjell Technology's third quarter investor call. My name is Gert Haugland. I'm the SVP for Finance and Investor Relations in Odfjell Technology. I'm joined by our CEO, Simen Lieungh, and our CFO, Jone Torstensen. You will find the presentation on our website. I ask you to take notice of the disclaimer on page two. Simen will start off by going through the highlights for the quarter and the market outlook before Jone will cover the financial details. Thereafter, we will conclude with a Q&A session. I now hand it over to Simen for the first part. Great. Thank you, Gert, and welcome to this call. Thank you for calling in. I start with the overall numbers and as Gert said that Jone will take care of the financial details somewhat later. The quarter is the performance with the company is we think is strong. We have increased revenue from the last from compared to second quarter of or the previous quarter. Today we have NOK 995 million in revenue. We have an EBITDA NOK 188 million improved from the last quarter. We have a strong backlog, NOK 11.5 billion. Cash flow has improved. Cash is NOK 423 million compared to NOK 411 million. The thing we quite like to see is that our gearing is lower. We have 1.6 in the debt, in interest-bearing debt on the EBITDA compared to 1.9 a year ago and or some time ago. The EBITDA also on the debt is improving 1.8 times them in the backlog, which is which are KPIs we are very confident that are strong and will show that our balance sheet and our backlog will serve our ambitions quite well. If we take the highlights for the quarter, the financial performance is strong. Revenue has increased Q2 to Q3 and on a year-on-year basis, it has increased with 32%. EBITDA growth was 11% Q2 to Q3, again, a strong year-on-year improvement of 86%. Revenue is mainly driven by, you know, contracts commenced somewhat later and we see that the activity levels are increased in all the segments we are operating in all regions. This just confirms that the market within our core businesses today is improving strongly. We also see that we will comment more about that later, but, you know, it's clear that we see a very increased activity level globally. Remember that this company operates in more than 20 countries and it's quite kind of an interesting observation that all regions are performing and increasing activity level. Cash flow from operations as generated is NOK 162 and year to date is NOK 384. That also is an very strong indication that the performance are well above expectations. Operations were carried out safely with no serious incident in the quarter. We have a stable operating performance. As I said, we have started up with the jackup operations on Ekofisk with Linus. That commenced 3rd of September. We have also won activated a contract with Aker BP on the wired drill pipe, which is a new solution for more digital operations within the well operations. If we move over to more into the segments, I think it's at least what we are finally seeing now after many years of kind of a flat market or negative market. We have seen now that well services are performing better and better because the market is also improving. We have a revenue increase in Q3. We also have increased margins. Details on the numbers, well, Jone will come more back to that. We have a NOK 3.7 billion backlog, which is a strong backlog. For those that has followed this segment earlier, To count backlog in well services is not just straightforward. This is a conservative estimate of the backlog we have. We are not kind of maximizing that number, but that's more like a realistic number. We have increased the number of employees, and we probably gonna do that more because we see more activity. Globally, we operate on 72 rigs. The cost of the equipment pool we have today, the asset pool we have is about NOK 3.7 billion. If we go over to drilling operations, which is the platform drilling, used to be called earlier, that is a very stable business. Currently we operate 16 platforms. We have a good financial utilization. This type of business is not the top margin business, it's very, very stable. We like that kind of operations because it actually literally spoken, give us platforms or ability to do add-on sales, like well services, like engineering activities, like, you know, modifications, all that kind of thing. This is a very, very important business in the company that we actually get add-on sales or the other services. The backlog is strong. It's NOK 7.6 billion. We have more, close to 1,200 employees, and that also includes the operations with the jack-up from Linus on Ekofisk. The next page shows the contract and the length of the contracts and different from type of options. The green on these bars are options and different from options in, within the floater part, the, you know, the module side. These options are extremely normal to be declared. We see that more than 85% of the cases, these options are declared and it's in a way, as we say, not necessarily too serious, but it's in a way ours to lose. If you operate well, you do a good safety, good performance, very often the client just rolls the operations further. We've seen that earlier, as I said, the backlog, including these options are quite strong and very predictable. It's very stable, it's a low risk operation, and it generates good cash. Engineering, this is an area where we see significant growth actually. We are in the process of discussing how to kind of shape the engineering activity going forward. We have significant increase in tenders. We are currently in the process of actually employing more people, which is a challenge, I guess, for many. We also to serve our clients what they ask for, we have a process, as I said today, to shape the company and to focus on what we want to do and what we gonna do. The backlog here is about $290 million. We have a resource base currently on 230 people. There's no secret that we are in the market to try to increase that base with between 50 to 100 more people, which just is an indication, that's on the conservative side, indication of the increased activity level. Utilization is high and we also. This is an area where we also have the focus on the so-called green initiatives, including what we are engaged today, which is ocean wind. We see more to come, but that's gonna be a later story. That was the segments, which you see all of them are performing well, increased activity, increased backlog, increased, you know, revenue and better performance on earnings. Regarding the market outlook, we clearly see that because of the increased activity regarding the energy crisis different from many things, you know, finally back in a situation where clients are investing more. We have, unfortunately, a strong, terrible war in Ukraine, Russia, which is also driving the market. So we see the upturn is driven by increased pricing and increased demand, which is strong for this segment. Now the oil and gas business, as you all have seen, is in a way the area that can kind of serve the energy demand in the global market on the next few years. Of course, there will be more renewables and green shift, clearly that oil and gas business, especially gas, is extremely important for the energy balance in the world. Within well services, we clearly see more activity. We see a lot more activity here in Norway. We see a lot more activity coming up in the Middle East. We see more activity in Africa. We see more activity in the Asia Pacific. As we have also signed more contracts with the within Malaysia with Halliburton. We also see more activity in Saudi. We see more activity in a way, all over the place. We clearly want to take our share, and we see that the demand coming up, especially from late 2023 and onwards, is very strong. Within drilling operations, it's a very predictable and stable market outlook. We do have tenders running now, and if we are successful, we will increase the number of assets we are working on. We also are focusing more strongly on plug abandonment activities and also other type of drilling activities. We also see now that this area has a potential for increased revenue and earnings. I've already commented upon engineering and again, engineering for us is an area where we also concentrate a lot of project execution. We see now that how we're gonna shape that part of the company will be released to the market early next year. We see more kind of operations and projects coming up. As I said, we are also today bringing new resources and capacities into the organization. We also see that this part of the company is very important for, you know, adapting us into new solutions, new technologies, and so forth. We also have a very close cooperation with ODL, Odfjell Drilling Limited. We know that all the next coming special surveys, classifications to five years are coming up in 2024 and onwards. It's actually seven, eight of them. We are preparing the cooperation with ODL on that part. That is significant activities which also bring more activity into the operations. Within engineering, we also have a group of people that work with creates new engineering opportunities also related to the energy transition. With those comments, I think Jone, you can take care of the remaining part of the presentation within the financial information. Thank you. Thank you, Simen. Starting with the group summary financial on page 14. Group operating revenue was NOK 996 million compared to NOK 753 million in Q3 2021, an increase of NOK 242 million. There has been increased activity in all business area, mainly due to positive development in market in general and successful achievement of new contracts. Group EBITDA was NOK 188 million compared to NOK 101 million in Q3 2021, an increase of NOK 87 million, mainly due to increased activity and improved margin in contracts. After depreciation, net financial items, and income taxes, the group delivered a net profit of NOK 44 million compared to NOK 19 million in Q3 2021. Down to the segments. Well services. Operating revenue for well services was NOK 374 million compared to NOK 247 million in Q3 2021, an increase of NOK 127 million. EBITDA was NOK 138 million compared to NOK 69 million. EBITDA margin was NOK 37 million compared to 28% in Q3 2021. Drilling operations. Operating revenue was NOK 468 compared to NOK 394 million in Q3, an increase of NOK 74 million. EBITDA was NOK 48 million compared to NOK 32 million. EBITDA margin was 10% compared to 8% in Q3 2021. Finally, engineering. Operating revenue was NOK 153 million compared to NOK 96 million in Q3 2022, an increase of NOK 57 million. EBITDA was NOK 30 million compared to NOK 4 million EBITDA. Margin was 9% in 2022 Q3 compared to 4% in Q3 2021. Moving to page 15 and balance sheet for the group. Some highlights there. Gross, group gross interest-bearing debt was NOK 1.35 billion in September 2022, NOK 423 million in cash in June 2022. Equity ratio was 26% in September compared to 23% in Q2 2022. Moving to page 16, summary of the group cash flow statement. Some highlights from the quarter. Net cash from operation was NOK 132 million compared to NOK 43 million in Q3 2021. There has been a negative change in working capital of NOK 17 million due to increased activity. Investing activities of NOK 126 million, mainly due to purchases of more equipment and wired drill pipe equipment and CCS equipment related to start up of Johan Sverdrup and Breidablikk projects. To summarize on page 18, another quarter with significant revenue and margin growth. Good cash position and expected further improvement in Q4. On track to pay dividend in Q2 2023. Positive market outlook for all segments, with particular growth potential in well services. Q4 expectation is in line with Q3 performance. We still have a strong contract portfolio combined with a solid balance sheet, gives us the flexibility to focus on building an even stronger company. As Simen said, ongoing strategy process focus on controlled growth in core businesses and developing new sustainable services and products. Thanks. Yeah. I think that concludes the presentation and we're ready for the Q&A session. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. There you go. We'll now take our first question at the tone. Please state your name and company before posing your question. Your line is open. Please go ahead. Hi there, Kim André Uggedal. Hi. Well, congratulations on the successful third quarter performance. Just want to know, I've got two questions here. The first one is, considering the recent windfall tax position in the U.K., just wonder whether that will directly or indirectly affect your company's operations going forward. Secondly, just want to know that, given that the demand outlook seems to be looking quite good in general, just want to know whether you're seeing significantly more competition on the supply side as well in different regions. Thank you. Shall I take it? Regarding the tax situation, I don't think that will have any impact on us, as far as I can see, if that was the question. Regarding competition, I think that the buyer entry this market is quite high. Even though people look at it as kind of a easier way to access. We don't see any new competition coming. We are very well aware of the existing competition and of course that's significant competition. No, no doubt about that. The company, to enter the company as a new player, I don't see that coming. It will be the same picture. There could be some consolidations here and there, but I don't foresee any major. We are well aware of the competitive market. That's where we navigate. Okay? Great. Many thanks. Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. Okay, we've got our next question from Ullard Rehman of Uma Invest. Your line is open. Please go ahead. Yes. Hello, and congratulations with a good quarter. One question regarding well services. We've seen a quite substantial increase in the CapEx there. How do you explain that? Jone, you can take that. Yeah, the... Okay. Yeah, the CapEx is very much driven by contract wins and startup of these this year. Most of them are related to Norway, and it's new equipment, new technology. In addition, we have also re-established our mooring business. This year and also last year were kind of extraordinary in, you know, the high CapEx. It's not investment level that we assume will continue. Okay. Is that okay? That's extraordinary investments, which is linked to contract wins. We don't see that number in general going forward. If we do see a good business opportunity, we will always provide investments, if that makes sense. In general, this has been extraordinary investments. Okay? All right. Thank you. We'll now move on to our next question from Svel of Vital Capital. Your line is open. Please go ahead. Yeah. Hi. My question was also on CapEx. Just to follow up, is there any changes to the CapEx outlook going forward, given the strong demand that you're seeing? In terms of CapEx outlook, I'm primarily thinking of the levels you gave at the IPO or at the spin-off. I'm sorry. I can answer that. As we said in the IPO, that we'll have a level of approximately $ 17 million-$ 18 million for our CapEx going forward. That would be also the case for us going forward. We don't change that statement we have in the IPO. That's the level going forward. That's in dollars. That's in dollars, yeah. That's dollars. Yeah. In dollars. Great. Got it. Thank you. I just add on a comment there because we do have capacity within the existing, you know, tools and equipment. So we do have capacity there. So even though we see a stronger demand, we are able to serve that without too much extraordinary investments. Just to say that. What the guy said here is about the $17 million-$18 million U.S. type of thing is a realistic average if you kind of look away from could be extraordinary things that could demand more. But if that happens, those... the business case will justify what we do. For sure. Thank you. Okay. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We will take our next question from Inge Reinertsen, a private investor. Your line is open. Please go ahead. Thank you. An earlier report, I heard that you may have to pay around GBP 30 million in a lawsuit against you. Are there any more information about that? Yeah. It's the National Insurance contribution claim for U.K., where it's based on historical application of National Insurance contribution. The exposure there, as you said, is $30 million. According to our legal advisors, we have a very good case. No further development in the process ongoing. The process, it's a long process, and if it's continue, it will continue a couple of more years, final 2025, 2026. We see no reason to take any provisions. Of course, we feel that we have a very good case there. Okay. Thank you. That is also co-confirmed by the auditors. Yes. Yeah. Thank you. We'll now take our next question from Anders Høegh at Alastor Capital. Your line is open. Please go ahead. Hi, good afternoon. I have a couple of housekeeping questions. Can I start around just pricing on equipment? What, what are you seeing there? Because when I look at this space, it seems like there's not much new investment going in, and a lot of the equipment that is already in the market is kind of used to some extent, and now we're seeing a lot of licenses wrapping up in the U.K. It would be great to hear your thoughts about pricing, especially in North Sea, and how you're seeing that progressing. Because I think we are on a considerably lower level than we were in the last strong market, 2011-2013 or so. Yeah. Gert, can you comment there? Yeah. I think, of course, we have seen increases in prices, over the, you know, the last six months and so on. I think again, it's a little bit about, you know, our CapEx level. It's a lot of this is something we would, of course, put into the pricing and calculation, in the new contracts. We would make up for it, I would say. I think the prices are fluctuating quite a bit right now. I think, you know, in the overall picture where we have a lot of equipment that has a long life, it's not a major concern for us right now. It is, of course, something we are really monitoring closely and just need to handle through the contracts that we sign going forward. True. Is it fair to assume that the pricing towards your customers is increasing quite rapidly? It looks like a short market to me. I'm not sure what you see on the pricing side that you are able to take to your customers? Yeah. I think we have, you know, we have some contracts which are, you know, again, the lower margin contracts and, with less equipment and mainly personnel. For those contracts, we have extremely good escalation clauses, so we're very well covered. When it comes to some of these contracts that are related to rental equipment, you know, there's less opportunity to increase the prices, but, you know, they've been set up to kind of handle cost increases. The kind of the marginal cost increases that we're seeing now are not significant. When we look at kind of bigger projects, new contracts where you would require to make investments, we need to, you know, update our calculation and our pricing based on the cost of acquiring the equipment. I think we. It's something that we can, you know, we can handle pretty well. Okay. Good. I think it's the same for all our competitors. You also always have usually, you know, extra equipment, spare capacity in the equipment you already have. Often the investments are, you know, based off that you need to top off your inventory a little bit. It's not that you need to buy You know, a completely new pool of equipment to handle one contract. That's true. Okay. That's understood. We don't guide anything. You see, we talk about words saying growth, increased revenue, increased margins, increased earnings. That means that when we look into the future and we compare with our own base, with equipment and services, when we use these words, we see that we are moving upwards going forward. Also because we see that the pricing as everybody, all our competition has the same challenges. Day rates on rigs are coming up. Day rates on jackups are coming up. There are more jackups playing. They're more active. You know, the rig count here is very important. A very strong KPI to follow is the number of rigs activated, which is a clear indication of how well services will perform. Kind of, when I talk to investors, I say that what are the drivers in this market, the well services market? There are more drilling operations with land rigs, jackups, with deep water, shallow water, harsh environment. More rigs in operation, more services. That is a very good indication. The day rates are coming up on day operations. Rates are coming up on equipment performance and deliveries. The key here is to keep the cost level as low as possible. That's really the key now to perform well on earnings. We focus very much on the cost side now to make sure we have agreements that we can control the cost level without having that rate to escalate to unacceptable levels. That's also a KPI. Yeah. I mean, it's very clear, and I think you're doing a good job there. And then I want to ask about potential refinancing as well. It sounds like you wanna do dividend next year. You have a bond that is on, I think, 10% interest rate at the moment. It looks to me that that bond was taken mandatory or spin-off happened, and you might not have had that much choice. Are you looking to refinance the bond and to improve the interest rate? Because it's eating into free cash flow quite materially. For us looking at it, I think, I think that would be a quite easy fruit to pick. Yeah. We haven't concluded anything there. I have to say that. We have, we are focused to pay dividends. We have not agreed on or discussed what we're gonna do with the bond or how we're gonna structure the financial structure in the OTL in general. As you said, we did the bond in the spin-off. That was necessary. How we're gonna kind of organize that going forward. We need to discuss that more in detail. That's not imminent to talk about that now. We're gonna be thinking about it, how we're gonna structure our financial, our financial capacity. The most... What we focus now to make it, kind of, make it as simple as possible is to perform well and pay dividends. Okay. That's understood. Thank you very much. Thank you. We'll now take our next question from Phil Holterven at Vital Capital. Your line is open. Please go ahead. Yes. To me, the net interest cost during Q3 looks a bit extraordinary high. Could you just help me and walk me through the reason for that? The net interest cost? Yeah, exactly. I think the net interest cost wasn't exceptional. I think we had a currency loss. Is that the line you're looking at? Yeah, that's the line I'm looking at. Also I was, I wasn't sure if the transaction costs related to the new borrowings was expensed as well. No, that's earlier. I think this quarter we had no exceptional items when it came to the financial lines. No. The currency loss in Q3 was NOK 16 million. Most of it is unrealized. Now the U.S. dollar is going the right direction. We also have strengthened the balance between the exposure in the RCF, exposure in US dollars and cash balance. The reason for your question, I guess, is the currency loss of NOK 16 million. Got it. Those are only related to the RCF, right? There's no, like, hedging to USD for the bond or something like that. No. It's related to the RCF. Got it. Thank you. Thank you. We currently have no questions coming through. Once again, if you would like to ask a question, please press star one now. Thank you. There are no further questions. I will now hand it back to your host to conclude today's conference or for any additional remarks. Thank you. No. I think we will conclude. We thank everyone for calling in. Please contact me if you have any additional follow-up questions. Thank you.