Good afternoon, everybody, and welcome to the Odfjell Drilling Q4 and financial year-end 2025 results presentation. My name is James Crothers, and I'm the Investor Relations Officer at the company, and I'm joined today by our Chief Executive Officer, Kjetil Gjersdal, and our Chief Financial Officer, Ørjan Lunde. Before we begin, your attention is brought to the important information slide of our presentation, which we'd encourage participants to read in full. Note that the presentation is only a summary of the quarter, and a more comprehensive quarterly report should be read separately. Both that report and today's presentations are available on our website, www.odfjelldrilling.com. Today's call will follow the traditional structure, with Kjetil taking us through the key highlights, which there have been quite a few this quarter, before taking us through the operational performance of the business.
Kjetil will then continue with an overview of the market as we see it today, before handing over to Ørjan, who will go through our financial review. Kjetil will then summarize the presentation before we open up our Q&A session for analysts and investors. As always, the Q&A session will be conducted over both telephone lines and webcast tools. We'll always try and get through as many of these questions as possible. However, if we don't get a chance to go through your question 'cause of time, I will try and follow up directly with you after the call. We make an effort to answer all of the questions asked, so we do encourage you to use this feature as much as possible. This has certainly been the busiest quarter for the business since I joined Odfjell Drilling.
Without further ado, I will pass over to Kjetil to take us through the key highlights. Kjetil?
Thank you, James, a very good afternoon, everybody. As James said, it's been a very busy quarter for our company. Unsurprisingly, one of the most important achievements during the quarter was the successful completion of the Deepsea Bollsta and the accompanying refinancing of the company. This has had a significant impact on our business, and I am delighted to now call the Deepsea Bollsta one of our own units. I'll talk more about that on the next slide. In addition to this, the company secured three new contracts during the quarter, which in addition to the Bollsta acquisition, added nearly $1 billion in our firm order backlog. Our backlog now sits at $2.5 billion, including priced options, significantly increased from Q3. Once again, our operational performance has facilitated record-breaking financial results.
With an average financial utilization of 98%, we were able to deliver revenue of $245 million and an EBITDA of $124 million. We were also able to deliver net profit of $45 million, reduced by $18 million due to costs associated with our refinancing. Last but not least, we have once again increased our dividends, moving from $0.20 in Q3 2025 to $0.23 in Q4, equaling a total dividend of $55 million. Given today's share price, this is equal to an annualized yield of around 8%. Before I begin with the operational review, I briefly wanted to touch on the acquisition of Deepsea Bollsta. As many of you know, we've been looking to expand the size of our fleet for some time. We had to be cautious when doing this.
Our see-through backlog, we secured on our 4 own units, created a fantastic cash flow generation for our business. Any deal we considered had to be accretive to that story. With the Bollsta acquisition, we believe we found that deal. For the total cost of $480 million, significantly below the implied value of our own rigs and way below new build cost, we have acquired one of the highest spec units in our sector with a $355 million in firm backlog already secured. The deal is as anticipated to add $100 million in annual EBITDA, with limited CapEx expected going forward, and an SPS schedule, which is aligned with our own fleet.
The beauty of adding a rig from our managed fleet has meant that the transition of owners has been seamless, with the crew on board Deepsea Bollsta barely noticing a change. We are absolutely delighted to add this unit to our fleet. As some of you may have noted across our social media, we have decided to rename the Deepsea Bollsta to Deepsea Bergen. The Deepsea Bergen was the unit that we retired in 2022 after it serviced clients faithfully over 37 years. The unit had a fantastic reputation and standing in the industry, and we hope that with this name change, we can continue to build upon that legacy. I will then move on to our operational review, beginning with our new contract announcement. As many of you know, we agreed 3 new contracts on our rigs.
Firstly, the Deepsea Bollsta secured a 5-month extension to its existing contract with Equinor, which will see it drilling on the Johan Sverdrup Phase III project. This has extended the Deepsea Bollsta's firm backlog to Q1 2028. The contract includes 5 one-year options following the firm period, which extends until 2032. During the quarter, we secured over 2 years of firm contract for the use of Deepsea Aberdeen with Equinor, which extend the contract backlog for that unit until Q2 2029. The contract will see the drilling unit drilling on the Fram Sør project for Equinor, and will continue in direct continuation of the existing contract. We also secured a 1-year contract extension with Aker BP for the use of Deepsea Nordkapp.
That extension takes the firm contract backlog until the end of 2027. Aker BP retains further options, which extend until 2Q 2029. Overall, with the acquisition of Deepsea Bollsta, the company added nearly $1 billion of total order backlog to the group during Q4, with all of the new contracts being secured at industry-leading day rates. With these new contracts in place, our contract backlog is in a strongest position as ever, with all of our own fleet fully booked until at least 2027. In total, we have $2.5 billion of contract backlog, out of which $2.3 billion is firm.
As you can see from the chart, our first contracting opportunity is now the Deepsea Atlantic, which has priced options in place, which last the majority of 2027, and unpriced options which continues past 2030. All five of our own units are operating in Norway for the length of the firm contracts, except the Deepsea Atlantic, which will begin its operations in U.K. on the Rosebank project shortly. If we transition that forward revenue into annual revenue, you can see that our track record on a year-on-year revenue growth is set to continue in 2026, particularly after the acquisition of Deepsea Bollsta.
Now, bear in mind, on top of the revenue figures that you see on this slide, we also receive bonuses and fuel incentives on our contracts, except for the Deepsea Bollsta contract, which does not have arrangements for that. Also worth noting on this chart, the green line indicates our average day rate for rigs, which are secured in the mid to high $400,000 range, while nearly straight back line is an illustration of how our OpEx is expected to develop. Due to our strong cost focus, and escalation clauses in the contract, this line is nearly flat between now and 2030. When you put all this together, our business has some highly attractive economics going forward for consistent and robust future EBITDA generation. I'm gonna talk a little bit about the market.
The way we see it, the market is getting tighter. In Norway, we already know that the market is good, with the company securing 3 new contracts at leading day rates recently. As we look ahead, we think that this will continue. Clients have been vocal about their goals and interest in drilling exploration and production wells to arrest production declines, and based on Norwegian Petroleum Directorate forecasts, they will have to elevate from current levels of drilling to achieve those goal. We do believe that we will get our fair share of that work. We have seen an increased interest in securing Tier 1 sixth-generation units in Norway, while supply remains tight for these types of vessels. Most units which could be brought into Norway are either sold out overseas or in need of significant CapEx to bring it into supply.
It was of no surprise, therefore, to hear about the contract award for the to Noble for the Ocean GreatWhite with Aker BP. We see that the award as evidence of clients' interest in securing capacity into the sector. We believe that there is gonna be a lot of drilling going on on the NCS in the coming years. Further to Norway, international demand has increased from prior quarters, with tenders outstanding in both Namibia, Canada, and U.K. This is in addition to short-term exploration work, which could also suit semi-submersibles quite well. Ultimately, as international projects mature into development, this could align with ongoing supply constraints issue in Norway, potentially leading to an even stronger market for our units to operate in. With that, I will now pass on to Ørjan to go through our financial review.
Thank you, Kjetil. I will begin with a summary of the income statement, which continues to benefit from higher day rates, as you can see from the top left chart. Operating revenue in Q4 2025 was $245 million, compared to $203 million in Q4 last year. Operating revenue from our own fleet was $201 million, while the external fleet generated a revenue of $43 million. Q4 EBITDA for the own fleet segment was $118 million, which is a margin of 59%. The EBITDA for the external fleet segment was $9 million, which is a margin of 21%. Less corporate overhead and other adjustments, the group EBITDA was $124 million.
The company delivered a net profit of $45 million in Q4, slightly reduced due to costs associated with the refinancing. Our net profit is substantially higher for the year, finishing at $173 million, in comparison to $65 million in 2024. Turning to page 15, you will notice that we've included details on the refinancing in Q4 last year. The refinancing that we completed in tandem with the acquisition of the Deepsea Bollsta was a turning point for our business. Thanks to our banks and bondholders, we were able to secure a credit solution which has reduced our financing cost, extended our debt maturities, and given us substantial flexibility for free cash flow generation. We were particularly delighted to have secured $650 million by way of a listed bond with a coupon of 7.25%.
The interest and feedback we received during the refinancing was fantastic and also very humbling. Our new debt repayment structure is shown on the top slide on page 15 and is also available on our website. Moving on to the balance sheets. As you can see, our net debts and leverage ratio are both increased from prior quarters due to the refinancing. At year-end, our net debt to EBITDA ratio was 1.7x, whilst our net debt was $908 million. Similarly, our equity ratio has decreased from prior quarters to 54%, and our total assets increased to $2.7 billion, largely as a result of the acquisition of Deepsea Bollsta. Available liquidity was $283 million, including undrawn RCF of $103 million. Details of the cash flow for Q4 follows on the next slide.
In Q4, 2025, we generated $140 million in cash from operations. Net interest paid was $22 million, while tax paid was $4 million. Net cash flow from financing activities was $442 million. Cash flow from investment activities was $501 million, which mainly comprised the Deepsea Bollsta acquisition. Also included in that figure was CapEx of $21 million, which mainly related to periodic maintenance and purchases of fixed assets, whereof $6 million were client-specific upgrades covered by lump sum payments from customers in this or adjacent quarters. Dividends paid in Q4 were $48 million and was related to Q3 results. Finally, we are continuing our upward dividend trajectory by declaring a dividend for Q4 of $0.23 per share, which translates into a total dividend payment of $55 million.
This corresponds to an annualized yield of approximately 8% based on yesterday's close. The shares will trade ex-dividend third of March 2026. Payment will be made nineteenth of March. I will now pass back to Kjetil, who will summarize our presentation.
Well, thanks, everyone. Fourth quarter was a very important and busy quarter for everybody in Odfjell Drilling. We completed the acquisition of Deepsea Bollsta. We refinanced the business, giving us a long runway for free cash flow generation. We secured nearly $1 billion of new firm order backlog during the quarter. Operationally, our units and teams delivered fantastically, resulting in a 98% financial utilization and record quarterly and the year-end financial results. This is the best quarter the company has ever delivered, and it's also the best full year that the company has ever delivered. Finally, we once again have increased our dividend, this time to $0.23 per share, continuing our trend of increasing our dividends. On the dividend subject, I will say that we are building stone by stone.
That is our philosophy, and we have very good capacity to follow this trend going forward. Looking ahead to 2026, it is, my pleasure as CEO to state that Odfjell Drilling has entered the year in a strong a position as ever, and we are very excited for what comes next. Thank you.
Thank you, Kjetil. As a reminder, if you would like to ask a question, you can do so either via the telephone line controls or via the webcast tools. I will now hand over to Laura, our Operator on the telephone lines, to begin that.
Thank you, James. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now take our first question from Frederik Stene of Clarksons Securities. Please go ahead.
Hey, Kjetil, Ørjan, James, I hope you are all well. Once again, congratulations on both the Deepsea Bollsta acquisition and the refinancing. I think the market has appreciated that very much. I wanted to talk a bit about the market today, and in your written report and the pre-prepared remarks. You know, you seem to be very positive towards the NCS and the opportunities for, you know, high-spec units in particular. It seems to me like you saw a change with operators through 2025 on, you know, being more willing to address the decline, et cetera. I also got the impression that you expect there to be incremental rigs to meet, or there's a need for incremental rigs to meet this demand.
I was hoping that, you know, maybe you could elaborate a bit on, you know, how you can capitalize on that. I think there are two facets to that question. One, you know, both rates repricing of your own fleet, but also if there are more and similar opportunities as the Bollsta acquisition that could potentially, you know, have you grow market share as well in what seems to be a growing market. Thanks.
Okay. To start with, how we view the market, I think, you know, this is we establish our position and view on the market just based on what we see our clients say, and what their ambitions are, and also, of course, with talks that we have with them. What we see is that we see a client base that are setting themselves up for a busy next 5 years. As you all know, they have been very vocal about their ambitions for the coming period. They're also being clear that, you know, there are less elephant finds out there, so we will be looking at more subsea tiebacks, more marginal field developments, more tight reservoirs, et cetera.
All of which means that there's going to be drilled more than we've seen before. On top of that comes exploration. Norwegian Continental Shelf is mature for sure, but there are still significant resources out there. In order to meet the decline that we know will happen, we need to find more. We're also pleased to see that clients ambitions on explorations are have been raised. In terms of, you know, additional supply, from our side, one of the big workhorses on, for Equinor, for instance, the Deepsea Atlantic, is actually now leaving the Norwegian sector to work in the UK for a couple of years. That takes a little. This is a rig that easily delivers 10 to 12 wells per year.
You know, that will make an impact. You combine that with the rest of the requirements that are out there for clients, we think it's quite encouraging. We also see other regions coming in. There's going to be work in Canada next year. We think there's going to be more work in Canada as we move along. We also have received tenders now, interesting tenders, Western Shetland, deepwater work, Western Shetland, work starting in 2028, which is very interesting. We do believe that other regions, such as South Africa and Namibia, also will come along as we go along. All of this summed up, Frederik, gives us quite a confident picture in sort of being able to add more valuable backlog to our fleet as we move along.
And as you all know, there's very limited side capacity, and if we can call this an upcycle, I guess we can, or at least we can sort of, expect that we can come into a period that we can call an upcycle. I want to remind everybody, this is the first time that we have an upcycle in an industry that is not followed by new builds. There are absolutely no new builds in the pipeline, and I think that's cause for some interesting, thoughts, around that picture. Further, I think to your last question, Frederik, are we looking to do, to do more, add more capacity? I think, you know, Bollsta obviously was a big deal for us. We, we now have a super fleet.
I won't rule anything out. Again, it needs to be the right asset quality, it needs to come with a contract, and the price needs to be right. That it sort of needs to fit into all of those parameters. We're very happy with how we look today. It could be that we could do something, but we definitely don't have to. We're sort of open to what comes up, we follow everything very closely. Was that okay, Frederik?
Yeah, no, that was super helpful. A lot of color. I have one more follow-up that also relates to the market, and maybe it's a bit premature to ask that question. I noticed this morning on Upstream that the headline there, continues to be the headline, is that the UK government is actively discussing an early end to the windfall tax. If they, you know, phase that out much quicker than the 2030, that has kind of been in place for some time, do you have any kind of initial thinking feedback on how you think that could impact the rig market? If the U.K. starts to accelerate again, obviously there'd be positive spillover effect for Norway, too. Any commentary, if you have any?
I saw that article, too, and, of course, this is kind of what we've been waiting for and sort of also picked up through unofficial channels. I guess the comment is obvious. Should we move in that direction? I think you keep in mind, you're at the all-time low, with active rig level now in U.K. I think it's 2 or 3 semis working over there at the moment. Quite horrible, actually. If we are to get a shift on that, and we all know U.K. is a harsh environment, that could lead to some very interesting scenarios.
All right, let's cross our fingers.
Yeah.
Peace over color. Thank you so much, and have a good day.
Thank you, Frederik.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad, and we'll pause for a brief moment. Thank you. We have no further questions coming on the line. I'll now hand over to James for webcast questions.
Great. Thank you very much, Laura. Yeah, I absolutely echo the sentiments on the UK government. I really hope that does change. As the British person in the room. We've had a few questions come through in the Q&A system. Really appreciate that. First question: do you have projections for 2026 free cash flow and dividend distribution metrics? I suppose the question more hints at, do we have any sort of guidance that we can give, and I suppose our strategy around how we intend to guide?
No. We don't guide, not on results and not on dividends either. I think my only comment is, look at the history on dividends, look at what we've done. You all know we have great capacity going forward. I think that is my response to that.
Yeah. Thank you. Again, unfortunately, we'll have to be relatively tight on time today, so I won't be able to answer too many questions, but any that do come through, I will certainly answer today. I think we've got time for maybe one or two more, but do you consider it a risk for the future that Odfjell Drilling operates primarily in the Norwegian Continental Shelf if regional regulations tighten?
If I see it as a risk?
Yes.
Okay, I'm not sure I follow that because, I mean, all our rigs are Norway compatible, and are working in Norway. What I would like to say is, also, all of our own units has deep water capacity, meaning that we could go other places to work if we find that more attractive, and we have also done that in the past. We worked in South Africa, we have worked in Namibia, we worked in West Africa, we worked in Canada. I think that's really the beauty of our fleet, is the flexibility that we can move around to the most attractive contracts out there.
Yeah. I suppose it's not something we can necessarily answer for this question. There have been a few recent fixtures in the sector recently in Norway recently. I suppose the hint is Ocean GreatWhite and Transocean Norge.
Mm.
How do your rigs compare to that? What day rates do you think your rigs could achieve in comparison to that? That's obviously a hard question to answer.
Now, of course, I might be a bit biased, but we noticed those fixtures. I think they will come with a story and background behind it. That being said, we do view our rigs as the best ones out there, and when we look at the product and the performance that we are able to deliver to our clients, we are in a position to claim a premium on top of market day rates.
Yeah. Great. I think we can have one more question. Do you employ artificial intelligence technologies in your day-to-day operations, and/or do you expect to do so in 2026?
I would say, you know, we in the company's general, I think we've sort of adopted general AI technology along our work processes. However, we do not drill our wells using AI, I can say that. We work in a highly operational and with the highest demand on security. Offshore, when we do our day-to-day work there, we do not use AI in any form. However, there is AI used by our clients, I know, for planning, et cetera, but operationally, we are taking a cautious approach to that.
Great. Great. I said we really are quite pressed on time today, so I think we'll stop the call from there. Just to finish up by just saying to thank you all again for joining and for your questions and interest in the company. Our next conference call will be in regards to our Q1 results. That will be on the 12th of May. As always, if you'd like any more color on today's results or have any other questions, please do just get in touch. There's a few Q&A's on the webcast, which I haven't answered, but I'll get back to you today. In the meantime, thank you, Laura, to PIR Media for hosting the call. You can close the webcast now.