SFL (SFL) Q2 2025 Earnings Call Transcript

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Date

Aug. 19, 2025 at 10 a.m. ET

Call participants

Chief Executive Officer — Ole Hjertaker

Chief Operating Officer — Trym Sjølie

Chief Financial Officer — Aksel Olesen

Head of Investor Relations — Espen Nilsen Gjøsund

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Risks

CEO Hjertaker stated, “The drilling rig Hercules also remained idle in the quarter,” and flagged that, due to continued market turmoil and oil price volatility, "it is difficult to give any guidance on timing" for new contracts, directly affecting near-term cash flow and financial results.

CFO Olesen noted that adjusted EBITDA (non-GAAP) declined to approximately $112 million in Q2 2025, down from $160 million in the previous quarter due to a relatively high number of vessels in scheduled dry dock, which increased dry dock expenses to $16.5 million in Q2 2025, compared to a normalized $5 million.

Ole Hjertaker confirmed, "The Board has therefore decided to adjust the dividend to $0.20 per share for Q2 2025," citing capacity constraints and a deliberate approach “to make sure that the distribution is not effectively subsidized because that unit is out of service currently.”

Takeaways

Revenue-- $194 million (non-GAAP) reported for Q2 2025, primarily from time charter contracts and reflecting a diversified asset base.

Adjusted EBITDA-- Adjusted EBITDA was approximately $112 million for Q2 2025, down from $160 million in the previous quarter, impacted by elevated dry docking and upgrade activity.

Total charter backlog-- $4.2 billion charter backlog, with approximately two-thirds attributed to investment-grade customers, enhancing cash flow visibility as of Q2 2025.

Dividend-- $0.20 per share declared for Q2 2025, representing approximately a 9% yield on the prior day's closing price.

Cash position-- $156 million in cash and cash equivalents at Q2 2025 quarter-end, plus $49 million in undrawn credit lines and $192 million in unencumbered vessel value.

Fleet composition-- Fleet now comprises three dry bulk vessels, 30 containerships, 16 large tankers, two chemical tankers, seven car carriers, and two drilling rigs, after divesting twenty older vessels as of Q2 2025.

Dry docking costs-- $16.5 million expensed in Q2 2025, well above the normalized $5 million, primarily due to eight vessels in dry dock for major efficiency investments.

Hercules rig status-- Remained idle in Q2 2025, generating $3.3 million in revenue from contract payments and equipment rentals, but incurring operating expenses of $4.9 million; management provided no timeline for re-employment.

Linus rig performance-- Generated $22.6 million in Q2 2025, up 10% sequentially from Q1, due to rate adjustment and zero downtime.

Net profit (U.S. GAAP)-- $1.5 million net profit reported under U.S. GAAP for Q2 2025, or $0.01 per share, compared to a prior quarter net loss of $32 million.

Asset sales and proceeds-- Disposed of multiple vessels, including Capesize bulkers and container ships, bringing net proceeds of about $150 million subsequent to Q2 2025 quarter-end, further strengthening liquidity.

Capital expenditures-- $25 million remains for vessel and rig efficiency upgrades, with $850 million due for five container newbuildings as of Q2 2025, scheduled for delivery through 2028.

Operating days and utilization-- Fleet operated 6,475 days in Q2 2025, reaching 98.1% utilization overall, and 99.9% when adjusted for unscheduled off-hire.

New charters-- Secured five-year charters for three 9,500 TEU containerships withMaersk(CPH: MAERSK-B), adding $225 million to backlog from 2026 onwards, with most upgrade costs to be recovered via charter rate add-ons.

Fleet technical investments-- Now 11 vessels capable of operating on LNG, including five newbuildings under construction, as part of ongoing fuel efficiency and environmental compliance efforts.

Summary

In Q2 2025,SFL Corporation(NYSE:SFL) saw a substantial reduction in fleet size, with sales of older vessels lowering the average fleet age by approximately two years and materially improving operational efficiency. Management emphasized that dry dock and upgrade activity peaked in Q1 and Q2 2025, and expects these costs to normalize for the remainder of the year. Liquidity was further enhanced by vessel divestitures and new financing, leaving over $300 million available for investment at the end of Q2 2025. Management confirmed a shift to exclusively third-party counterparties, as all related-party transactions have now concluded. The explicit reduction in the dividend recognizes near-term cash flow impacts from the idle Hercules rig and reflectsSFL Corporation(NYSE:SFL)'s deliberate capital allocation in a time of market volatility.

CEO Hjertaker said, Our charter backlog is currently $4.2 billion as of Q2 2025, and importantly, two-thirds of this is with customers holding investment-grade ratings, giving us unique cash flow visibility and resilience in light of the current market volatility.

COO Sjølie disclosed that in Q2 2025, 95% of charter revenues were generated from time charter contracts, while only 5% came from bareboat or dry leases.

CFO Olesen explained that the company entered into approximately $84 million of new financing arrangements for the two car carriers, SFL Conductor and SFL Composer, in Q2 2025.

Management confirmed that the $850 million in remaining capital expenditures for the five new container vessels is expected to be fully funded through pre and post-delivery financing.

Industry glossary

Bareboat charter: A vessel lease in which the charterer assumes total responsibility for the operation and maintenance of the vessel.

Time charter: A charter agreement where the vessel owner provides the ship, crew, and maintenance, while the charterer pays for the use and voyage expenses for a fixed period.

Dry docking: The process of taking a vessel out of the water for repairs, maintenance, inspections, or upgrades.

Warm stacked: A vessel or rig that is out of active service but maintained in operational condition for rapid redeployment.

Deadweight (DWT): A measure of how much weight a ship can safely carry, including cargo, fuel, crew, and provisions.

Unencumbered vessel: A vessel that is free from debt or other financial obligations, and thus available for sale or refinancing.

TEU (Twenty-foot Equivalent Unit): The measurement unit used to describe the capacity of container ships and terminals, based on the volume of a standard twenty-foot-long container.

Full Conference Call Transcript

Ole Hjertaker: Thank you, Espen. We are now announcing our 86th dividend and continue building our business as a maritime infrastructure company with a diversified fleet. We reported revenues of $194 million this quarter, and the EBITDA equivalent cash flow in the quarter was $112 million. Over the last twelve months, the EBITDA equivalent has been $520 million. The second quarter result was impacted by several one-off items, including a higher number of vessels in dry dock and several of these with additional efficiency investments. Dry dockings are expensed when incurred, and the vessel's revenue was lower when they were out of service. The drilling rig Hercules also remained idle in the quarter.

We have in recent quarters taken decisive steps to strengthen our charter backlog by securing agreements with strong counterparties and deploying high-quality assets. We have also made substantial investments in cargo handling and fuel efficiency upgrades across our existing fleet while divesting older, less efficient vessels. As part of this process, five fifty-seven thousand deadweight dry bulk vessels built between 2009 and 2012 have been sold recently. Four of the vessels have already been delivered to their new owners, and the last vessel is due to be delivered next month. The vessels were originally on long-term charters but have been operated in the spot market the last several years.

Due to a combination of age, design, and fuel efficiency, we have not been able to find new long-term charters for these vessels, and we have therefore decided to divest the vessels as part of our continuous fleet renewal process. Eight older Capesize bulkers to Golden Ocean and seven 2002 built container ships to MSC have also been redelivered in late June and early July pursuant to the chartering agreements. As a result of this and also vessel efficiency investments, operational efficiency and fuel consumption profile of the fleet has improved materially, delivering benefits to both SFL Corporation Ltd. and our customers.

We have also advanced our commitment to new technology with 11 vessels now capable of operating on LNG fuel, including five new buildings currently under construction. We are pleased to announce new five-year charters for three nine thousand five hundred TEU vessels on charter to Maersk. This adds $225 million to our backlog from 2026 onwards, and the vessels will be upgraded with both cargo and fuel efficiency features similar to our other large container ships. Most of the upgrades will be compensated by the charterer through charter rate add-ons.

The drilling rig Hercules has been idle since the fourth quarter of 2024, and the recent market turmoil and oil price volatility has delayed new employment opportunities for the rig, which is impacting our near-term financial result as we keep the rig warm stacked. We remain optimistic about finding new employment for the rig and continue to explore strategic opportunities for the rig in parallel, but it is difficult to give any guidance on timing for this. We have also recently redelivered several vessels pursuant to pre-agreed purchase options and sold vessels employed in the spot market. And while this is increasing our available capital for new investments, it is reducing the near-term cash flow generation.

The Board has therefore decided to adjust the dividend to $0.20 per share for the second quarter. With this dividend, we have returned nearly $2.9 billion to our shareholders over eighty-six consecutive quarters, and the 20¢ dividend represents a yield of approximately 9% based on the share price yesterday. Our charter backlog is currently $4.2 billion, and importantly, two-thirds of this is to customers with investment-grade ratings, giving us unique cash flow visibility and resilience in light of the current market volatility. Over time, we have consistently demonstrated our ability to renew and diversify the portfolio of assets and charters, supporting a sustainable long-term capacity for shareholder distributions.

And we have a strong liquidity position, including all drawn portions of credit lines, also multiple unlevered vessels at quarter-end, which should enable us to continue investing in new accretive assets. And with that, I will leave the word over to our Chief Operating Officer, Trym Sjølie.

Trym Sjølie: Thank you, Ole. Our current fleet is made up of 616 maritime assets, including vessels, rigs, and contracted new buildings. Although a lot of material reduction in charter backlog, we have a reduction in fleet from last quarter after having disposed of 20 of our older vessels. These sales partly come as a result of end-of-lease vessels being sold back to charterers under option structures, but also due to fleet renewal. The average age of the vessels sold was about eighteen years, reducing the fleet average by about two years.

Our backlog from owned and managed shipping assets stands at $4.2 billion, and the fleet following Q2 is made up of three dry bulk vessels, 30 containerships, 16 large tankers, two chemical tankers, seven car carriers, and two drilling rigs. Now we have a diversified fleet of assets chartered out to first-class customers on mostly long-term charters. And the majority of our customer base is largely industrial end users. Container vessels dominate our backlog, accounting for about 71% of our portfolio. A key to remaining an attractive partner is to ramp up investments in fleet renewal, new technology, and vessel upgrades, which we are doing.

Strict regulatory demands, particularly from the IMO and EU aimed at cutting shipping emissions, is another driving factor. By enhancing our fleet, we position ourselves for organic growth either by supplying new vessels to clients or extending the life of existing ones. In Q2, we had four container vessels in dry dock for special survey and major upgrades to cargo systems, energy-saving technologies, propeller enhancements, and hull modifications. On the back of already executed projects with Maersk, we have agreed new five-year time charters on three of our 9,500 TEU container vessels, also including a similar investment scope. In Q2, 95% of charter revenues from all assets came from time charter contracts, and only 5% from bareboat or dry leases.

The charter revenue from our fleet was about $194 million in the quarter, and we had a total of 6,475 operating days. Operating days being defined as calendar days less technical off-hire and dry dockings or stacking for rigs. Eight vessels have been in dry dock in the quarter, four of which were container ships undergoing major upgrade projects, and the time at the shipyard required for those upgrades beyond the fifteen days normal dry docking is for the charterer's account. This quarter, in addition to a high number of vessels in dry dock, the scope of repairs and upgrades was larger than usual.

Thus, the dry dock costs in the quarter were about $16 million, where we, in a normalized quarter, would see an average of 2.5 vessels in dry dock at a cost of around $5 million. We expect dry dock costs in Q3 and Q4 to taper down significantly. Our overall utilization across the shipping fleet in Q2 was 98.1%. Adjusted for unscheduled technical off-hire only, the utilization of the shipping fleet was 99.9%. A testament to the high quality of our vessel management. Subsequent to quarter-end, our car carrier, SFL Composer, had a collision in Denmark upon approaching Udensa Pilot Station going in for her special survey dry docking at Feyard.

Just before midnight on August 4, the vessel was hit from behind by an overtaking container vessel. Luckily, there were no injuries to personnel and no pollution as a result of the collision. The vessel went straight into dry dock after the incident and is currently scheduled for completion of all repairs by early September. Due to loss of hire insurance, we expect no impact on earnings. On the energy side, the Linus rig earned $22.6 million in Q2, about 10% up from Q1 as the contract rate was adjusted up by 2% from May, and the rig had no downtime during the quarter.

OpEx was $14.5 million in Q2, up from $12.2 million in Q1 as the US dollar weakened versus the NOK, thereby impacting personnel expenses in dollars. The Hercules rig is currently warm stacked in Norway and being marketed for new contract opportunities. During the second quarter, the rig recorded $3.3 million in revenues relating to contract payments from Equinor and equipment rental income. The majority of this equipment has been returned subsequent to quarter-end, and we do not expect to receive further rental income. Rig OpEx was approximately $4.9 million in the second quarter. I will now give the word over to our CFO, Aksel Olesen, who will take us through the financial highlights of the quarter.

Aksel Olesen: Thank you, Trym. On this slide, we have shown our pro forma illustration of cash flows for the second quarter. Please note that this is only a guideline to assess the company's performance and is not in accordance with U.S. GAAP and also net of extraordinary and noncash items. The company generated gross charter hire of approximately $194 million during the second quarter, with approximately $82 million coming from the container fleet, including profit share related to fuel savings on seven of our large container vessels. As in the previous quarter, revenue was impacted by scheduled dry dockings and efficiency upgrades on some of the large container vessels, as four vessels underwent scheduled dry docking during the quarter.

Also, the company sold the 2005 built 1,700 TEU container vessel HNAs. And just before quarter-end, seven oil container ships on bareboat charters to MSC were redelivered pursuant to the chartering arrangement. The car carrier fleet generated approximately $26 million of gross charter hire in the quarter, including profit share from fuel savings, which is slightly up from the last quarter. Our tanker fleet generated approximately $41 million in gross charter hire, which is down from approximately $45 million in the previous quarter as three vessels underwent scheduled dry dockings. SFL Corporation Ltd. has 14 dry bulk vessels, of which eight are employed on long-term charters. The vessels generated approximately $19 million in gross charter hire in the second quarter.

The seven vessels employed in the spot and short-term market contributed approximately $5.8 million in net charter revenue compared to approximately $4.4 million in the fourth quarter. During the quarter, the company agreed to sell its remaining four Supramax dry bulk vessels, and subsequent to quarter-end, the company delivered its eight Capesize dry bulk vessels on contract with Golden Ocean to them as part of the previously announced purchase option that was exercised in the first quarter. SFL Corporation Ltd. owns two harsh environment drilling rigs, the large tanker rig Linus and the ultra-deepwater semisubmersible rig Hercules. The rigs generated approximately $26 million of charter hire in the quarter.

Our operating and G&A expenses for the quarter were approximately $83 million, up from approximately $78 million in the first quarter. We had a relatively high number of vessels in scheduled dry dock in the quarter, and dry dock expenses for ships are being expensed when incurred. Furthermore, the vessels are out of service during the dry dock period, reducing new revenues temporarily. During the second quarter, we expensed approximately $16.5 million for vessels in dry dock, compared to a normalized average of approximately $5 million per quarter. This summarizes an adjusted EBITDA of approximately $112 million compared to $160 million in the previous quarter. We then move on to the profit and loss statement as reported on U.S. GAAP.

For the second quarter, we report total operating revenues of approximately $192 million compared to approximately $187 million in the previous quarter. The contribution from our vessels was approximately $107 million compared to approximately $171 million in the previous quarter, while the rigs contributed approximately $26 million compared to approximately $22.5 million in the previous quarter. Vessel operating expenses in the quarter were approximately $67 million, including approximately $16 million related to scheduled dry dockings, compared to approximately $58 million in total in the previous quarter. Rig operating expenses in the quarter were approximately $19 million compared to approximately $18 million in the previous quarter.

Net results in the second quarter were also impacted by nonrecurring or noncash items, including a net gain on the sale of assets of approximately $4.2 million, negative mark-to-market effects from hedging derivatives of $2.4 million, and negative mark-to-market effects from equity investments of approximately $1 million. So overall and according to U.S. GAAP, the company reported a net profit of approximately $1.5 million or $0.01 per share compared to a net loss of approximately $32 million or $0.24 per share in the previous quarter. Moving on to the balance sheet. At quarter-end, SFL Corporation Ltd. had approximately $156 million of cash and cash equivalents, in addition to undrawn credit lines in the amount of approximately $49 million.

In addition, the company had 15 unencumbered vessels with a market value of approximately $192 million at quarter-end. During the quarter, the company received net proceeds of approximately $20 million from the sale of one Supramax vessel and seven container vessels. And subsequent to quarter-end, 12 of our 15 unencumbered vessels have been delivered to their new owners, including the eight Capesize dry bulk vessels to Golden Ocean, with total net proceeds of approximately $150 million further strengthening our liquidity position. So including available credit lines, we currently have available liquidity of more than $300 million. During the quarter, the company entered into approximately $84 million of new financing arrangements for the two car carriers, SFL Conductor and SFL Composer.

We also prepaid three debt facilities in an amount of approximately $95 million in addition to order installments of approximately $59 million. As of the end of the quarter, the company had approximately $25 million in remaining capital expenditures, mainly relating to efficiency upgrades on the large container vessels and the Hercules. We furthermore have remaining capital expenditures of $850 million remaining on five container newbuildings expected to be funded through pre and post-delivery financing. So based on the Q2 numbers, the company has a net book equity ratio of approximately 25.5%.

Then to summarize, the Board has declared the eighty-sixth consecutive cash dividend of $0.20 per share, which represents a dividend yield of approximately 9% based on the closing share price yesterday. Our charter backlog is currently $4.2 billion, and importantly, approximately two-thirds of this is to customers with investment-grade ratings, giving us unique cash flow visibility and resilience in light of the current market volatility. Furthermore, our strong balance sheet liquidity position provides flexibility in the current market environment and enables us to pursue new investment opportunities. And with that, I give the word back to the operator. We will open the line for questions.

Espen Nilsen Gjøsund: Thank you, Aksel. We will now open for a Q&A session. Those of you who are following this presentation through Zoom, please use the raise hand function under reactions in the toolbar to ask a question. When your name is called out, please unmute your speaker to ask your question. Thank you. And we will have our first question from Mr. Jeff Harvey. What's the status with the lawsuit with Seadrill?

Aksel Olesen: I think there are two lawsuits. The larger one relating to the redelivery of the Hercules will be scheduled sometime in, hopefully, 2026, yes. And also, I mean, as you know, we were awarded a judgment in the first instance of approximately $45 million to $50 million depending on the currency rate. We have also received a guarantee for that amount by Seadrill, including interest rates, yes.

Espen Nilsen Gjøsund: Thank you, Aksel. We will now take our next question from Gregory Lewis. Please unmute your speaker to ask your question.

Gregory Lewis: Yeah. Hi. Good afternoon, everybody, and thanks for taking my questions. I was hoping to get more of a kind of if you could kind of walk us through your thought process on the decision to lower the dividend. You know, obviously, the 7¢, well, you know, called out. You know, is that you know, clearly, you highlighted the rig as kind of the main driver for that, but I imagine it's not just that simple.

So just kind of curious, you know, how you kind of set that 20¢ number and how we should think about that moving forward as, you know, if our base case is that rig goes back to work, I do not know, sometime next year.

Ole Hjertaker: Thank you, Greg. It's Ole here. Yes. And I fully understand and appreciate that there is some disappointment on an adjustment to the dividend level. We guided in the first quarter that unless we saw a clear path onwards in the near term for the Hercules, that we might have just looked at the distribution, you know, call it longer-term distribution capacity in the company. So it's clear that the rig is warm stacked. These assets are quite expensive to keep to make sure that they are effectively ready to drill when there are contract opportunities. But it looks like this market continues to be relatively slow, and the opportunities take longer to materialize than we had hoped for.

So that is, of course, one piece of it. And while the rig is idle, we have a warm stack rate currently in the region of $60,000 per day, and then, of course, also some interest and amortization on the financing relating to it. So that is something that we are, of course, focused on. But also bearing in mind that when the rig worked in the last full quarter that the rig worked in the third quarter of 2024, it had a significant contribution. Just that one rig alone had an EBITDA contribution of around $35 million, around $20 million that quarter after interest and amortization. So it's a significant asset when it's working.

But right now, we feel and the board feels that it's very prudent to make sure that the distribution is not effectively subsidized because that unit is out of service currently. We also have recently divested some of the assets that we noted, some of the dry bulk to Golden Ocean. And, you know, incidentally, we find it, you know, it's also we call it a historic moment when Golden Ocean first was sold and then now the vessels were, you know, effectively repurchased based on the pre-agreed purchase option. That was the last related party deal we had in our portfolio. So now all our transactions are with third-party companies and customers out there.

But both the sale of those vessels, the sale of some older container ships we had, and also the bulkers, that is more from a timing perspective. You know, we now have significant investment capacity from that, and that capital is hopefully redeployed when we see the right investment opportunities going forward. So the adjustment to 20¢ is seen as a whole, but you could also say that part of that is also illustrating the distribution capacity coming out from the other assets that we have in our portfolio currently. And then within mass net capacity on the side and hopefully some good upside potential related to the Hercules when that is back out working.

Gregory Lewis: Okay. Super helpful. And then just, you know, I'll ask just my two questions, and then the first one is pretty quick. You know, as we think about, you called out the dry docking, which impacted tankers and container OpEx costs in the second quarter. As we think about the back half of the year, should we be thinking around, you know, costs for those in terms of costs or maybe somewhere in between Q1 and Subs asset classes to look more like Q1, Q2? And then just and then I was hoping you know, after that, could talk, you know, cash has gone up. Obviously, there's a lot of uncertainty in the market.

But just kind of curious broadly speaking, how you're thinking about the ability to, and really what the market is telling you in terms of the opportunities to acquire assets because it does look like that's really what's going to, you know, drive any pickup in the dividend going forward.

Trym Sjølie: So on dry dockings, we've had a high number of dry dockings both in Q1 and Q2. And now in Q3, we will have a couple of ships sort of scheduled. And in Q4, one, depending a little bit on timing. So the last two quarters this year will be we expect the cost for dry docking and any positioning of vessels to be very low and sort of under the average so that this year, although more busy than the normal year, will still average out. And sort of per vessel docking, if it's a large container ship, we'll be maybe around $2 million. If it's a small container ship, maybe one and a half.

And so and for a car carrier. So I think in Q3, we might be looking at maybe three to three and a half million. And in Q4, maybe one to two. On the dry docking side.

Ole Hjertaker: And just for illustration, that is down from around $16.5 million in the second quarter. It's because of the high number of vessels in dry dock. Yes. I believe around 10 in the first quarter. So the front half of the year has been kind of very heavy on the dry dockings, and then it's going to normalize for the rest of the year.

Gregory Lewis: Okay. Super helpful. And then just on the opportunities for potential acquisitions.

Ole Hjertaker: Yeah. Absolutely. I mean, yes, we are. We continue to look at opportunities. The market has been a little slower in terms of I think this has more to do with the general market uncertainty from April onwards, so I would say through the second quarter, slower in terms of new opportunities, so where we saw that there was some real window to get a transaction done. We are very focused on counterparties and counterparty strength. Asset types, what kind of residual exposure we will be willing to take, and of course, that is bearing into the opportunities that we end up doing in the end.

We have never guided in the past on how much we are going to deploy in every single quarter. Just as an illustration, the last eighteen months in 2024 and the first half of 2025, I believe we added more than $2 billion to our charter backlog, invested well north of a billion dollars. So we have been quite active over time. But it's all about getting the right deal done. But we definitely have capacity and not least now when we have had the transactions relating to both the Capesize bulkers, the Supramax bulkers, and also the container ships which has given us a good net cash contribution.

Gregory Lewis: Super helpful. Thank you very much.

Trym Sjølie: Yes. Thank you.

Espen Nilsen Gjøsund: Thank you. We'll take our next question from Mr.

Sherif Elmaghrabi: Hi. Thank you for taking my questions. If I remember correctly, this is the first quarter in which you've provided the EBITDA contribution from your energy assets on a standalone basis. If we strip out the $3 million to $4 million in rental income you mentioned you generated during the quarter, should we expect the organic EBITDA contribution from the energy side to come in at around $3 million per quarter until a new contract for the Hercules is secured?

Ole Hjertaker: Yeah. I'm not sure exactly which number you are looking at now, but we have the two drilling rigs Linus and Hercules. Linus is operated currently at a charter rate of around $230,000 per day. As an operating expense in the region of $140,000 per day, so there is around $90,000 per day net after, you know, at OpEx. Yeah. So in terms of kind of on the revenues on the energy side, I think it's slightly $3 million higher than we should expect in the run rate rest of the year. As revenues are mainly from Linus. And $3 million, call it, extra from the previous work for the Hercules that came in a bit later in this quarter.

So we'll unfortunately continue to have kind of a negative drag from the energy segment going forward, but we thought it would be good to highlight kind of the very solid contribution and cash flow we have from our shipping fleet. And this kind of making this clear for investors and also analysts.

Sherif Elmaghrabi: Yeah. I think that's helpful. And now I also wanted to ask a question, this one more on the modeling side. You still have around $850 million in CapEx outstanding for the container ship newbuilds. Correct. Yeah. And that's expected to be covered by debt proceeds. Are the deliveries still expected in 2028?

Ole Hjertaker: Correct. So in terms of the progress there, I mean, the yard will commence with the construction of these vessels approximately one year of effective construction time on the ship. So you'll have installments starting one year before delivery of the ship. So Q1 in 2027, we'll have some more installments and then the ships are delivered throughout 2028, starting in Q1. Yeah.

Sherif Elmaghrabi: Makes sense. I'll turn it back. Thank you for taking my questions.

Ole Hjertaker: Thank you.

Trym Sjølie: So we have a question here from Arne at the Lunasul Polaris. Just a question on the vessel operating expenses. I think we addressed that already. So on the shipping side, we should expect that to be coming down. There's also a follow-up question on the Hercules in terms of the kind of stacking costs on that. I think we're continuously on reducing that to an efficient number. Preserving kind of warm stack mode of the rig. And then, hopefully, we can push that down to around 60 ish per day going forward, but always looking for ways to decrease this further. Yeah.

Espen Nilsen Gjøsund: Okay. As there are no further questions from the audience, I would like to thank everyone for participating in this conference call. If you have any follow-up questions for the management, there are contact details in the press release, or you can get in touch with us through the contact pages on our webpage, www.sflcorp.com.

Sherif Elmaghrabi: Thank you.

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