Odfjell Drilling Ltd

OSE:ODL

Earnings Call Transcript 2020-Q2

[Operator]

Good day and welcome to the Odfjell Drilling Q2 2020 Investor Call. At this time, I would like to turn the conference over to Simen Lieungh, CEO. Please go ahead, sir.

[Simen Lieungh, CEO & President]

Thank you, and good afternoon, everybody, and welcome to the Odfjell investor call for second quarter. I'm here together with my CFO, Atle Sæbø, which will take the financial details after my presentation. So as usual, we will -- we have submitted our presentation, and I will use the presentation as the structure for my comments. And so I will just announce the page when I flip through the presentation for all of you to follow, if you want. So over -- on the Page #3, just to give you -- give a short update on the Odfjell headlines for the quarter. And in general, we take the key summary points for the second quarter. We go over to segment reporting, and after that, we'll take the financial information. And as usual, after that presentation with Atle, we will open for a Q&A session. Well, on the Page #4, we have the headlines here. We have a quarter which we have delivered $81 million EBITDA. We have a cash position, which we find quite comfortable, of $155 million cash. We have a strong backlog of $2.2 billion, excluding well services and engineering technology. We have an equity ratio of 41%. I think it was about 40% last quarter. And the leverage ratio is down to 3.5. I think last quarter was 3.8. So we are deleveraging the company and building a stronger balance sheet and serving our debt well. Regarding the key summary points, of course, we are still in the middle of a pandemic with the COVID situation, but it has been a very limited impact on operations over the last month. We have been able to handle all type of mobilizations, crew change. And operations, knock wood, always say that in these times, but we have been able to run our operations smoothly with high regularity and good efficiency and quality. We are still under that COVID regime, of course, and we are following all rules, regulations quite strict. And come a little back to when we have recently mobilized Deepsea Stavanger for South Africa, and we have done a lot of measures to make sure that people are safe and sound during the flights down there and crew change and operations. So we are following all the guidelines we are given from authorities and health authorities. Deepsea Atlantic has won more work. We have recently announced that we took the contract for Johan Sverdrup Phase 2 starting up in '22. We have also now recently announced that we have continued to win work under the Master Frame Agreement, so we are now covered up till January, February next year. And we have very good reasons to believe that Equinor will continue to award work, so we get a continuous operation from today, as we speak, until we start up Sverdrup Phase 2. I wouldn't have said that if I didn't -- if I wasn't sure, but I'm quite sure about that, even though it's not been announced. We have finally now decided to recycle Deepsea Bergen. After a long life, we have seen that the market has changed, and the demand for such rig is lower. So we have -- as you all know, we are fronting -- if we should continue, we have to do the SPS, and we do not find that as necessary investment reasons for investing for the next 5 years. So also to give more balance and contributions to the balance in the market, we are taking Bergen out of operation. We have also this summer mobilized for Ekofisk with ConocoPhillips. That has been successful. We are starting up 2 operations, Kilo and X. And I think that the handover from Archer has been very smooth and nice and professional, and we are now in -- well into operations on that with ConocoPhillips. TAQA also extended the platform drilling in the U.K. until approximately 1 year until July, August next year. So we also have a continued operation in that region. We also today announced that we have done investment in Oceanwind. This is something we have considered for quite some time, actually many, many months. And we have, several years ago, started to have the contribution to the green shift by establishing an ambition for zero-emission drilling, and we feel that, that is absolutely realistic with the combination of technology, hybrids, onshore power. And we're also seeing the potential for offshore wind power. This is the investment we have done here to start up some -- I would say a concept together with Oceanwind team, which has done work on this project or type of concept for many, many years. And so we're not starting at 0. We're starting with a good team, and we are going to contribute with the money and resources. And by that, bring the competencies we have within -- especially the marine sector, we have handled harsh environment winds in the North Sea for close to 50 years, so it's a perfect switch from -- to drive that competencies from regular drilling operations for its semisubmersibles and drillships over to type of semis or offshore structures in the wind sector. Quite exciting. We're very pleased to have that cooperation, and we might talk more about that a little later. We see also the results for the quarter has been driven by strong performance in the whole company. Of course, when we met the COVID situation back in March, everything was kind of very, very uncertain, but it has shown up that we have been able to handle the uncertainties, and we have shown a strong operational delivery from -- especially MODU has also been able to keep low cost and contribute significant on the results from that operation. Page #6, we see that what I've said here, we have high regularity. We have mobilized Stavanger for operations in South Africa. The plan was to start drilling back in -- actually back in March. But because of the COVID situation, we ended the operations with Aker BP. We went into a kind of a project situation where we upgraded the project with Total and did -- we even docked the rig at Hanøytangen to do the final modification for the longer operations down in South Africa. And we went into a, what we call it, a special standby situation compensated on a daily basis by Total, but now we mobilized for in July. And we are now -- we commenced the drilling operation or the contract only 2, 3 days ago. So currently, we are doing top hole drilling, and we have started the drilling on the first well. Quite exciting, by the way. It's wintertime down there. Last time we drilled was summertime, during Christmas. Now it's winter, and we certainly see that if we look at the conditions down South Africa outside Cape Town, certainly, it talks about harsh environment. But we are prepared and done significant preparations, and we look forward to see how this campaign will end. Bergen, as I said here, we will take it out from our operation, and we haven't decided yet where to go, how to do it, but we have made the decision, and we are currently getting bids from potential yards that can take care of the recycling. Of course, we will do this according to all standards, all regulations and requirements to protect our reputation and also make sure that the recycling process is taken care of. There has been -- a lot of rigs have been taken out of operation, and we are harvesting on many of the experiences from other companies that have done this in much bigger scale than we have. But of course, taking 1 rig out of our fleet is a significant reduction, and hopefully, this will also deliver a better balance regarding the supply in the market. But again, there is clearly a different demand from clients. They don't demand this kind of rigs anymore, only for small campaigns, exploration wells and so forth. But we cannot kind of justify an investment on the SPS with that kind of on and off type of campaigns. So we have made that decision and probably will take some month now to decide details, but over Deep Bergen is gone. Regarding the coverage of the -- on Slide 7, we have just showed the backlog and Bergen out, Atlantic. The 21 is covered in our view, and we have a close Equinor there. We go into Sverdrup, and we do have options after that. So the coverage is '23, '24. Stavanger is now down in Africa, and we expect her to return to these areas, maybe, let's say, late summer, early fall next year. We -- the scope is up to 3 wells with testing and everything along with it. So given that we do finds its going to be a campaign for approximately a year, I guess, plus. Deepsea Aberdeen has now been in -- it ended a drilling with BP, and there's no more scope of work for the rig. So currently, she has moved into the key side outside Aberdeen, at the yard, and we are planning to move the rig to Norway later. We don't see any new contracts coming yet. We do have coverage on the contract until April '22, so it remains to be seen how we will deal with BP on the remaining part of the contract. We have a good position there. We have -- the contract is regulating everything, so there's no drama around that end. Nordkapp, 2-year fix with Aker BP, ending up in June '22. We have 1 option left in the contract and remains to be seen when and if that's called. But we expect the Aker BP will continue to operate with Nordkapp, so far, very successfully. And so we will start the dialogue with Aker BP for the next option when that's due. Yantai has shown to be a very okay rig. We have learned to operate it. Neptune is happy. We did a nice find with them. And we believe that Neptune will extend the scope of work with more wells and more options on the rig. We have no details around how the endgame for that rig will be. Currently, we do the management. But clearly, the technical solutions on the rig is showing that it fits perfectly into the harsh environment here in the North Sea. And so we're quite pleased with that. We have good people on board and delivering good standards regarding HSE and quality and uptime. So now we have learned a rig -- to operate a rig. There was -- as you know, the rig hasn't been built by us, but we have taken it in last November last year, and it's shown to be a good horse. So we like it. Backlog is a little less than $1 billion, with $0.1 billion in priced options in MODU. If we move to Page #8, we have -- with platform for drilling. We are -- as I said, we are operating, we have long-term businesses with Equinor, with Wintershall, with Conoco, BP, TAQA and Serica Energy. Brage is currently on hold, but we hope and expect that the rig will start up again when the oil price is stabilizing in the future, here we seen a little higher. We also believe that Wintershall I believe will also start up the rig again. When, I don't really know, but we hope to do that not too far in the future. The most important thing within Platform Drilling today is, first of all, we have very, very strong operations. We are harvesting incentive schemes, and we are earning bonuses, and we are very pleased to be able to kick off the ConocoPhillips Ekofisk again. And as you all know, we do also have well services on board Ekofisk. So we do a lot of integrated operations together with well services, which is also probably one of the reasons we won the contract. So congratulations to the team for that, and good luck further. With Well Services, maybe the Well Services was the only area with us that was kind of a met -- felt the COVID situation toughest in March because a lot of things just shut down, countries shut down. We operate in more than 20 countries, and we saw that overnight, things just stopped. So we were concerned about that, of course. We were concerned about the people because we have people on different fields all around the world, very remote locations, onshore, offshore, mid water, shallow water, deepwater, and it's -- it was a challenge to kind of get overview. So we had stopped, and we analyzed the whole situation. But the good thing with the but is that Well Services have been able to keep up the good work. And even though we have looked at the different forecast for the year, we have -- we are seeing trends, good trends that we are coming back again, and things are being picked up again. And even though they looked a little black down back in March, April, we are much more optimistic about the future. One thing that is worth to mention is that we have tried to establish -- together with Huisman in Holland, we have established exclusive raisemen for Casing While Drilling, and we have now received an LOI for -- in Malaysia for Petrofac and with a significant scope of work within casing/drilling. And we have tested it, we have developed stronger technology. And this time, we certainly believe that we will be successful. And if so, if we do, there are a lot of other companies looking at what we're doing there, and some -- a couple of majors, 2 are following closely how this is executed. And I say, if we are doing this, this is going to be a new product line within Well Services. We have recent -- we have earlier mentioned that we have developed a position within wired drill pipe. And the Casing While Drilling is another product line, which we believe has high merits on both onshore and offshore drilling. And so this could be a very, very interesting development of the business area Well Services. Regarding the -- we have $2.2 billion backlog. As I said, it's not with -- we don't take the call offs in Well Services or within the Technology. This is backlog and options within MODU and Platform Drilling. But $2.2 billion is a nice level. And as I say, if we are able to execute over time this backlog in a good manner, as we have shown so far, I think that -- well, Atle will come back to that a little later there, our financial development will be more than satisfactory. Look at the market, the outlook. Of course, we do have a lot of uncertainties with the COVID. It's absolutely too early to say this is over, even though many had hoped so. I think -- we think that this situation will last for many, many, many months so far. So this is the -- this is at least, in the medium-term future, the new normal. We see that the drilling market in general is very, very tough. There's no more to talk about that within other business areas or drilling areas like jack-ups, deepwater, harsh environment. The harsh environment segment has been relatively okay. We look at where we are, we see a lot of demand from -- to our rigs. We have good assets, and the clients want them much -- maybe too much because we don't have more than 4 of the high-end rigs, and all of them are occupied. So in this case, we could certainly have more. We look at -- the day rates are, in a way, stabilized, where we saw where we landed Sverdrup. But it's important to add that we are also discussing different way of being compensated these days by incentive schemes, which is yielding much more than traditionally. And I think that some of the reasons we have delivered a good quarter is that we finally now see that incentives are ticking in and support together with the cost control. And incentives, we are increasing the bottom line on that aspect. We -- of course, we observe what happens in the general market regarding our competition. And there's a lot of Chapter 11 talks these days that will change the map, the offshore drilling map significantly. A lot of companies are -- already announced Chapter 11. Some of them will -- has not done that yet, but will end there. So this will also open up for new opportunities and consolidations. We have said many times that the previous round of consolidation was too early. So we have -- as many of you know, we have been kind of approached by many to consolidate, but we have always said that it's too early, it's too much depth, it's too little income, too low forecast on day rates and so forth and contracts. So we have not been entertaining any of those attempt to consolidate. We have evaluated, but we haven't been engaged in details. This might change. Of course, we also see that the market is changing, and there might be nice opportunities coming up when balance sheets are cleaned up. That could be also an opportunity for us to look at areas where we are -- where it could be interesting to participate in consolidations. I won't be -- if any given questions afterwards, I don't -- I won't go into any detail, so you can spare that question. Well Services, again, it's better. With better conditions, we are picking up activity again. I think that at year-end, we will be much better off than expected back in March, April, and that's a good story. And also together with platform drilling and technology, we see that the demand is okay within technology. We see that projects are coming back, and both of them has not been what we planned for, so-called budget. Both of these areas are now delivering according to budget or better. So that means that when we made the budget last year, we didn't know about the COVID. Now we had some sort of worries about development when we got this pandemic, global pandemic, but now we see that we're actually able to deliver what we hope for in the so-called normal world that was previous before COVID. But we are again saying that we are ticking back into that level. Just to remark that Stavanger was planned to operate in March, but this is now starting up in August, September. So of course, we haven't reduced any -- the contract is the same. So the income will just kind of move into this year and also next year, it was not the original plan. And that was also partly where we have kind of a different forecast than we had in the beginning of the year -- for this year. But again, it's just about timing here. It's not about the contract. It's the same scope, same contracts, same details, same incentive schemes, same everything and it's about to deliver. So that's how we see it. Atle, you can take us into the financials.

[Atle Sæbø, CFO & Executive VP]

Thank you, Simen. I'm pleased to present the financial for Odfjell Drilling for the second quarter of 2020. If you start looking at Page 3, you can see that the group operating revenue was $167 million compared to $186 million in the second quarter last year. The group EBITDA was $81 million compared to $72 million in the same quarter last year. The increase in EBITDA is mainly due to increased EBITDA in the mobile drilling unit business. EBITDA margin was 49% compared to 39% in the same period last year. These were the blended figures of the capital-intensive mobile drilling unit segment and the human-intensive platform drilling and technology. I will now go into each of the segments, and I start with the MODU segment on Page 14. Please note that as of January 1 this year, the internal reporting of these segments is prepared according to IFRS. Comparative figures are also adjusted accordingly. Operating revenue for the MODU segment was $118 million compared to $132 million in the same period last year. EBITDA was $68 million compared to $63 million in second quarter '19. The change in EBITDA is due to a higher EBITDA for Deepsea Atlantic, of USD 7 million related to strong performance and bonus earned in the period. And Deepsea Nordkapp of USD 6 million, which had a full operational quarter this year compared to half a quarter last year when it was delivered from yard. This is partly offset by lower EBITDA for Deepsea Stavanger waiting for the South Africa job of USD 4 million and Deepsea Bergen of USD 3 million due to nonoperational activities in this quarter. EBITDA margin was 58% compared to 48% in the same quarter last year. Then we move on to Page 15, the Drilling & Technology segment. The operating revenue was $32 million compared to $37 million in the second quarter '19. EBITDA was $5 million compared to $4 million in the same quarter last year. The Drilling & Technology segment continues to perform positively, and we are delivering a strong EBITDA margin also in this quarter, and particularly driven by high engineering activities. If we then go over to Page 16, the Well Services segment. The operating revenue was $24 million compared to $27 million in same period last year. EBITDA was USD 7 million, same as in second quarter '19. The result was affected by improved activity in Norway, offset by a reduction in other regions, such as Middle East and Asia. EBITDA margin was 29% compared to 27% in second quarter '19. If we then go over to Page 17, which is the group eliminations, corporate overhead and net financial items. On this slide, we have shown the bridge from the sum of EBIT of the segments to the group consolidated profit before tax by adjusting for elimination, corporate overheads and net financial information -- net financial items for your information. If you take a look at Page 18, which is the summary statement of financial positions, you can see that the group's gross interest-bearing debt was $1.315 billion as of end of June 2020. We have $154 million in cash and cash equivalents at the same period, and the equity ratio by end of June is 41%. If we then move over to Page 19, is the summary of the group's cash flow statement. In this quarter, the net cash from operations was $90 million compared to $60 million in the second quarter '19. The investing activities was $37 million in the second quarter this year. We repaid $74 million in bank debt in the second quarter. The cash position as end of June 2020 was $154 million. If you then move on with Page 20, which is the summary of the second quarter 2020. We start with the mobile drilling units, where we have a very attractive harsh environment fleet, strong backlog and healthy outlook despite the COVID-19 and volatility in oil price. If you take a look at the Drilling & Technology, we have solid operations combined with healthy financial results, successfully commenced operations with ConocoPhillips and Ekofisk in July this year. Well Services continued the strong activity, although the service market has been affected by less demand due to the COVID-19 and oil price turbulence in this period. If you then take a look at the key financials, the Odfjell Drilling is well prepared for the future. We have an earnings visibility through $2.2 billion order backlog, we have a sound cash position, we have a strong balance sheet, combined with the continued deleveraging and we have no short-term refinancing requirement. We have, however, a couple of loans coming up for refinancing by end of 2021. All in all, that was the presentation. So please, anybody with questions or comments are welcome. We are ready.

[Operator]

[Operator Instructions] And we'll take our first question from Fredrik Stene with Clarksons Platou Securities.

[Fredrik Stene, Vice President]

Congratulations on a good quarter, good performance, low cost. And I'll skip the M&A questions, Simen, after your comments. But I'm quite interested in your investment in Oceanwind as well. And I guess this kind of follows some discussion and comments you've had earlier that there is a shift in the industry towards a greener future, but that you have to come to a point where clients are willing to pay for that. So do you think -- or I guess my question is, with this investment in Oceanwind, what's the current scope and kind of time line of the things that you've outlined in the report with relation to possible offshore wind power stations? And kind of how do you expect to use this investment to expand your green footprint? And potential, so if you have any comments on the price and investments.

[Simen Lieungh, CEO & President]

Yes. Well, thank you, Fredrik. It's relevant. What you're asking here is we have, over time, evaluated how we could kind of also use our competencies for the change in the future. We have quite some time had interest to look at the offshore wind concept. Because if you look at our company, it's not -- first of all, all the things to the turbines and the windmill itself, that's proven technology today. But we have close to 50 years experience on the marine sector, and we see floating offshore is something we are close into as in say that most of the success we had with the MODUs has been because we handle the marine sector quite professional. And for us, it's a natural step when the green shift started some time ago, that we -- how could we benefit from what we have done historically into what could be in the future. So we have, for some time ago, we established an ambition for zero-emission drilling, meaning that we should take down all type of diesel gas burning into zero when we do drilling. And that's realistic because we are investing now in technology, supported by our clients. So for example, on Deepsea Nordkapp and Atlantic, we are, as we speak, invest in installing new technologies to reduce the diesel consumption significantly. And we're also talking about onshore power and we also talk about offshore power based on what also Equinor, for example, has presented. In the meantime, we also have seen, looked at how could this ambition to increase offshore power been done. And of course, over the last month and year, we have seen in the media and everybody that the environment, the government is supporting this kind of investment significantly. It's not cost-effective today, absolutely not, but it could be in the future. We see that there's a lot of resistance against onshore wind and offshore wind is more kind of, say, environmental-friendly regarding the impact on people where they live. And we have seen that well, we have followed Oceanwind, the Oceanwind company for some time. These guys didn't start yesterday. They have worked many years on the concept. So we do have a good starting point to further develop what they have done. And by using Odfjell's competencies within the marine sector, combining with what they know about the rest of the windmill concept itself, we see that we should be in a good position to develop a product, and this is what we're looking at, at this stage. This is more like a project now. We are investing a limited amount of money. We're going to, after some time, take control of the company together with the founders of the company. And we are investing some money, and we are investing a lot of resources to develop a further kind of deepen out the concept to be cost-effective to be able to compete on power pricing. The structure we have agreed to do now will be developed. And I think that it's fair to say that this is not what we're going to do over the next, say, 1 or 2 years. We're going to try to find -- we also check with clients, so they are quite interested in this kind of thinking. If we find a product that's viable and cost-effective, and if we find commercially attractive contract with a client, we will later discuss how we strategically should make the final investment decision. Specifically, that's not done. Currently, it's not going to be integrated as a part of Odfjell Drilling group. It will be a separate company, will be ruled by a separate Board, where we will participate. But we will also, together over the next few months and coming year, develop a marketing strategy, a technical strategy. And after a while, we -- if we're successful, I'd say, if we are successful, it's not given, we will, at the right stage, make the final strategic investment plan or whatever we're going to do with the company. It's not decided.

[Fredrik Stene, Vice President]

Okay. So thanks for enlightening a bit.

[Simen Lieungh, CEO & President]

To me, this is -- when you talk about the green shift, there's a lot of rhetoric about this. I cannot avoid just to say this. We -- this is to me, the perfect way to go into the green shift by doing one thing very good and bring the same competencies into a new product line and new atmosphere or industry by building on what we have because we're quite good at that instead of saying, stop this and start that, which is to be totally unrealistic. So this is absolutely the perfect storm against the change from what we're doing on drilling today, which we believe will end in -- well, not in tomorrow, it will end maybe in 20, 30 years, I don't know. But still a lot of production in oil and gas is going to happen regardless of what's been said here and there. So we're going to be good at that, too. But this is the perfect way to kind of move the focus from this, what we're doing here, reduce emissions and produce green power. So we are talking about or changing, opening to more energy-oriented company, not only the drilling itself traditionally. That's the plan behind it.

[Operator]

And next, I'll move to Lukas Daul with ABG.

[Lukas Daul, Analyst]

If we can start with the Stavanger. I mean she has kicked off the campaign in South Africa. And based on what you're saying, Simen, it seems like the sort of contract is probably going to be in the longer end of what you sort of initially indicated when you announced it. Is that sort of the base case assumption here in terms of how we should think about that?

[Simen Lieungh, CEO & President]

I think -- Lukas, I think what's going to be -- well, what we need to find out, is this something we will make a find or not. If we do the first well dry, to do a dry well, it doesn't take too much time. If we find a wet well, it's going to start with testing and coring and everything. So it's very kind of difficult to say how long this campaign will be, is guaranteed at least 180 days in operations. And plus 2 months down, 2 months back, that will give the minimum duration of the contract. But if we are -- if we do -- if we have 3 wet wells, well, kind of that will be 3 months plus per well. So it's a very -- it's a little bingo. I can't give you exact answers. If we get what we expect, I think we will return back to Norway next summer. If not, we might return earlier, but it will be compensated at a minimum of 180 days anyway on the full rate.

[Lukas Daul, Analyst]

Okay. I understand. Let's see how it goes. Good. Yes. And then on your -- on sort of -- in terms of the reported numbers, I mean, again, the performance in this quarter. And I was wondering if you could sort of disclose a number. How much is your incentive compensation in this quarter in total? Is that something you would like to share?

[Simen Lieungh, CEO & President]

I will not share details there for the reasons. As I say, we always count bonuses or incentives when it's on the bank account, not what we hoped for. But we have indicated earlier that we are in the range of type of 5%, 10%. Some areas we are higher, some areas we are 0 because of length of contract. But I guess that -- but if you say that, we are -- some well here will have given significant bonuses and others have given 0. So there's a combination here. But if you say some 10%-plus in bonuses, that's what you can put us in your equation when you see the day rates.

[Lukas Daul, Analyst]

Okay. That sounds good. And then on Aberdeen, I mean you mentioned that she's done with the work west of Shetland. And obviously, you've got a good legacy type of contract, which would sort of compensate you if BP was to terminate. So my question would be more, if that was the case, what are your thoughts about sort of refinancing the facility, which is due 18 months from now? And I guess, it would be a different conversation, whether the rig has or has not a contract.

[Atle Sæbø, CFO & Executive VP]

Absolutely. I can give you some thoughts about the refinancing coming up in '21. First of all, the leverage ratio is on its way down for the group as such. And this is due to repayment of existing loans, and we have a steady or increasing EBITDA. So the leverage ratio is indeed acceptable. The equity percentage is increasing as the total balance sheet is reduced, and we have a profit is added to the equity in the books. But as you mentioned, the backlog is, of course, of major importance. We are talking to clients, and there are potential long- to medium-term contracts out there. And our fleet will continue to work on this. And based on building backlog, we expect that we should have terms in the refinancing, reflecting a good backlog position for the group. The cash generation will be -- we have no SPS coming up before 2024. That has taken quite a lot of cash in '19 and in '20, giving room to further strengthen the balance sheet by repayment of worst debt and also as from 2022 to start the dividend payments for the units. And also, if you look at the figures coming up there, our service loan was originally $450 million. When it's up for refinancing, it will be at $150 million. All the debt multiples should be indeed doable if you look at the EBITDA creating from the service side compared to the total debt. The other one is, of course, Deepsea Aberdeen coming up by end of next year. We will then have a depth on the unit with $180 million, approximately, I think the remaining loan on that unit will be. And also that the majority of that loan are with ECA and kicks in to make it easier even in a challenging financial world out there. So based on this, we are strong believers that we got good agreement with the banks. When we start these negotiations, we are, of course, talking to the banks. We are having a good conversation with the banks, but we haven't started to negotiate this potential agreement yet.

[Lukas Daul, Analyst]

Okay. Yes, I agree with that. That's good color. And just finally, one for Simen. I mean I sort of read your comments in the Norwegian media about the dividend in 2022, sort of good to see that kind of confidence. Would you like to sort of elaborate on that a bit? Or...

[Simen Lieungh, CEO & President]

Well, we are asked about that. And I think that we believe, and that's what we truly believe, if we execute the current backlog we have, and we expect -- and if you add on what we hope to get with what I mentioned, Atlantic, and we believe Atlantic will go continuously until we take further. If we add on what we're doing today and if add not the backlog and if we just extrapolate the performance we have today, and even though reduce somewhat the incentives, we will still be in a position in '22 to pay dividend. Not everybody believe that, but we believe it, and that's why we say it.

[Lukas Daul, Analyst]

Okay. Well, certainly, your net debt-to-EBITDA is coming down towards the low 2s. So I guess, it should be possible.

[Operator]

And there are no further questions at this time.

[Simen Lieungh, CEO & President]

Okay. If there's no further questions, I thank you for listening in, and good evening.

[Atle Sæbø, CFO & Executive VP]

Thank you for the attention.

[Simen Lieungh, CEO & President]

Take care of yourself. Bye-bye.

[Operator]

And that will conclude today's call. We thank you for your participation.