Welcome to Odfjell Technology's Q3 presentation. 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'll find the presentation on our website, and I ask you to take notice of the disclaimer on page two. Simen will start by presenting the key highlights of the quarter and the market outlook. You will thereafter cover the financial figures before we conclude with a Q&A session. You can submit your questions through the webcast portal or by using the dial-in numbers. I now hand it over to Simen for the first part.
Thank you, and welcome to the call everybody. Thanks for calling in. I'll share with you the view on the highlights. The quarter with the regarding revenue, EBITDA, is very much in line with the last quarter, second quarter this year. But if you look a year back on the Q3 last year, we have significant improvements. The revenue, sorry, the order backlog has been stable around NOK 11 billion. It's a strong backlog with a great potential. We have somewhat lower cash, you will come back to that, but based on our estimates and forward-looking, we actually expect quite some improvements in the Q4 really next quarter.
The multiples, the type of net debt on EBITDA is about one-one, same as last time. And the EBITDA in the backlog on the, on the, on the regarding the debt is about a little about 2x, which is a strong and very important key KPI for us. If we move over to the order, the market outlook, again the market in general is quite positive. It's somewhat volatile, but the trends are very positive, driven by demand and oil price. We are looking, we are continuously looking forward. We meet a lot of clients. We talk to market actors, and we certainly see that this upturn is actually, we expect it to be positive for a number of years.
I won't kind of say how many, but we will comment on the number of years. So we are certainly in a market upturn. The drilling activity, we see that the drilling activity in general, all markets, onshore, offshore, are increasing. We also see there's a number of more tenders and inquiries, which creates opportunities for us, and which is also, I would say, something that will also drive the tight in the market. We don't expect any, especially new builds, at least within the high end of the advanced drilling rigs.
There might be some new builds, but there will probably be a lot of retrofit because the rig market are getting tight, tighter, both within jack-ups, semi-submersibles, and we also see that down the road, maybe couple of years, there will be more need for drillships, deepwater drillships. So all the factors blend into a picture that we believe this upturn will last some time. If you take the segments, the market within the different segments, we see a continued strong momentum in Well Services. We are quite well positioned to capitalize on increased drilling activity in many fields, in the next coming years. There are positive outlooks, opportunities to expand services in new geographical market.
We come a little more into that when I go into the different business areas. Within Operations, drilling operations, we have a stable and predictable market outlook. We are looking at more within what we call new business opportunities. We are also evaluating more activity within so-called jack-up management, which is something we already do at the Ekofisk with ConocoPhillips. There are more opportunities in this area, plus we also look at the same type of opportunities down in Asia Pacific. We have, since we listed and spun off technology, we are looking at to create more competitive edge through integrated solutions, meaning that we are combining type of well services into drilling operations.
We also do that with other rig actors within the rig business in a way. Also, of course, other drilling, but also other major players within the rig market. Project Engineering has continued to grow. We are employing more people. We are opening new offices also outside where we are here in Norway, to create more capacity. Due to global growth in investments and modification, we see more activity within the engineering services part. There's a number of reactivation of drilling rigs as we in the market today, both within deepwater rigs, jack-ups, and semi-submersibles, which must go through these so-called special periodic surveys over five, each fifth year.
We also use our engineering capacity to support those kind of activities. Quite important activity for that part of the company. We also see that there are more activities on studies and I would say evaluation of the so-called green shift. We are engaged in several projects in that aspect, not big projects, but they are creating quite significant revenue and the bottom line numbers are black. If you go into each business area, starting with Well Services, we have a strong backlog of NOK 3.4 billion.
We still have a cost, the equipment pool in all markets are the cost price about NOK 4.5 billion. We still have some capacity to grow on that, on that pool today, but we also are investing more into new type of equipment, because we expect that the demand for those kind of solutions will grow in all drilling markets. We opened new operations in offshore Africa, deepwater Africa, and Canada which is a harsh environment. We opened that in Q3, and we with the expected good revenue and good margin levels. We are actually, as we have communicated many times now, that we are looking at growth.
We are looking at a type of M&A, bolt-on acquisitions, to get hold of technologies that will fit into our portfolio of product lines. When we kind of map what we see in within Well Services going forward, we are, I would say, looking at some solutions that we need to develop in order to play the market well. So both organic and via M&A, we are looking at growing the company internationally, and we are looking at new markets where we see that the market developments are high. Very much within rental, very much within special tools for wellbore cleanup and other things.
So, we certainly see that the market within regular drilling and both within slot recovery and plug abandonment is on the early stage of a long cycle of growth. Within Operations, we have a stable backlog. Today, 7 billion NOK. We operate in 16 platforms. We also operate jack-ups. We see a stable activity level. We have had some lack of earnings based on lack of bonuses. Very many of these projects or contracts are driven by kind of a floor margin regular operations, and there's a lot of incentive schemes on top of it. And the last quarter was hit by that we didn't achieve the expected level of bonuses or incentives we had put in our expectations.
So that's the reason why that is somewhat behind. But there are many reasons for that but we certainly see that in a general normal condition, we will get significant more incentive schemes and get more paid by bonuses. There are a lot of activity now in Operations. There are a lot of tenders, there are a lot of open. Many, many, many operators are opening up for new tenders, which opens up for a better I say position for ourselves, where we can integrate services both from Well Services and also combined with modification and installation of type of green technology to reduce emissions on the different platforms. Project Engineering, we are ramping up the organization.
As I said, we also evaluate now to open up some, as an office outside our own base camps, so to speak. We and we certainly see a continuous strong demand for these kind of services. Remember that our engineering department are specialized within drilling and operations, but they are also very close engaged with our development within ocean wind, and we do a lot of studies for other clients in that aspect. Many of the actually big operators are asked us to also to share our knowledge and how we would approach their own ambitions to grow within especially within ocean wind. But we also are engaged with other actors, other players, regarding installation of green technology on different installation drilling installations to reduce emissions.
We won a very important contract with Aker BP, a frame agreement, and this is something we are quite proud of because there was heavy competition, and the value is NOK 100 million over five years, but let's put a couple of pluses behind that, because normally these kind of contracts are developing. We also are engaged with another client with the same type of frame agreement to install special installation, special tools, special equipment on board. And so this is something that will build a strong and stable backlog within engineering and also with a quite good margin level.
As I said earlier, we are working with, in our book, a significant revenue, also within the energy sector transition work and we also get at least the positive contributions for that kind of activity. So this is the picture of the Operations within technology. And I think Jone, you might go into more details on the financials. So thank you so far.
Thank you, Simen. Now to the financial on page ten. I'm starting with the revenue. The revenue growth of 1% compared with previous quarter, and 28% compared to Q3, which means strong market, improved contract portfolio, and good operation performance. EBITDA in line with previous quarter and 13%, NOK 24 million, compared to same quarter last year. Net profit of NOK 85 million in Q3 2023 versus NOK 44 million in Q3 2022. Year-to-date, net profit is NOK 208 million versus NOK 143 million same period last year. Cash balance of NOK 500 million this quarter versus NOK 432 million in Q3 2022. The cash generated from operation in Q3 of NOK 45 million versus NOK 162 million in Q3 2022. The reduction is mainly caused by negative development in working capital.
We expect improvement in working capital in Q4, based on estimates we have done for receivable and timing elements. The leverage ratio and net debt is stable and in line with previous quarter. Going to page 11, the business area, starting with Well Services. Revenue growth continue with 6% improvement compared to previous quarter, and 25% improvement compared to Q3 2022. The growth is a result of new contracts in Africa, Canada, and Asia, combined with continued good activity other regions. EBITDA up 10% compared to previous quarter and 19% compared to Q2 2022. The EBITDA improvement driven by revenue growth and lower cost as new operations are up and running. The operation revenue up 1% compared to Q2, and 26% up compared to Q3 2022.
Increase in revenue from Q3 2022 to Q3 2023, mainly driven by Linus management contract and very high activity in the rig inspection services. We have a reduced EBITDA margin from Q2 to Q3, due to, as Simen said, lower bonus earnings and also high maintenance activity, which is handled as a passthrough with a lower margin than the business. Project Engineering, revenue reduced by 14% compared to Q2, while up 54% compared to same quarter last year. EBITDA of NOK 60 million in Q3 is 37% lower than Q2, but up 92% compared to the same quarter last year. Seasonal effect reduced the number over-delivered and invoiced, as we see every year. Still, activity level remains stronger than previous year due to a large project portfolio. So just to go to the summary on page 13.
We're delivering our strategic plan to grow international, as Simen explained. We get the important engineering contract with Aker BP that secured in October. We have very high tender activity in all business areas. I would say we have a solid revenue and EBITDA performance. The EBITDA of NOK 840 million delivered last twelve months, versus full year 2022, EBITDA of NOK 673 million. Cash from operation expected to improve in Q4. Finally, a dividend of NOK 25 million approved by Board of Director with payment November, bringing the total dividend for 2023 to NOK 100 million.
Yeah, that concludes our presentation and we're ready for a Q&A session. We'll start with questions for anyone who's called in.
As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your questions, please press star two. As we don't have currently any questions coming from the phone, I will hand you back to Gert for the webcast questions.
Yeah, we have one question here from Ben, who is referring back to previous calls where we talked about 2023 being a transition year, and 2024 would be a stronger year business-wise. And he's asking if we're holding still the same view. And Simen, would you answer that one?
I can. It's a very relevant question, so thank you. The answer is clearly yes. We have said that the year of 2023, this year, and partly into 2024, is some sort of a waiting for the higher activity level. So but, as we see now today, that 2024 will be certainly a year for further growth, whilst we have also seen that a potentially much more, I would say, aggressive growth will come in 2025, 2026. But 2024, yes, definitely we keep that position, and we have our own targets for meeting that kind of opportunities. Answer is yes.
Yeah. And Jørgen Lande is asking about our backlog, which has been fairly flat the seven last quarters, and is wondering what we think about the development going forward.
I can try to say that, too. It's flat, but what we - r emember that the backlog is very much driven. The biggest part of the backlog is actually within O perations, and we haven't had any announcement of new wins within platform drilling, which is the biggest part of the backlog. Normally and traditionally is like that. What we follow is that we see we expect to increase the operation backlog, yes because as I mentioned, there's a lot of tenders out these days, and we expect to take our share plus. We are closely, even more focused to maintain and build the backlog within Well Services, and we are opening more areas, more geographical areas.
So that is also a very important element to see how the backlog within Well Services are developing. And we expect that to be positive, even though it will not be the same volume as within Operations, so those are drilling on contracts over many years. Backlog within the Well Services, as I've told many of you, is different, how it's kind of been recognized. But we believe that Well Services backlog will also come up now. And within Projects & Engineering, again shorter horizons, but with more activity and more operations, we certainly see that this is also coming up, even though the volume compared to the rest will be more limited.
I think there's some additional questions here, regarding the growth in Well Services. We're investing in growth, especially in Well Services. Can you elaborate a bit on how we should think about the top-line growth for Well Services over the coming years?
As I said, I won't guide numbers, but, but we have identified a number of technologies, equipment, tools we would like to own. We are not talking about massive M&A activity, massive investments, buying companies bigger than ourselves. What we talk about here is really to, as we have done historically, we have addressed and accessed technology solutions that fits into our own portfolio to build a stronger and more integrated well services to meet the demand and the buying pattern from the clients going forward. So this is a process that will take some time. It will be partly organic and partly through M&A. We are investing into the company.
We do have some capacity in the existing equipment tools within the stock, but we also need to increase or do more investments to maintain and be able to grow on the basis of serving the market with some equipment. So maybe Jone, you could just elaborate a little about the level of investments we are foreseeing and what kind of timing we have there. Can you do that?
Yeah, of course. If you look at the the CapEx for 2023, it's according to our plans. We have now established a plan, CapEx and whatnot plan for 2024, and that's related to, how to say, a controlled growth in new regions in well services. And we expect a small increase in CapEx for 2024 related to that, the growth. And also say that all CapEx decisions will be based on a sufficient business case evaluation.
Yeah. Yes thank you, Jone. Good.
Yeah. We have questions regarding inflation-related cost if that's ticking up during the coming six months.
Yeah, I think, when we do, within most of the contracts, drilling typical, we have escalation clauses. Within the well services, this is somewhat more difficult. We are doing some, which we haven't done before. We expect within certain product lines that the demand will come, so we have actually ordered equipment more on speculation. Used to be 5-6 months delivery time, now it's 12+. So in order to meet what we see coming on the kind of a most demanded type of equipment, we have already invested in to buy and to fill up the capacity for that kind of equipment.
But when we are pricing now contracts within Well Services, we are pricing with an expected escalation or inflation rate. So we cannot, we don't have any escalation clauses in those contracts. In some of them we have, but not internationally, it's not that normal. But we can price with an expected escalation when we actually are bidding for those projects. So in a way, it's indirectly taken care of but I can't guarantee you it will be taken 100% care of all places. But in general, we are very aware of the threat about the cost increase.
Yeah, great. We don't have any more questions here. Did we have any call-in questions?
There are currently no questions from the conference call at the moment.
Then I think we conclude today's webcast. I thank everyone for joining the call. Please reach out to me if you have any questions. I wish you all a very good weekend.