Odfjell Drilling Ltd

OSE:ODL

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and welcome to the Odfjell drilling Q1 2021 investor call. At this time, I would like to turn the conference over to Simen Lieungh, CEO. Please go ahead.

[Simen Lieungh, CEO & President]

Thank you, and welcome all of you to our conference call for Q1 '21. I will cover the first part of the presentation, which I guess you all have seen. And Atle Sæbø, the CFO, will go through the last part. As usual, we will conclude the presentation with a Q&A session, so please prepare any questions you want to raise.I want to follow the presentation and for references, if I remember all the time, I'll give you the page, and you can follow the presentation going forward. So I'll go through the introduction, go through some key summaries for the Q1 '21. We go into the segment reporting a little later and financial information as I said, we have Atle. If you take up to Page #4, the front page, we -- which gives the numbers. We have a revenue of $182 million for the quarter. Cash position is $194 million. We have EBITDA number for $45 million EBITDA. I think Atle will go through the special circumstances around that number. I know that many of you have seen the reasons for exactly that number, but he will explain more in detail what's the background for that. We have still a lowering the leverage ratio, it is now 2.75x. We have a $2.5 billion backlog, order backlog and equity ratio of 46%. And the same structure as we have had for some time now, and I can say that all our assets, all the rigs are in full operation. If we turn over to the key Q1, key summary at Page 5, here in bullet point by bullet point, there's more wells allocated to Deepsea Atlantic. We have, as you know, this Master Frame agreement with Equinor over the last period. They have awarded us more than 15 wells, and we will show a little later that over spring up till Johan Sverdrup, #2 are now closed. So we have full operations, and we'll go continuing to Johan Sverdrup. That shows that, first of all very happy to work with Equinor here. And they have certainly shown that what they have said that the Master Frame agreement, at least for us, works very, very fine.We have been awarded work for Lundin, for Deepsea Stavanger. And of course, also Equinor, we announced yesterday that we will now also bring Deepsea Stavanger over to Equinor operations later. And I'll come a little more back to that when we look at the backlog stage.Aker BP has exercised the second option for Deepsea Nordkapp. And on top of that, there's another option for another year after the second option. That's for the fleet. And with the platform drilling, we were awarded a 5-year platform drilling contract with TAQA in the U.K. For us, that was extremely important because there are more platforms to operate. And on top of those platforms, we provide all the well services we have with rentals, with intervention capacity and casing running. So -- and of course, it's a lot of other type of modifications coming on top of that. So the add-on sales for those installations are quite important to us. So within the energy area, with platform drilling and also engineering are covered, there are quite a lot -- quite important contracts for us. So we're happy for that.We have worked for quite some time with BP to work on an alliance type of cooperation on the clear platforms, and there will be more than one. And so we finally now have signed that alliance with BP and Baker.And of course, [indiscernible] to that, we have finally got the firm bank commitments for '21 for the debt maturities. So I have to say that I'm very pleased that we have followed overall ambitions to get that refinancing in place before June, and that works fine for us.If you look at the Page #6, the only thing that really was not planned this quarter was that we had an incident with Atlantic, we normally have over the last years in plural, very high utilization of the whole fleet, and between 98% and 99%, up to 100% operations.But with Atlantic, we had an incident where we lost some equipment in hole during January. January is always a demanding month regarding weather. So to do the fishing campaign to get the equipment back again, took some time. So the operation time here is only 86%. That is also impacting the numbers, not significantly, but of course, for us, important and was not planned. That's the incident we -- the rest of it is fine. And we have also started up with Aberdeen for Wintershall, direct from the campaign with BP in the West of Shetlands. And Aberdeen has now been kind of make ready for the Norwegian sector, and we are up and running there with a good utilization.Nordkapp doing fine is now currently actually in the Barents Sea with -- as a [indiscernible] to Equinor and has already proven that it works extremely well also over there. And the Deepsea Yantai is also working fine with Neptun. So all in all, the operations are satisfactory, of course, but for exceptions of Atlantic, but I can assure you now Atlantic is back on track, and we expect Atlantic to provide the good performance going forward. Now again, now with Slide #7, with Atlantic now been completed with more work and the whole -- dark blue is now until we have done Sverdrup and after Sverdrup, there's an option, actually, we also -- we expect Equinor to run also the options. Then another I guess, I don't really remember the numbers, but there are several wells after the regular operation. Deepsea Stavanger is now currently on contract with Aker BP. And we expect now that Stavanger will end the Aker BP campaign and roll over to Lundin, where we expect now that Lundin will end up in, let's say, November, December. We have signed the first contract on the same master frame agreement with Equinor on Stavanger. Again, we are quite happy to do that because I just want to say that we have three similar rigs in Equinor, and Equinor has a huge scope of work to be done. And with all the green shifts with all the, I would say, the modernization and the new way of working with an operator like -- client like Equinor, we are quite happy that we are actually in the front of all the new developments regarding technologies and way of operating and so forth to improve performance.So for us, it's a quite strategic move to make them into the same kind of a bag now and develop the same -- the 3 operations according to the expectations we and the client has.So for us, it's a great game. And there's a small white spot at the end of the year. This contract with Equinor actually starts about January, February, but we hope and believe that there will be potentially work late this year to start earlier than planned. And as I said, Equinor has proven their capacity and their will to prioritize the rigs they put in front. And so we -- with reference to Atlantic and the way they have treated that well, we expect the same here, and we have the same dialogue as we have there.Deepsea Aberdeen will now continue with Wintershall and rolls directly into Breidablikk, April next year, which gives us a good backlog. Nordkapp, as I said, has already got the option plus another option. And Deepsea Yantai will, I guess, continuously work for Neptune. They have a single work, and they wanted to run one rig going forward. And to our knowledge, they're going to prioritize Deepsea Yantai, which performs quite well over there. So for us, this is a strategic option move. Even though we don't own the rig, we do the management there. That gives us a significant good backlog, and we see that, for example, with Stavanger, we believe that we will roll with the continuous optionality, as you have seen with Atlantic, and I'll come a little back to the market outlook later. But as I said, we have said earlier, '21 is a difficult year. '22 is a very difficult year for the whole business. But we see quite much will come '23 and onwards. And so that's going to be a more active period, I guess. So it's important to have a fleet ready with the right clients. If we go to the platform drilling Page 8, not too much to say there. We have lot of capacity activity. All these installations are also supported by well services.As I said, now we have quite a lot of options. The way these kind of options works is different from type of floaters. So these are on platforms, production platforms, drilling platforms, fixed, and the client has a tendency just to roll these kind of options. If you do well, you continue on the work. So it's in a way a little simplicity said, is ours to lose. If we mess up things, they might -- you are a stake to lose the job. But as long as these are going well and certainly, the portfolio we have and the way platform drilling performs should not be any concern at all.We have a good backlog here with a nice bunch of options. So I think that brings us to a well positioned. We have capacity to take on more platforms, if that comes up. But as I said, we have already got some extra work, for example, TAQA, and we look forward to do more. Within well services, I mean, that's an area where we still see that this is an international -- very international business. We operate in more than 20 countries. We have 650 people in all these places. And of course, these -- the key within well services, there's a lot of logistics. Margins are quite okay. It could be better, of course, but they're quite okay. There are still some oversupply, and it's also quite difficult to do the logistics, both with people and equipment with the pandemic in the back end. It's to cross borders with quarantine requirements and you can just imagine, you have all seen what happened in the world, and there are very different developments of the pandemic in different parts of the world.So the resolution here will be that when the vaccine has done the job and we get back to some little more normal, if that can be said normal, we expect that these activities to ramp up again.So we see, for example, in the Middle East to transport people from India, which we use for -- in the Middle East, which is a big working group there with the pandemic infection in India, of course, makes it difficult to move people, to do all the quarantine part, as I mentioned, is a fatigue -- mental fatigue to people, and it's more complicated and goes slower than we expected. So we don't -- we don't lose any work, but work are postponed. That's the key there. But we still actually have -- I mean, compared to peers here, we are doing quite well, I would say, said that. We see that the market is also coming up again, and we are quite positive for the outlook in the future because remember that well services serve both fixed floaters, onshore, shallow water, mid water, deepwater. So we are all over the spots in this outlook. Regarding order backlog, we have $2.5 billion backlog, including options. And this does not include any backlog from well services or any from engineering. This is only for modular drilling units and platform drilling. We don't count backlog for the other business areas. But $2.5 billion backlog is a good position. And that was the basis for the refinancing. If we didn't have that backlog, we would have trouble. But the financial departments have done well, and we have actually taken the most important contracts over the last years. And that has been consciously -- we have taken them to the market level, and we have introduced quite interesting and quite potential incentive schemes in there. So if we look back and we look forward, we know what we're going to earn, we know what we're going to kind of look at both expenses. We don't have any SPSs coming up the next 2, 3 years.So we know that we're going to build up a stronger cash position just based on this backlog. So I think the order backlog is key to everything today. And the order backlog is really the ticket to get okay financial agreements with a more and more demanding bank market. Atle will talk more back to that. On the market outlook on the Page #11, well, I would say, still there are COVID issues out there. We do not have any trouble with crewing. I know that there are competitors and people within different business or the business areas moving people from different countries into Norway or other parts. With quarantines, there's a quite significant challenge for the maritime industry in general. We don't have too many or very few actually that we take in from -- regarding crewing from abroad. We have most of them staying here in Norway, and the only thing that, as I said, we struggle with is actually within well services. Then there's a different picture, but not too bad either, but still a challenge.MODU side, of course, within the harsh environment, it's not that bad. Still, there are challenges because there are not too much work for the time being, in '21, '22. But as I said, there are something like 35, 40 new PDOs to be approved. So we expect that there will be a lot more activity in '23 and onwards -- maybe mid- '23 and onwards. And we see that both, there will be a lot of smaller campaigns -- well campaigns, but there will also be longer contracts in the regular way. I guess it will be well-based contracts, but still, there will be more activity to be that.And most of the longer contracts is within Equinor's portfolio, just bear that in mind. That's why we're positioned for that market also.There will be, I guess, in the general marketplace, there's a lot of consolidation. I mean you probably know more than us. There's within the Chapter 11 process are coming to an end, and we see already a quite significant consolidation activity in the market within typical players with a lot of drillships, deepwater players and backup players.Not that much in the harsh environment area because there's less fewer players and they are less kind of a free capacity, but they're still also interesting things to look at there.But there will be still, I guess, that the deepwater market will take some time to recover, but it will recover. And I think that with a setup that is now coming up from the new -- from the company's emerging from the Chapter 11 mist, is now positioning for that market. Well services, as I said, there are still some oversupply. We still struggle with the COVID, but if we can look 1-year ahead, I guess, that we'll see a different picture, better picture. And also within the energy market, platform drilling technology, we see more activity on upgrades and modifications for the green shift, which entertains quite a lot of engineering capacity these days. There are also modifications coming up and within platform drilling activities, we see that the market is -- we don't operate too much outside the North Sea or U.K. and Norway. But we see within that market, there's quite a lot of activity coming up over the next years to come.So that's our view on the market. And again, happy to take questions later. So Atle, you can take us through the financial information.

[Atle Sæbø, CFO & Executive VP]

Thank you, Simen. I will start with the group summary financials. And the group operating revenue was $182 million compared to $197 million in Q1 2020. The group EBITDA was $45 million compared to $82 million in Q1 2020. The decrease in EBITDA is mainly due to the decrease in EBITDA in the MODU segment.Overall income in connection with the Deepsea Stavanger operation for Total in South Africa, including the payment for additional days and demobilization fee was recognized in 2020.Further note that all costs incurred in Q1 2021 related to the demobilization from South Africa was expensed in Q1 2021.Deepsea Stavanger commenced operation for Aker BP on April 10 this year. If you however look at the average EBITDA for Q4 2020 and Q1 2021 growing the whole of the South Africa operations, the average EBITDA for each of these quarters were $108 million, which we regard as a solid figure. The EBITDA margin was 25% for the Q1 2021 compared to 42% in the same period last year. If we then move over to Page 14, we start looking at the segment reporting. The first was the blended figures for the capital-intensive MODU segment and the human capital-intensive service segments. But if we look at -- into the MODU financials, you can see that the operating revenue for the quarter was $114 million, compared to $142 million in the same period last year. The EBITDA was $37 million compared to $70 million in Q1 2020. The change is mainly, as explained, the decrease in EBITDA for Deepsea Stavanger of $28 million, reflecting the fact that the rig was in transit and between contracts during Q1 2021. Based on that, the EBITDA margin was 32% compared to 49% in first quarter last year. If we then move over to Page 15 and look into the segment reporting for the Energy segment, we can see that the operating revenue was $47 million compared to $36 million in same quarter last year. The increase is mainly explained by revenue from ConocoPhillips contract, which commenced in Q3 2020. The EBITDA was $2 million compared to $3 million in the same period last year. If we then move over to Page 16, which is the segment reporting for well services, we can see that the operating revenue was $27 million compared to $28 million in Q1 2020. The EBITDA was $6 million compared to $9 million in the same period last year. The EBITDA margin was down from 31% in the first quarter last year to 24% this year.Both Norway and Middle East has maintained a consistent level compared with last year. However, the results for the European countries were impacted by the COVID-19 pandemic. The EBITDA margin in Norway has remained at the similar level as in the first quarter last year, with a [indiscernible] for Middle East and especially in Europe due to delayed work and logistical challenges due to the COVID-19 pandemic. If we then move over to Page 17, is the elimination, corporate overhead and net financial items. On this slide, we have shown the group from the same EBIT of the segments to the group consolidated profit before tax by adjusting for elimination, corporate overhead and net financial items. And you can see that we end the quarter with a group profit before tax with loss of $11 million.If we then move to Page 18, which is the summary statement of financial position. The group gross interest-bearing debt was $1.193 billion by end of March this year. We had $194 million in cash and cash equivalents at the same time. The gross -- and out of that, you can read that the net interest-bearing debt is just below $1 billion at the end of March this year. The equity ratio is at 46% at March 2021. If we then move to Page 19, which is the summary statement of cash flow, we can see that in this quarter, the net cash from operations was $44 million compared to $43 million in same period last year. The investing activities was $33 million in first quarter 2021. We repaid approximately $21 million in bank debt in first quarter.And as mentioned, the cash position for end of March was $194 million compared to $174 million in first quarter last year.If we then move to the summary of the first quarter on Page 20, we can see that we continue to build backlog and be a preferred partner in the harsh environment market.We have an attractive cost environment assets and a healthy market outlook in that segment.If you move over to Energy, we have been awarded a 5-year contract for platform drilling and maintenance services for TAQA in the U.K. and signed a strategic alliance agreement with BP in the U.K. for platform drilling activities. Well services continued strong activity. All of the service market has been affected by less demand due to COVID-19 and the following oil price turbulence. If we look at the key financials for the end of the quarter, we have an earnings visibility through $2.5 billion order backlog. We have secured firm debt commitments for the 2021 debt maturities and has noted the first maturity in 2023. We continue to deleverage the company net debt of less than $1 billion at the end of the quarter. And we have, what I would call a sound cash position by end of the quarter.And this concludes our presentation. We will now open for Q&A session. So please, if you have any questions, comments, we are available.

[Operator]

We'll hear first from Lukas Daul with ABG.

[Lukas Daul, Analyst]

First, just quickly on the Q1, Atle might have mentioned, but I didn't catch it. What did you say was the extra cost that was sort of associated with the Stavanger move from South Africa?

[Atle Sæbø, CFO & Executive VP]

Well, when Deepsea Stavanger demobilized from South Africa and the preparation for next work, we had full operating cost at the unit for the whole period. So the operating cost for Deepsea Stavanger was running for the whole quarter. In addition, we had the fuel cost, et cetera, which also came into consideration. So Stavanger was having full operating cost for the period.

[Lukas Daul, Analyst]

Yes. Okay. So the OpEx, that's okay. But -- and how much was the sort of fuel cost that you had to pick up and [indiscernible] P&L?

[Atle Sæbø, CFO & Executive VP]

I don't have the exact figure for the fuel cost. But of course, if you include fuel, if you include crewing of the vessel, preparation for next work when we come back to Norway, I'm afraid we were at a cost level of $170,000, $180,000 on a daily basis for that period.

[Lukas Daul, Analyst]

Okay.

[Simen Lieungh, CEO & President]

I think just to add on there, Lukas, we have to take all the income we had with the South African job. We had demob fee and operational during the contract and the demob fee. So the demob fee was to cover all the costs that Atle mentioned there.But we had to take demob fee income in the last quarter -- in last year, but the costs came up in -- as we said then in '21. So that's why the numbers in 2020 was quite high and equally lower here. That's the reason.

[Lukas Daul, Analyst]

Yes. No, I understand that. I mean it's just that sort of -- there was a bit of a deviation on the cost side in the MODU. And I think what you sort of said about having a bit higher costs in the field, that sort of explains it. So I'm good on that one.

[Simen Lieungh, CEO & President]

Okay. Good.

[Lukas Daul, Analyst]

And then secondly, I mean the refinancing, obviously, good to see that you sort of pulled it off.But just interesting on the Aberdeen, I mean, the debt that you are putting on that rig, $211 million or so, that's roughly speaking, what is the contracted EBITDA on that rig right now, which sort of means that the lenders are not willing to assign a lot of, if I may, residual value on the asset?And the question then is, do you think it's possible in today's market to finance such an asset without a contract?

[Atle Sæbø, CFO & Executive VP]

Yes. I might give an answer to that. I don't think it's possible today to finance a drilling unit without a contract. It's really the cash flow the banks are looking for and the reason why we have now got, what I would call, a quite good financing is that we are -- have been able to repay our debt according to schedule through these rough years, as you may call it in this business.We have proven solid operations and have a solid contract backlog. And of course, this is done by relationship banks, Scandinavian banks that are supporting us in this period. As you know, the banking market is quite hard these days. But I think we have achieved. We have rolled over the existing financing. We have GIEK and Kexim involved in this financing, and we have maintained the same margin and the same repayment schedule as we had previously.

[Lukas Daul, Analyst]

And on the sort of well services facility, I mean you are sort of extending the debt by around 2 years, but in a bigger scheme of things, do you sort of think that, that's a kind of business where -- that should be basically debt-free or is that the $150 million that you're operating on it, which is like 5x, it's last 12 months EBITDA, an appropriate level in your view?

[Simen Lieungh, CEO & President]

No. Like we said, we have been working to deleverage the company, both the mobile drilling units and the service level over the last few years.Now we think we are, as a group, coming down to a satisfactory level with a leverage of somewhere between 2 and 3. And we are also in this [indiscernible] going below the leverage of 2 in not too long. So we think we have indeed no debt level that we can handle.And it's also giving more financial flexibility than from where we came from a few years back in town with a higher debt level and a higher leverage.

[Atle Sæbø, CFO & Executive VP]

The [indiscernible] on the service side is more than on the well services, Lukas. It's also including platform drilling and engineering. So when we put 150 as a depth in that area, some years ago, it was too high. We all agree to that. But that has been paid down $40 per year. Now we have put 150 in and we expected in our typical earnings going forward, that's a [indiscernible] today. So it's not that bad.

[Simen Lieungh, CEO & President]

And we also have the benefit now from reduced repayment. Up to now, it's been $40 million on a yearly basis, and from '22, it's $20 million on a yearly basis.

[Lukas Daul, Analyst]

Yes. Okay. Okay. That makes sense. And then just finally on you, Simen, I mean you touched up on there is a lot of sort of going on in -- with people living the Chapter 11 in consolidation. Has your view changed on now it's time to do something where you want to be 5 years from now, et cetera? Are you still in the sideline watching it from a bird perspective?

[Simen Lieungh, CEO & President]

It hasn't changed. I mean we monitor what's possible out there. And within, of course, within the global deepwater market, it's a potentially huge -- a lot of things to do. We're not there. We're going to try to focus on the harsh environment. And we monitor, we are, of course, in dialogue with several that we could potentially work together with. And so the opinion hasn't changed, Lukas. We just haven't found the right point yet, but we do have several things to talk about and discuss and work with.

[Operator]

[Operator Instructions] Moving to a question from Christopher MøllerløKken with Carnegie.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

This is Christopher Møllerløkken in Carnegie. Could you please update us on the status of the loan towards Akastor and your thinking going forward there?

[Simen Lieungh, CEO & President]

Atle?

[Atle Sæbø, CFO & Executive VP]

Could you please? I didn't catch the first part of your question.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

Akastor.

[Atle Sæbø, CFO & Executive VP]

Yes. We have...

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

What do we think there, just to give a highlight.

[Atle Sæbø, CFO & Executive VP]

Yes. We have these preference shares with Akastor, which is still running for a few more years, I think it's [ '25 ]. And we have no other plans than keeping this running in debt period.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

Okay. And in the release today, you mentioned this incident on Atlantic, but since this was a general incident, wouldn't it been better if you disclosed this in your Q4 report, which was late February? Or if you could consider that in the future?It is not a huge impact, but it was -- it was already known when you reported fourth quarter.

[Atle Sæbø, CFO & Executive VP]

I mean it's not significant. It's not significant enough. If it was a big hit, it would have been different, but it's not a significant hit.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

Yes. And finally compared to consensus in my numbers, you beat us both on revenues and costs, which both came in higher than assumed. Anything you would highlight, which was a bit off or one-offs in Q1? Or was it as you had expected?

[Simen Lieungh, CEO & President]

Atle, the currency, Atle, you can take that.

[Atle Sæbø, CFO & Executive VP]

Yes. Of course, on a group level, we are hedged. On our mobile drilling units, we have part of the income in Norwegian kroner when we operate in Norway. And we have the remaining in U.S. dollars to cover the financing. But of course, when the U.S. dollar changed, I think, in the first quarter last year, we had a U.S. dollar level debt that exceeded $9.5 to Norwegian kroner. And this year, it was less than $8.5. So there's some 10%, 15% difference. So if you look, isolate it on the top line or isolate on the cost, we, of course, had this effect.If you measure unit operating with Norwegian kroner cost base, the cost in U.S. dollars increased by approximately $14,000 on a daily basis, just due to the exchange rate in that period.But if you look at the EBITDA, we are quite neutral in this regard as it's a natural hedging by having income in the same currency as we have the cost level.

[Operator]

[Operator Instructions] We'll hear from [indiscernible] with Gladwin Investments.

[Unknown Analyst]

Apologies, I was on mute. I just had a question on the outlook for dividends. This has come up on a couple of calls recently, and I'm just curious to get your thoughts on whether that's changed in light of this quarter or indeed not? Or maybe to ask a quick follow-up on that is, does refinancing effect that as well.

[Simen Lieungh, CEO & President]

Atle?

[Atle Sæbø, CFO & Executive VP]

Yes, yes. If you look at our future debt repayment for '22 and '23, there's approximately $50 million lower on a yearly basis than we had a couple of years back in time. And we repaid debt in excess of $200 million on a yearly basis. And the debt repayment for '22, '23 is at the level of approximately $156 million on a yearly basis.Of course, we don't know the income for the year to come. But if you look, it will be approximately the same level as it's been up to now. The average for the last few years has been in the $350 level approximately. It will be a room for paying a dividend. But however, we have to look at what is the contract backlog, what is the clause position. We are in the position now where all of our units have been clear of SPS. We don't have any SPS coming up before 2024 and 2025. So based on market development, as expected, there will be a room for a dividend. It is open in our loan agreements to pay a dividend of up to 50% of the previous year's net result.However, that has to be approved by the banks for case by case basis. And this is based on what I said, based on the contract backlog, on the liquidity position and what kind of cost is coming up for the coming year or 2.

[Simen Lieungh, CEO & President]

Which is true. I just want to add there, which is the key here is the backlog. And if we look forward the next -- we have a backlog more or less into '24, '25. And so we know we have a good view of what we're going to provide as EBITDA and so forth. So if you look at the refinancing we did now, which is good in the market-based on the current backlog we have, we have agreed with the banks that there's still quite significant potential for dividend as long as we provide and perform according to expectations. And that I see that some analyst has kind of a question that, that is now gone. That's absolutely not right. We still have an ambition to pay dividend.

[Operator]

Now moving to a question from Fredrik Stene with Clarksons Platou Securities.

[Fredrik Stene, Vice President]

Fredrik here. Congratulations on the refi here. I was -- I guess it's a kind of a broad question, but when I look at your fleet status here, you've done well for 2021 already. Effectively, everything is booked up, and 2022 is not looking too bad, either on the MODU side. And of course, you need to concentrate on just running your day-to-day operations. But do you have any broader plans now that you, call it, have potentially some left over time since you've contracted a lot of your units to develop all your offshore -- other offer ambitions? Or are you, at this point also competing for work much further out in time as well?

[Simen Lieungh, CEO & President]

If you meant -- did you think of the offshore you mean within the MODU area?

[Fredrik Stene, Vice President]

Yes. Your offshore -- potentia offshore wind ambitions that you briefly touched upon?

[Simen Lieungh, CEO & President]

Yes. No. Okay. So you're thinking of the Oceanwind?

[Fredrik Stene, Vice President]

Yes. Right, if you booked a lot of your capacity for the motor rigs, are you going to look at something else? Or -- I think you said a few quarters back that Odfjell might be a different company in the years to come.

[Simen Lieungh, CEO & President]

We work with the wind offshore wind capacity. We do that. I'm not -- that's something we want to kind of present somewhat later to be more kind of a comprehensive on the whole concept. We have progressed significantly over the last period, and we will work with clients to see what kind of assets and the solutions we can move into market. So yes, we are working with that. But as I also said that over the end game in our wind capacity or wind efforts -- offshore wind efforts, we will not be a part of Odfjell drilling as a drilling company. It doesn't belong there, but to use the same type of the synergies between, for example, MODU and offshore wind is significant regarding my team understanding and the Oceanwind ocean understandings. So yes, we are working with that. We have not been -- we have not deliberately not presented in any details because we don't want to kind of rush into the -- that everybody else is talking and talking. We want to do something more substantial. So we can come back to that, Fredrik somewhat later, where we're going to -- where we're going to be more informative what we actually are doing. If you go to our website or Odfjell Oceanwind, you will find it there. And we will start to do some campaigns to explain to the market what we actually are doing a little this year, okay?

[Fredrik Stene, Vice President]

Okay. Yes.

[Simen Lieungh, CEO & President]

We also actually look at more capacity within the MODU side. And all of you ask that, but we do. And when we find the time right, the right concept, the right solution, the right integration, we clearly want to do a move also to increase capacity.

[Fredrik Stene, Vice President]

Yes. And are you still -- I think you said earlier that if you had more capacity, you can definitely employ that capacity. Is that still a correct statement?

[Simen Lieungh, CEO & President]

That's the correct statement. And that type of activity comes not in '21, not in '22, but we could certainly make some interesting moves in '23 and onwards.So that's why we believe, as I said, the most important client in that package, you know who that is. All right?

[Fredrik Stene, Vice President]

Yes.

[Operator]

It looks like we have a follow-up question from Christopher Møllerløkken with Carnegie.

[Christopher Møllerløkken, Research Analyst & Analyst of Oil Services]

Yes. Just a quick follow-up on Deepsea Stavanger. With regards to Slide 7 in your package, would you say it's fair to assume base case, there will be some time off between the Lundin and the Equinor contract? Or do you expect that it will basically roll over directly to Equinor?

[Simen Lieungh, CEO & President]

Of course, I might not be objective. But clearly, we believe it's going to be continuous operations. I've shown that before, it's going to happen again.

[Operator]

[Operator Instructions] With no additional questions in the queue, I will turn the call back over to your host for any additional or closing remarks.

[Simen Lieungh, CEO & President]

Okay. Guys, all of you, thank you for calling in.And I wish you a good day, and thanks for now until we talk next time. Thank you.

[Atle Sæbø, CFO & Executive VP]

Thank you.

[Operator]

Ladies and gentlemen, this will conclude your conference for today. Thank you for your participation, and you may now disconnect.