Welcome to the Archer fourth quarter 2021 trading update and 2022 outlook. Throughout the call, all participants will be in a listen-only mode and answer the question and answer session. Today I'm pleased to present Dag Skindlo, CEO, and Espen Joranger, CFO. Please go ahead with your meeting.
Thank you, Rhianna. Good morning, ladies and gentlemen, and thank you for joining the conference call for our fourth quarter trading update and financial outlook update for 2022. Archer's CEO, Dag Skindlo, is joining me on the call today. In today's call, I will briefly describe Archer while continuing to give some key highlights and summarize Archer's operation for the fourth quarter.
Dag will thereafter summarize Archer's performance during the full year 2021 and walk us through Archer's participation and commitments to the energy transition before looking forward in our 2022 financial outlook. Towards the end of the call, we will open the line for questions. Next slide, please. Moving to Slide 3, and before we proceed on the call, I would like to note that the information provided in today's call includes forward-looking statements as well as non-GAAP financial measurements. Next slide, please.
When you think about Archer, you should remember the following: Archer delivers drilling and well services in our resilient brownfield market, providing our customers with low-carbon solutions. Archer is mainly involved in the production phase, which means we are less exposed to the volatile segments of the oil and gas value chain, such as, for instance, seismic and exploration.
The production activities will continue with substantial activity levels in decades to come. Archer has an extensive track record performing well P&A and is well positioned to capture a large portion of the upcoming P&A scope. Archer is relatively asset-light and continues to generate positive cash flow. Since the end of 2016, we have reduced our net interest-bearing debt by almost $300 million through a combination of operational cash flows, debt forgiveness, and equity issuance. Finally, Archer is committed to the ongoing energy transition.
We are later in today's call announcing our roadmap to net zero. Slide 5, please. Revenue in the quarter of $248 million is an increase of $37 million relative to the corresponding quarter last year, equivalent to 17.6%. On the back of increased activity, our adjusted EBITDA increased by $2.3 million compared to third quarter. The increase was driven by increased contribution from our well services and land drilling divisions.
During the quarter, we incurred $3.5 million of exceptional charges, mainly relating to COVID-19, severance, and idle personnel in Argentina, resulting in a reported EBITDA of $22.3 million. Compared to Q4 2020, EBITDA increased by 16.6% or $3.1 million, while compared to the previous quarter, EBITDA increased by $1.8 million. The results in Q4 were positively impacted by retroactive adjustment of terms in our land drilling operations, amounting to about $2 million in the quarter.
Compared to the end of third quarter 2021, we see a substantial reduction in our net interest-bearing debt, ending just below $500 million. When adjusting for the impact of the DeepWell acquisition, we see that our net interest-bearing debt is trending in line with our expectations and guidance. The macro fundamentals in Argentina continue to be challenging following their severe debt default, which constrains the country's ability to further develop their vast oil and gas resources.
In this context, we have concluded to write off a total of 15 drilling rigs and pulling and workover units that are unlikely to return to operations. This impairment will have a negative impact on our net results of roughly $14 million in the fourth quarter. Finally, we have, during the first quarter, agreed on a two-year contract extension with Pan American Energy in Argentina, with an estimated $235 million in additional backlog.
Slide 6, please. Yesterday, we announced a two-year contract extension for drilling services in Argentina with Pan American Energy. The estimated additional backlog is $235 million. The contract extension covers two drilling rigs, 13 workover units, and 13 pulling units on Pan American's Cerro Dragón in the Gulf of San Jorge Basin in southern Argentina. The contract will, with the extension, run until Q2 2025. Pan American has the flexibility to adjust the level of activity up or down during the contract term, but based on our current outlook, the total value of the contract is estimated at $400 million. The terms of the remaining contract should provide a basis for us to lift our margins from the operations. Slide 7, please. Our well services division delivered another quarter with record revenue of $62.3 million.
The increase compared to the previous quarter is modest, but compared to the previous year, the increase exceeds 100%. The increase compared to the previous year is driven by a 220% increase in wireline revenue, supported by continued growth in oil tools activity. On the back of growth in revenue, we're pleased to report an additional $1.2 million of EBITDA contribution from this segment compared to the previous quarter and an increased contribution of $5.2 million compared to the fourth quarter last year. On the operational side, in addition to the successful completion of the P&A campaign at Gyda during the fourth quarter, we highlight the first successful job with SUMO, our new developed hydraulic downhole casing jack system. SUMO is part of our casing removal tools and part of our P&A product range portfolio.
Moving to Slide 8, revenue from platform drilling, engineering, and our modular rigs continues to be stable relative to the previous quarters. In addition to revenue, EBITDA continues to be fairly stable quarter-over-quarter, with an overall EBITDA margin of 9.3% in the fourth quarter. The number of rigs under contract in active drilling mode reduced by one rig in the quarter as the P&A campaign on Gyda came to an end during Q4. Slide 9, please. Our revenue for land drilling increased by $2.8 million compared to the previous quarter, and the adjusted EBITDA increased by $2.6 million. We incurred a total of $2.6 million of exceptional charges, resulting in an EBITDA of $3.6 million, which is $2 million higher than the previous quarter. The exceptional charges were primarily severance payments, cost of idle personnel in Argentina, and COVID-19-related sick leave. The results in Argentina remain below expectations.
As we can see from the bottom-right graph, active drilling units in the fourth quarter were 10, representing an increase of one rig. We are dependent on increased activity within land drilling in order for us to deliver meaningful EBITDA contribution from this segment, despite the improved result in the fourth quarter, which was influenced by positive bonus contract amendments. With that, I hand the words over to Dag.
Thank you, Espen. The backbone of Archer is the open drilling business, characterized by long-term contracts and limited CapEx. Along with the well service division, oil tools, and wireline, the services we offer are typically brownfield activities to maintain and increase production around existing fields and platforms. Looking back over the last few years, we see a steady increase in our EBITDA contribution from the Eastern Hemisphere division, following expansion of our contract portfolio and market penetration for our well services division.
Since 2017, our quarterly EBITDA run rate has grown about 100% to about $20 million a quarter in the Eastern Hemisphere. Both the investment forecast for the Norwegian Continental Shelf produced by the Norwegian Petroleum Directorate and Rystad estimates for wells drilled per year support our view that our core home market will be fairly stable in the years to come. Slide 11, please.
Looking forward, we have a clear strategy to capture a large portion of the growing P&A market in the North Sea through the combination of our technology, know-how, and presence. According to Rystad, it is expected that a total of 3,000 wells will be plugged in Norway, U.K., and the Netherlands in the coming 15 years. We have a good position and have more track record and scope of services than most of our competitors.
We will continue to invest in technologies and services for the slot recovery and P&A market. Slide 12, please. The economic conditions in Argentina continue to be challenging, impacting our ability to generate attractive returns and repatriate cash generation. In Argentina, the sovereign debt restructuring is continuing. IMF and Argentina announced last week that they have an agreement in principle to solve Argentina's default of their $57 billion loan from 2018.
This is encouraging and a first step towards a more normalized situation. Due to the macroeconomic situation and the financial market restrictions, Argentina is currently not an investment destination, and there is very limited access to financing for development of projects. Argentine companies struggle to access new credit in the international debt markets, but there are some muted signs of improvement as YPF last week secured $300 million of financing.
As you can see from the graphs, the shale play in Argentina has grown significantly in the last few years, and it's generally where operators get the highest production per drilled well. However, in addition to constraints in access to financing, there are limitations in the oil and gas infrastructure from Neuquén, as 90% of the capacity of the existing pipelines are already being utilized.
There is a need for investments to increase the capacity and, consequently, increase the level of drilling and production. Slide 13, please. We have, over the last years, reduced our net interest-bearing debt substantially and consistently. Our debt burden is currently 37% lower than it was at the end of 2016, a reduction of nearly $300 million. Archer has consistently, for the last six years, generated free cash flow.
Free cash flow is cash flow from operations, less capex, less interest expenses and less taxes. We have generated cash in both expanding and contracting market conditions, evidencing our ability to adjust to the market environment as well as having a good operating model. At the end of 2021, we had an excess of $116 million in cash and committed credit lines. Slide 14, please.
Summing up 2021, we are pleased to see that we delivered on our promises and guidance, which we communicated in Q4 2020 trading updates. We delivered a revenue growth in excess of 18% over the second half run rate in 2020, while our EBITDA grew by 12.6%. Our capital expenditure during 2021 was roughly $33 million, or 3.6% of gross revenue. And finally, we continue to generate positive cash flow and reduce our needs over the course of the year, as outlined by Espen earlier on. Slide 15, please. Archer is committed to the ongoing energy transition. Our sustainability is based on three pillars: one, a resilient oil and gas offering, two, a low-carbon agenda with respect to own and customers' emissions, and three, developing alternative revenue streams outside of oil and gas.
Short term, we can best contribute by ensuring efficient operation with low emission and continue to develop new technologies and services that reduce energy consumption and support our clients' low-carbon agenda. I will, on the next slide, outline Archer's roadmap to net zero. Slide 16, please. Today, we are announcing, for the first time, our emission targets as well as our renewable and transition targets.
In 2022, Archer will be carbon neutral in Scope 1 and 2 in all countries outside Argentina and Bolivia. Excluding the land drilling operation, our annual global emission equals that of only 500 cars per year. We are not a big polluter. We will, in 2022, be carbon neutral in countries like Norway, U.K., and the U.S. By 2025, we will reach 20% global reductions, and by 2030, we will reach 30% emission reductions. Our plan and commitment is to become net zero by 2050.
In Archer, we work with and assess our vendors on how they work on reducing their direct and indirect emissions. By working with vendors on reducing their emissions, Archer's Scope 3 will improve and eventually also become zero. Companies and society rely on everyone doing their part. We are evaluating concrete opportunities within the renewable and transition segments, either through acquisitions, partnerships, organically growth, or a combination.
Segments closest to our heritage are geothermal energy and carbon storage. These are segments with significant expected growth. Both these areas require drilling and well services, the core competence in Archer. Furthermore, we plan to deploy drilling rigs from Latin America into the geothermal drilling industry as the energy transition continues to unfold. Next slide, please. To become carbon neutral in all countries outside Argentina and Bolivia in 2022, we are focusing on operational awareness to reduce the need for energy.
We're installing solar PV systems to produce our own electricity. We buy electricity from guaranteed renewable sources. Lastly, we compensate for remaining Scope 1 and 2 emissions. We will plant about 3,000 trees during 2022. Slide 18, please. Our biggest challenge and opportunity for improvement is our emissions related to our land drilling operation in Latin America. The power required to drill wells is largely produced by large diesel generators.
We have many actions and initiatives ongoing to reduce energy consumption and emissions, which are already producing emission savings. Long term, we, like other heavy industries, will require new fuel and battery solutions. We will evolve and adapt as the solutions will be developed at scale. It is a big undertaking to reach CO2 emission or CO2 neutral for land drilling operations, but we are on the path towards our overall goal.
It is interesting and promising to note that YPF last week announced the first sustainable financing with the issuance of a $300 million bond to finance the transition process towards a more sustainable company and commitment to the environment. Furthermore, we are currently undertaking a study with Pan American to see if the pulling units we operate can be electrified.
There is electricity available on every producing well, so the potential is there. Slide 19, please. Looking forward, our priorities are to grow our core business area, further improve operational performance, and deliver on our commitment to the ongoing energy transition. When growing our core business, we need further international growth in our drilling and well services division. We have, during the last years, established a strong foothold in the growing P&A market, which is a very important growth area for Archer globally.
When looking for M&A opportunities, we have identified complementary areas within the green energy, low-carbon solutions, and brownfield as the most interesting areas for our investments. We have today revealed Archer's plans, and we confirmed our commitment to the ongoing energy transition. Archer will continue to make brownfield greener and find better and more efficient solutions for our customers with low-carbon solutions.
Geothermal and carbon storage are areas that we believe Archer has complementary skills and will be areas of focus for both internal development as well as possible M&A. Archer will follow a path to be compliant and consistent with our ambitions to achieve net zero by 2050. Slide 20, please. Looking to 2022, we expect platform drilling to see a moderate slowdown in activity as we have completed two large P&A projects during 2021, and no more drilling will be required on these two platforms going forward.
For the modular rig , Emerald is scheduled to be demobilized during Q1 2022, while Topaz is scheduled to start mobilizing during Q2. We expect to see improvements in our well service division with high activity globally for oil tools and a full-year impact of the wireline contracts in Norway. Our expectation to our land drilling division remains cautious. The recent announcement announced contract extension with Pan American Energy, combined with a positive traction in Argentina's negotiation with IMF, gives us some confidence that our land drilling division will contribute more to Archer's overall performance in 2022. To be more concrete, Archer expects improved financial performance in 2022. We expect revenue for 2022 to increase moderately from 2021. We believe EBITDA for 2022 will be between 5%-8% higher than 2021.
We expect a slow start in Q1, and growth is primarily expected in the second half of the year. As in previous years, we plan our capital expenditures to be between 3%-4% of revenue. Lastly, we expect another year with positive free cash flow, and we plan for a modest reduction in our net interest-bearing debt. Our needs will fluctuate due to timing issues on CapEx, taxes, payroll, etc. And as such, we expect to see the major improvements in Q4. With that, I will hand the call over to the operator for any questions.
Thank you. If you do wish to ask a question, please press zero and one on your telephone keypad. If you wish to adjourn your question, you may do so by pressing zero two to cancel. There'll be a brief pause while any questions are being registered. Our first question is from Haakon Amundsen of ABG. Please go ahead.
Yeah, good morning, guys. It's Haakon Amundsen. Just two questions from me. Firstly, a bit on the market. I mean, there looks to be quite high activity on the NCS in terms of sanctioning of new projects, and we're seeing quite a steep increase in the budgets from some oil companies globally for 2022. So I just wondered how you can put this into context of relatively moderate growth going into this year for Archer.
That's my first question. And my second question is to the financial guidance. It looks like the EBITDA guidance for 2022 is basically flat if you just compare it to the adjusted, the underlying number for 2021. So I'm just wondering if you expect kind of more exceptional items in 2022, or if you could just give some color on that, please. Thanks.
Thank you, Haakon. I think when you look at the Norwegian shelf, the continental shelf, there will be a lot of activity, but there's a lot of new developments. So the new developments in the short term doesn't really help Archer too much. Okay? There's development of subsea installations and platforms. So the EPC market and the subsea market is going to be very active, and also the installation. We will see benefits later on when this comes into production and the brownfield, Haakon.
And specifically, as you mentioned here, that we did 2 big projects in 2021, which was a Gyda P&A, and we are about to finish also on the Veslefrikk P&A. Those are platforms that will not continue to operate in 2022. That's the reason why we are quite realistic in our expectations for Norway activity. Yeah, there are certainly growth, and we expect growth internationally in both oil tools and wireline in 2022, but it's not significant in an Archer perspective, Haakon. So the balance is to be muted. On the EBITDA guidance, I don't know if you want to give some color.
Yeah, it goes along the lines as Dag commented on for the Norwegian Continental Shelf, where we see sort of the moderate activity increase in 2022. While for Argentina, it's the idle people that we had during 2021 for the drilling rigs that never came back after COVID. That's where we had the severance and also the idle personnel in 2021. And we do not forecast to have similar exceptional items for 2022. Of course, we are currently experiencing COVID-19 challenges in January, but in our guidance now, we have not assumed that this will continue further in 2022. And on another note regarding activity, as commented on earlier, we have the two modular rigs where we expect Emerald to demobilize from New Zealand during first quarter, and we have Topaz mobilizing during second quarter. We will have less months of modular rig activity in 2022 before then Topaz starts on the two-plus-year contract with TAQA in U.K.
All right. Thank you. That's very clear. Thanks.
Welcome.
Thank you. Just as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. There'll be another brief pause while any further questions are registered. There are no further questions on the audio line, so I'll hand back over to our speakers for any questions.
Thank you. We appreciate everyone joining us for this quarter call, and we look forward to speaking to you next quarter. Thank you, and have a good day.
Thank you. This now concludes our conference call. Thank you for attending. You may now disconnect your line.