Hello everyone, and welcome to the Archer first quarter 2021 earnings release call. Throughout this call, all participants will be in a listen-only mode, and afterwards, there'll be a question-and-answer session. I will now hand the call over to the CEO, Dag Skindlo. Please go ahead.
Thank you, Mirela. Good morning, ladies and gentlemen, and thank you for joining us for Archer's first quarter conference call. The call is being hosted jointly from Stavanger and Oslo, and I'm on the call together with our Chief Financial Officer, Espen Joranger. In today's call, I will touch upon key highlights and summarize Archer's operation for the first quarter. I will, during the operation section, also shed some further light on the acquisition of DeepWell, as well as the recent wireline contract award from ConocoPhillips. Espen will thereafter walk us through the financial section and the 2021 outlook. Towards the end of the call, we will open the line for questions. Moving to slide two. I would like to note that the information provided in today's call includes forward-looking statements as well as non-GAAP financial measures. Next slide, please.
Revenue in the quarter of $213.4 million was an increase of $2.8 million relative to the fourth quarter. We saw an increase in revenue in both Eastern and Western Hemisphere. The main growth contribution came from the Well Services segment and primarily from our Oiltools division. On the back of increased activity and revenue, we are pleased to see this reflected in our reported EBITDA, with an increase of 9.8% or $1.9 million compared to the fourth quarter. We report a net income in first quarter of $6.3 million, corresponding to NOK 0.35 per share. Compared to the end of first quarter 2020, we have seen a substantial drop in our net interest-bearing debt, now at $506.8 million.
The year-over-year drop amounts to $81 million. We have seen a modest uptick in our NIBD over the last two quarters, driven by increased activity, combined with a high CapEx reported in Q4. In addition to the award of the integrated wireline contract from Equinor in first quarter, our wireline division have followed up with award of a large wireline contract for ConocoPhillips, and we have signed the sales and purchase agreement to acquire DeepWell. Slide four, please. Our well services division delivered a record revenue of $35.5 million, a solid 17% increase compared to the previous quarter, while EBITDA increased by $2.1 million. Growth in EBITDA and EBITDA margin is driven by improvements in our Oiltools division.
The new wireline contract will have financial impact on our financial results from the second quarter onwards, as both new contracts commence in May. We will give further details on these contracts in the following slides. Slide five, please. We have in 2021 secured wireline contracts with a total firm backlog of NOK 3.5 billion, covering a firm scope and activity until 2026. Both contracts are with key operators in the Norwegian Continental Shelf. These contracts will give us scale as well as provide predictable activity for a minimum of five years and potentially as long as 11 years. Both contracts commence first of May, 2021. We have conducted a scope for ConocoPhillips in recent years, but the addition of Equinor contract is expanding Archer's wireline operations. The combination of these contracts have created challenges when it comes to expanding our personnel and equipment base.
The wireline organization has handled these challenges well, and we are ready to deliver value to our customers for the years to come. Next slide, please. Following the award of both Equinor and ConocoPhillips, we quickly approached DeepWell and have now signed the share purchase agreement. DeepWell is a specialized well intervention company focused on high-tech wireline services on the Norwegian Continental Shelf. The company is a somewhat perfect match for Archer's wireline division, as they have a team of talented and skilled employees, in addition to superior wireline equipment. DeepWell have invested more than $60 million in modern wireline equipment in recent years. DeepWell was the incumbent wireline provider for Equinor, and we have secured key employees from DeepWell in parallel to the acquisition, securing a transfer of know-how to Archer's Equinor operations, as these commence in the beginning of May. Slide seven, please.
When looking at the financial metrics, the acquisition is based on a valuation of DeepWell of NOK 177 million. We will set most of the acquisition price upon closing, but a portion of the settlement is payable in 2022. Given the financial forecast, synergies, CapEx savings, and tax benefits, we are confident that the payback of our investment in less than three years. For Archer, we foresee limited risk in this transaction, while it will bring further opportunities and flexibility going forward. The settlement will be financed by cash at hand in combination with our established credit lines. We have been vocal that securing our liquidity is the utmost importance to us.
Given the short payback time of the transaction and the level of available liquidity, we are comfortable that we do not jeopardize our liquidity position through this acquisition. The closing of the transaction is dependent on clearance from the Norwegian Competition Authority. The application has already been sent. As mentioned, acquisition of DeepWell is motivated first and foremost by securing Archer's access to highly skilled employees and modern wireline equipment. Increased capacity will give Archer flexibility to offer more services to both current and prospective clients, including clients in the U.K. and Denmark. DeepWell will bring additional contracts to Archer's portfolio and expand our service offering with light well intervention services. Slide 8. Given the traction in our well service division, we are pursuing a substantial growth over the next couple of years.
The growth is driven by the continuous, continued success in our Oiltools division , combined with already discussed expansion of the wireline operation on the back of recent contract awards. We expect the EBITDA contribution from our well services to be two to three times higher than the contribution in 2018. In 2018, EBITDA from our well services segment amounted to almost $15 million. For the next couple of years, a substantial amount of the growth will come from the recent contract awards and strategic alliances. In addition, we will continue to drive innovation and digitalization of our operations, as well as a further geographic expansion. The primary rationale for the DeepWell acquisition was to get access to personnel and equipment, and by increasing our capacity with wireline segment, and we are positioned to capitalize on opportunities.
In addition, the well services we offer are well-positioned within the brownfield market in general and for the P&A market in particular, which we expect to see expanding going forward. Next slide, please. Moving to slide nine. Revenue from platform drilling, engineering, and our modular rig decreased by $3.4 million relative to previous quarter. Reduction is primarily due to the lower revenue from our modular rigs, as the Emerald was demobilized towards the end of fourth quarter 2020. The number of rigs in the contract in active drilling mode was stable compared to first quarter. During the second quarter, we will discontinue the operation three rigs with TAQA. These rigs have been limited scope, so the reduced activity will have modest financial impact.
Our engineering division's financial performance was impacted by low progress on a couple of fixed-price contracts, while our modular rig, Emerald, experienced solid performance with high operational uptime in New Zealand. Slide 10, please. Our revenue for land drilling was increased by $1.1 million compared to previous quarter, and the EBITDA contribution increased by $2 million. We continue to see additional rigs being put back to work in the quarter. As we can see from the bottom-right graph, active drilling units continued to increase compared to the preceding quarters, and is approaching the levels from first quarter 2020. The increase is both for drilling rigs, work rigs, and pulling units. We are currently in contract negotiations with one of our main clients in Argentina, Pan American, for the continued operation of land rigs, workover, and pulling units in the south of Argentina.
Our current contract expires in June 2021, and we aim to sign a new contract before it expires. Alternatively, we are discussing a temporary contract extension to allow fragmentation of the negotiation. The gas incentive plan implemented by the Argentine government has led to improved market conditions in the beginning of the year, leading to activity levels measured by rig counts and fracking stages being back to pre-COVID levels in the Vaca Muerta Basin. However, there are increasing social unrest in the country, fueled by high inflation, increased poverty and unemployment. We see there is a considerable increase in the number of strikes, including strikes impacting Archer's operation. The country continues to negotiate a debt restructuring after defaulting on their sovereign debt for the ninth time, while the COVID-19 pandemic is hit by a third wave.
In sum, despite the positive development over the last quarters, the outlook remains uncertain for the land drilling operation in Argentina. Slide 11, please. Slide 11 illustrates how we define sustainability in Archer. It has four pillars: low carbon, resilient oil and gas offering, green energy, and sustainable financial performance. Firstly, low carbon agenda. Archer is committed to contribute to the ongoing energy transition. Our biggest contribution is to reduce our clients' emissions through efficient operations with as low emission as possible. We will continue to develop new technologies and services that reduce time and energy consumption for our clients, supporting them in their low carbon agenda. We must also reduce our energy use and emissions from own operations, be it drilling operations in Argentina, our workshop, offices, or travel and transportation.
Low-carbon solutions will be part of our license to operate as the world moves towards a net-zero emission long term. Like many of our clients, we are currently evaluating and analyzing our long-term vision for carbon emissions. We will, during this year, conclude our emission targets and actions, and we plan to share this with you later in the year. Second, resilient oil and gas offering. The second important fact to understand is Archer's relative resilient position in the oil service market. About 90% of our global activity is within brownfield operations. Brownfield operations are in mature fields that have been developed, where infrastructure is in place and when the fields are already producing. At this stage, investments are typically smaller. There is more certainty in the decision.
In a market where we are likely to see less demand for oil and gas long term, oil and gas companies are more likely to prioritize spending in brownfield development. We are confident Archer's market position in brownfield services is a solid foundation for decades to come and will be more economically sustainable than our peers with greater exposure to the greenfield market. With our broad portfolio of products and services within slot recovery and plug and abandonment, Archer is in a unique position to deliver lower carbon solutions to our clients. We are part of the industry that will safely plug all the wells drilled. Thirdly, financial performance. Thirdly, in order to have a sustainable business, you must, in addition to deliver low carbon solution in a long-term market segment, deliver financial results and improve the capital structure.
Archer has over many years now demonstrated that we have delivered consistent financial results and with challenging market condition and improved capital structure. This must be part of our DNA. Last, green energy. There is currently a shift in the greater society, with more focus on green energy as we need to reduce the carbon emission. In addition to contributing with our current capabilities, Archer will explore business opportunities within the green and renewables energy space. Our business decision to enter new markets will be taken on the financial basis in line with our environmental, social, and governance foundation. With that, I hand the word over to Espen, who will take us through the financials in greater detail.
Thank you, Dag. Looking at slide 12, we see that our total revenue for first quarter amounted to $213.4 million, compared to $237.1 million last year. This is a reduction of $23.7 million. When netting off reimbursable revenue, we see that the operating revenue was reduced by $13.5 million, or 6.5% compared to first quarter last year. The reduction in revenue is explained by the reduced activity in Argentina and the depreciation of the Argentine pesos against the U.S. dollar, while partly offset by increased revenue from Eastern Hemisphere. For the quarter, EBITDA was $21 million, $0.7 million lower than first quarter last year. Positive additional EBITDA contribution from Eastern Hemisphere was more than offset by the lower EBITDA from Western Hemisphere.
EBITDA margin for the quarter was close to 10%. We do not report any exceptional charges for the quarter, and EBIT ended at $5.9 million. Net financial items amount to +$3 million in the first quarter. The positive figure is driven by a positive mark-to-market value adjustment for our shareholding in KLX Energy of $8.7 million, and a reported gain on our interest hedging position of $4.3 million. Net interest expense of $7.1 million is well below the $8.9 million incurred in first quarter last year. Net positive income for the quarter is $6.1 million, significant up compared to the loss reported in previous quarter. Slide 13, please.
Total current assets decreased by $8.7 million in the quarter, explained by a decrease in other current assets and cash at hand, offset by an increase in our receivables of roughly $4.6 million, mainly driven by increased activity. Total non-current assets decreased by $1.9 million. Over the quarter, the positive mark-to-market valuation adjustment of our KLX Energy shares and increase in other non-current assets was offset by depreciation of our property, plant, and equipment. On the liability side, the biggest difference is the reduction in other non-current liabilities and reduction in interest-bearing debt. The increase in equity of $5.2 million is a result of the positive net income for the quarter. Next slide, please. To sum up, first quarter was a solid operational quarter with improved financial metrics and increased EBITDA.
We deliver positive net income and was awarded an integrated wireline contract by Equinor, along with our strategic alliance partners, Welltec and Schlumberger. After securing the wireline contract from ConocoPhillips, we laid the foundation for further expansion of our wireline division through signing of the share purchase agreement to acquire DeepWell. Looking forward, and given the macroeconomic environment, we reiterate our outlook statement for 2021. We expect improved financial performance in 2021 on the back of a strong backlog and market position in our Eastern Hemisphere divisions, but the environment in our land drilling division in Argentina remains challenging. As we see it today, we expect revenue in 2021 to be moderately higher than our second half 2020 run rate.
We are preparing for a general increase in activity, leading to an increase in EBITDA in 2021 of 10%-20% compared to full year 2020. We will continue our investment discipline and estimate CapEx of 3%-4% of revenue. The acquisition of DeepWell will impact our ability to reduce NIBD during 2021. 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 then one on your telephone keypad now. If you wish to withdraw your question, you may do so by pressing zero two to cancel. That was zero one if you wish to ask a question. Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. It doesn't look like we have any questions on the telephone line, so I'll hand the call back to the speakers. Please go ahead.
Thank you. We appreciate everyone joining us for this quarter's call, and we look forward to speaking to you next quarter. Thank you, and have a good day.