Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Odfjell Technology Ltd (STU:ND4, Financial) reported a strong order backlog of NOK30.7 billion, indicating robust future business prospects.
- The company increased its dividend from NOK45 million to NOK60 million, reflecting a commitment to returning value to shareholders.
- Odfjell Technology Ltd (STU:ND4) has a healthy balance sheet with available liquidity of over NOK1 billion, providing financial flexibility.
- The company has won more than 100 contracts this year, showcasing its competitive edge and market presence.
- Odfjell Technology Ltd (STU:ND4) is well-positioned in the plug and abandon market, which is expected to grow due to regulatory pressures and environmental concerns.
Negative Points
- The company's EBIT decreased by 5% compared to the previous year, indicating some challenges in maintaining profitability.
- There is a slowdown in market activity levels, with investments and activity levels being postponed, affecting short-term growth.
- The company faces volatility in oil prices and global unrest, contributing to market uncertainty.
- Odfjell Technology Ltd (STU:ND4) has experienced delays in startup and mobilization activities in some regions, impacting operational efficiency.
- The company's well services segment saw a reduction in revenue and EBITDA due to changes in product mix and maintenance interruptions.
Q & A Highlights
Q: Can you quantify the CapEx estimate for 2025 and how does it compare to 2024?
A: We expect the CapEx level in 2025 to be approximately NOK 250 million, which is consistent with our long-term strategy unless significant business opportunities arise that could alter this plan.
Q: Should the focus on "zombie wells" positively impact well services in the coming quarters, or is this anticipated to happen later?
A: We are in discussions with clients about addressing "zombie wells," which are leaking wells left behind years ago. This is a significant issue, particularly in the US, due to both climate and health concerns. We expect increased activity in this area, especially in the Gulf of Mexico and the North Sea, with several tenders expected to be awarded in 2025.
Q: How do you view the project engineering segment going forward with fewer SPS modifications for ODL and ODL-managed rigs?
A: Historically, about 40% of P&E operations have been within ODL. We are exploring other activities, including modifications on existing platforms and green initiatives. We expect a steady level of activity in P&E, with potential growth in green shift projects and modifications.
Q: Do you expect an improvement in working capital in Q4 and into 2025?
A: We anticipate a similar improvement in working capital in Q4 as seen last year, and we are working hard to continue this trend into 2025.
Q: What are your expectations for margin levels in different segments next year?
A: For well services, we expect margins to return to the mid-30s. P&E margins are anticipated to be around 15%, while operations are expected to maintain high single-digit to low double-digit margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
