SFL - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, good afternoon and welcome to the Q4, 2020 SFL Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a Q&A session. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Ole Hjertaker. sir. ahead go Please

Ole Hjertaker

CFO, welcome then start SFL’s participate. Trym going the the questions the Chief that highlights and through our take call. financials where by the through quarter will opening I Sjølie of and our following And will call will quarter. Officer, Olesen all you also will fourth us be to call conference the Aksel concluded Thank Operating by for briefly up

would U.S. like expects, will of I statements. note Litigation we that within expressions call presentation, Before such anticipates, begin Act conference to contain similar forward-looking or the are this our as Reform estimates Words XXXX. meaning Private intended statements intends, these forward-looking to of the Securities identify

forth that of activities These be in but on limited performance. to operations those the are statements. results Forward-looking to to differ credit conditions statements expectations are guarantees future cause shipping statements current are our and results could inherently not Important cause and include, not markets. based risks in could and subject materially to and forward-looking plans of that the are and actual offshore different uncertainties from set future factors

exclude the adjusted to XX contribution time dividend of this from assets on payment. being. the uncertainties share yesterday and not restructuring, Seadrill and Chapter then operating quarterly outcome dividend is of represents undue may Exchange our therefore and with condition. offshore all the of have on per $X.XX and XXth Commission discussions than on the statements. these Securities financial a bearing continued more results for forward-looking which yield a surrounding refer X% should and The You based place price risks $X.XX our effectively and to reliance quarter dividend Board uncertainty of In direct for Please our last filings the light of our their more dividend announced detailed our closing

had with significant million was in total. million. impairment value have at than dividends taken margin the the we significant dividend XX% we revenues support more rate the And of forward. equivalent charter with long-term fixed than short-term the a in was per Over employed spot We the The recorded charters total continued charters billion and share $XXX this XX flow from more from backlog cash has have than market. in approximately from capacity our order to And than $XXX paid offshore vessels assets cash situation. $XXX in approximately in a relating vessels quarter less million the years, quarter going then we EBITDA Despite XX% last good the million. scrap capacity other nearly was charter $XX in other or not offshore $X.X was were well drilling the position the in to quarter. distribution idle impacted more a the which But quarter conservative. in financing $XX cash And in down on securities. more be free an market flow quarter, cash million marketable end $XXX in related the were to from by than been and the million and EBITDA equivalent flow addition, consolidated prepaying on months and an assets The the rig above quarter $XXX the

profit optionality profit it backlog from excludes fourth than us market flow more But significant million. approximately the from the of And owned going backlog vessel excludes charter share quarter higher for forward, quarter, stands reason, the share we X The XX to revenues billion also contribution the contribute was short-term charter does expect the and future drilling visibility at after savings last $X.X $X relatively providing managed and Frontline. cash relating primarily vessels VLCCs rate extensions it fuel The traded and fixed for from on to global with container transactions forward. in going anything value excluding some spreads. vessels from rigs strengthening the Our share market, positive and can also we from vessels in scrubbers any fuel price carriers fuel on contribution well. for hope in light increasing and a profit as With capsize of bulk accumulated optionality.

mentioned During and the capacity, share our investment were more also other affiliated the offshore has fully debt The end associated as sold raising MSC. account drilling and our XX.X% balance despite a immediate million that strengthened we the leases and earlier than XX,XXX restored no combined assets plans are balance with and four an which capacity our few transaction to sheet through nearly purchase the $XX purchaser a and months, prepayment initiatives was price to in Hemen the fourth of an issuance. $XXX the entity with of we reality out subsidiary, million by last there This, the debt stake therefore TEU was vessels investment rig raise largest approximately slammed of shareholder. large At was when more as million quarter, in in equity The reclassified container effect Holdings gross $XX.X equity. sheet.

from unchanged. in an $XXX,XXX portion these over remains large only quarter. net increased while distributable which capital reduction intercompany is per cash approximately interest-bearing the assets a That's limited loan, to Our ratio flow invested equity SFL’s estimated is

announced filed most Chapter week. of XX its As last subsidiaries in cases and Texas previously Seadrill

rig major lease held Seadrill facility. will the semi-submersible to rates. consecutive harsh Sea. use pay been for the five to Seadrill the agreements the the the the in fixed green free, lease to rig and the cover the rig rig Linus for agreements to a to and expenses. debt is an XXXX, now SFL’s redelivered more time environment SFL With expected West amounts by than our the rejected of European potential jack-up to be operating The being. is Linus This and level agreements elevating Hercules including Hercules of while These the charter allowed where We until rig, West approved alternatives is sub Taurus, sufficient of are two The have an and recycling entered service major environment sub-charters to end West years. Union West West for at rigs, receive major, currently relating employed received recycling to the under strategic uninterrupted sub North performance to ensure layup will where agreed will to sub-chartered into drilling is charter from existing the the to respective maintenance we has funds regard XX% relating hire is of be harsh the oil charters on approximately oil debt And SFL. oil in on for rig

and long-term Linus not Seadrill While our have no Hercules. SFL with comments the West further value provided rigs constructive proceedings, dialogue unfortunately XX can financing find any continues regards relating the to and as our the be West stakeholders. for make banks for assurances did pending to can outcome with always, to maximize solution to We a objective to Chapter But the is restructuring. relevant Seadrill’s the the and of long-term

billion of the rigs, $X.X backlog at drilling fourth end and quarter. was the the shipping the from managed assets Excluding owned

from remaining now Over XX have and from portfolio the both fleet fleet vessels back initial changed shipping years composition and in the XXXX. we have and we the structure

offshore right a XX% gone charter tankers and single time, XXX% have customer multiple mix charter We at from to stage container class the a counterparties. to now. largest varied over from segment, nearly of to diversified to single asset being has the one far And fleet the backlog one

In right Over discussed opportunities addition, we invest vessels earlier. and our our to across transactions to burning share but believe mix a because balance we time-to-time we in this be pockets. set in We and conservative to the is a from traded have the try to and we the contribution from from careful reward significant risk focuses up segments month and in do charters, not just as out, in investments, perspective. evaluating portfolio defined time, short-term market, on not XX which the deal money as itself profit XX will have try do also

to maintain companies emission service reduce would full CFO charters. time I us highlights to importantly, various with a word segments. able access in Olesen, portfolio only This or of take employed to services to give core the carbon cooperation’s believe financial ability of improvements. to been us offer more to vessels the footprint the unique the And with a passively for to that, be an We technical to with strong we gives to customer and our have competitive serve commercial vessel in our through the commercial not such initiatives vessels Aksel will developments impact not quarter. sister efforts, the propulsion be eliminate platform always asset has maintenance our and the us remain But of ensure gives range may that run. vessels other long opening by incentive also through Group. And closely life course can and where over up minimizing over operating follow in financing we flow strategy our wider in Seatankers our to who including the in and the technology structured it make the efficiency assets to energy our control and do Our customer new performance, and and effectively improvements full deal from

Aksel Olesen

XX% guideline and cash slide, generated visibility coming U.S. with note approximately our and is stands you, forma forward. fixed of only billion $X.X charter revenue not in backlog, showing which currently gross performance pro on charter extraordinary we of of quarter. it’s cash to of also more flow non-cash providing than million Thank the strong in us flows net the On with Hjertaker. rate going illustration fourth Mr. the accordance The and company $XXX set company’s that with are quarter, at Please our the GAAP hire it from fourth this items. for

revenue. hire $X.X the weighted XX% backlog fleet generated container was vessels the our the $X.X long-term quarter, of average approximately the to liner some charter an charter During Of in on quarter, our And balance backlog $XX Approximately XX% is from liner this operators, was derived were including vessels. profit-split years of amount of billion with fuel years liner gross the seven Line approximately four largest million if large and approximately Maersk the contribution by of savings XX% to with on the million of approximately charter end of liner SFL’s approximately fleet at MSC remaining related Evergreen. approximately world's term charters.

million. $XX.X in of VLCCs Group profit-split VLCCs in million share contribution. including company’s million the whilst approximately Our balance increased short-term Frontline Suezmax quarter. was the charter November, tankers to And X tanker generated the shipping the And the the from gross $X.X these XXXX, assets and employed contribution cash $XX in was million the total company repayment $XX.X charters on Hunter to hire. market during generated in $X.X Furthermore, last profit million in approximately financing SFL’s associated charter fleet approximately the million. the net from hire transaction by redelivered the $X.X

During approximately the amount this our derived $XX quarter, charter vessels fleet of our million approximately generated in bulk long-term from dry XX% charters. gross was on hire and

received Seadrill. of quarter charter rigs been to approval. Subsequent have hire generated three During subsidiaries SFL $X in entered the net which agreements court the the the the in final quarter. million owned short-term the charter In in vessels higher into relating to quarter, certain of SFL employed million. the $X.X to subject drilling Handysize had approximately drilling market. a million rigs approximately company to spot vessels XX to quarter, previous And end, and fourth $XX.X shorted compared

profit U.S. to adjusted $X.XX to the While reported of employment performance Taurus GAAP. West million West fourth sub the EBITDA approximately quarter loss continue Hercules redelivered on the $XXX then procedure per The move oil in for This to an onto the West will share. on ensure charters SFL. majors. their We and order and will or summarizes to Linus the as uninterrupted statement

our calls, those accounting traditional As are of different we've from shipping company. described statements earnings previous in a

strategy contracts, part classified charter business long-term as capital our on large focuses our leasing. activities As of are a

from long-term investments finance and excluded as As interest income result, revenues are associates. and and instead loans, of classified GAAP booked a of revenues repayment vessel operating results and a significant portion leases charter in associates in from investments our revenues as U.S.

according charter revenues which So quarter, $XXX of mentioned. total for less GAAP is fourth the we approximately the operating for reported than hire $XXX received the approximately to million U.S. actually just reasons million, of

to quarter, debt charter of The income mark-to-market and of company the non-cash a non-recurring vessels and profit-split the Frontline mark-to-market of $X.X arrangements items of subsidiaries. savings to tanker During vessels. negative on from of to relating FX recorded relating large $X.X investments million. some container profit-split sale company during also positive the derivatives million the related $X.X quarter, FX on charter including million recorded from million of from $X.X And million to hedging $X.X a gain termination equity and and fuel

addition provisions on impairment a the unless impairment the was debt gross with approximately credit of West of loss In repurchased $XXX.X increase debt extinguishment the $XXX company discount, the million. after million. records associated a million to FX in drilling by Taurus partly employing offset at the Furthermore, of $XX.X million rig $X.X

company loss reported So a $XXX net or share. $X.XX million overall, U.S. and GAAP, per of according to the

equivalents debt approximately million approximately SFL charter Carriers in approximately the securities quarter. non-consolidated In sale appraisals. developed wholly-owned fee mentioned as end, as quarter vessels last value approximately the $XX cash at proceeds we quarterly of net had million fee five and held under the $X.X on for subsidiaries sheet, market the subsidiaries that cash consolidated to and from treatment, result, prices approximately will prices, income net on marketable at combined result of balance accounted receive ADS associates the company and of the and dividend to the to subsidiaries. accordance $XX a be SFL associates not sold based vessels charters, the has excluding million Also XX%. based net million of in their SFL, and with That broker of on The the statement. the are revenues, million had $X end the GAAP. distributed with attractive operating cash Instead, Crude Moving $XXX at West subsidiaries approved interest and expect contribution market Furthermore, all rig net a so call, Taurus the applying SFL’s the combination included accounting been during operating equity of as accounted quarter. approximately in these equity the expenses and the drilling interest were as with as not U.S. and from owning of but results these Distribution by liners rigs subsidiaries first recognized method was This wholly-owned investment shareholders. previously from in expenses of in a income associate. well

the things, share profits-splits of Linus yesterday. from accounted balance the dividends. have backlog, West our Consequently, quarter, in fourth reassessed aggregate, and rig shareholders summarize, a During XXth company concurrently related consolidated as to also of Then container to to rate of which the collect the quarterly larger and approximately than has vessels. addition financing to declared SFL of VLCCs and the based savings we consolidated close to XX%. also share, some certain $XX the through fourth dividends And in into subsidiaries cash This per approximately the time Deepwater the more our arrangements of consolidated income share SFL. was charter arrangements upside at on SFL, equity to $X.XX XXXX, debt dividend from statement And represents the in the to vessels, the continue fixed operating fully and change the balance quarter, X.X%, the costs was owning relating consolidation and per our fully Taurus inception fuel Capesize the while SFL items revenues sheet XXXX on quarter price the since company of return profit-split and and terms figures, ratio other for we sheet from among yield or in is billion for all revenues end of $X.X West a October earned to of incurred dividend of assets. Board consecutive from the at Linus

particular give We word for in lower with back business position carbon opportunities have portfolio and that, footprint order investment fixed XX rate new with we the million our charter the on future. backlog for more in explore I last a to to than And with $XXX the operator. to continue actively months the focus assets

will open for questions. line We the

Operator

are and session. answer we the from go you, Jefferies. today now gentlemen, comes Randy question from question Our Giveans line Thank the first beginning ahead. ladies as Please Instructions] and of [Operator

open. Your line is

Randy Giveans

gentlemen, Hi, going? it how's

Ole Hjertaker

Good. Thank you.

Aksel Olesen

Good. Thank you.

Randy Giveans

right. Excellent. All

of balance I looking the kind you're around sheet at sales. So raised share guess in million your and fleet, $XX

sector for also So, the then year? what kind any are or acquisition at target subsector? of near-term, maybe notes in what plans later maturing the looking refinancing convertible And you here this

Aksel Olesen

Yes. Thanks.

in replenished what and prepaid and we did quarter Taurus the So, before quarter effectively cash prepay in have had, on fourth we know, to done, more million investment unit. loan we that West the relating the $XXX as capacity we you than the we more that than third have

in the we I and you company, capacity through Seadrill. also raised to less have has opportunities what in generation had acquisition an careful, the uncertainty of $XX also unfold say and at year, been that continuously course, the XXXX, So, little addition our is could market. been itself, would relating we’ve in charters say to illustration cash there of than flow We extra looked drilling a to the rigs million because in in somewhat the would

for there more that visibility I think is filed Chapter have now, XX.

get are offshore where looking say and I robust opportunities. We segments, oil related. will at We reluctant liquidity have obviously, product on and naturally course, guide are would segments, of many specifically generally we to continue don't maybe we

years company the the combination forward. come footprint all reward we also will carbon a, as the we where think from and hesitant that are right, on it's call about going also perspective, it but, We we over risk develop finding the of

XXXX to for new look we specifics, transactions and remain focused will hopefully at. be no but on you there deals in adding importantly So

Randy Giveans

Sure.

convertible on with the Okay, that any and color notes, then there?

Aksel Olesen

forgot October. that? comment I yes, we course, Yes, in that Sorry, coming due know to of on is

So months until still many that.

we capital as We markets are have there and cash And position is. the a believe, decent it available.

time certainly we So, final maturity. is ahead address that the there to course that ample well and of in think due

Randy Giveans

it. Got

or very obviously, markets are dry been but significant your then is much here of side, strength and sector And certainly that on exposure, spot most that Okay. long-term the right, charters, on don't a of seen strong, on vessels that containership in we've you bulk, terms that, have have what some have in is last just in with With spot the short-term spot vessels. to rate? you you market And here of you Handysize, amount operate continuing plan to in a the Supramax those are exposed few weeks. decent the lock on looking strong time do charters

Trym Otto Sjølie

speaking Sjølie Trym exposed for now. it. Thank being mean, right quite to I you we as market is the see spot now the question. positive Yes,

a the is Supra of or only of the will full, of take more I enjoy at three hot day. spot which less will with mean, Handysize the short spot this we have We almost per contracts, plus that sort pretty XX,XXX and Handy, at we market moment. the market means base seven week

may a vessels to I really looking lock longer or year sort mean, We up course of some it charges, good. some it's on depends. of sort of So in so. But

market vessels We for these are comfortable spot staying with in short-term the now.

Ole Hjertaker

more our that, long-term course, term of as with typically focus longer of philosophy business of charters. But is, or our the

can see these eventually, them and we have of assets, So, on secure out. it charters where cash then how flow reinvest this plays market long-term call And if back we we will get waiting in really we cannot to assets divest sort visibility. are we of sort

Trym Otto Sjølie

quite space came for really time as firm X-Ks hope Golden to some the charter being. also our get profit on Ocean in the And market to from

Randy Giveans

right. I guess makes of sense. question. what financial modeling of? other did And quick consist gain saw it? the that $XX million, That I Got All items last

Aksel Olesen

in debt of dividend. with that’s Well repurchase the relating the connection to

Randy Giveans

for thanks Well, deal. time. Good it. the Got again

Ole Hjertaker

Thank you, Randy.

Operator

And from Capital. your question Castlewood ahead. Richard comes the go of line from next Diamond Please

Your line open. is

Richard Diamond

Yes, good morning, good everyone. afternoon,

want identifying large My question attract the it's canvas be we're Finally other you shareholder, in team commend well shipping an you? looking for what think interest And you issue and of you the some it Seadrill as as could going and forward say there's be Where a going Ole to of I great to is, container class? I is not extraordinarily much opportunities areas positioned. for at can tankers resolved. doing that value job a in fairly or do and

Ole Hjertaker

are interest has you a the you there thank that technology, a also Yes, from typically But or words. it space are no customer technology think for And say securing spot on customers call transition lot Unfortunately, kind or in transportation. I look things towards will really focus liner area term maybe to to no is where maritime various that requesting and we general that we of it the call also also improved again, willing have We And where for the sort as the out, it longer our this at try neutral I point our quick we it seen to end side. there shipping. their user maritime it greener time-to-time, do many new also working as on assets, call systems. COO spends of And can in Richard. Trym out see carbon thanks time evaluating earlier as pay is and is charters is would green to broad you more Sjølie today And while on look are the call is fully market. setting. there I type this you new there, fix we, been our mentioned up of are and a now technology call because

assets for So with technology. our propulsion car efficient, side, of more dry typically say energy be newer assets. liner also that on the could side, container, and kind those interesting would carriers focus bulk I Also on the the area, opportunities

high the not footprint to to part side in is reluctant. as tanker too a very exposure negative, because opportunistic, have it. more the the that product as is we emission transporting, that, the sector, side, run, think That's we long a are always tanker while On are COX much we which also having

also but think us. core general, potentially sectors we in there it's that side, on for where opportunities of the balancing we liner act, outside and also growth focus be So new segments, our a current could

on the So, a building, But little we or we we portfolio happy and are too now. a in back dollar of SFL to any not had transition, that on trying years very we're very invest going vague little specific to we not amounts there, typically, sector. that sort be percentages specific are remember, some concentration vessels, I'm have only of don't we focused that that tanker ago, in segment and kind

Richard Diamond

been talking today I'd opportunity the by love when of six I'm at order set and L&G your And other looking in a to apologies long except wonder if a past? thoughts. I'm has the the very points book which career. better. thinking are contrast for various issues. there segments. flex forward versus few lot And in outlook have the time year I've months valleys to you your given the I'm that

Ole Hjertaker

many tanker a shipping in general, to back recoveries, low the and And it's interesting it seen demand, space, the time, of the absolutely pickup. we've or call a books, because a over many also, can forward. step think, many the books. In on owners going oversupply years, means standard and be with this. market, very holding with in therefore, not killed low historic where in, smaller focusing developments market long you typically ships, which in propulsion more banks capital from sort assets correct. of you've a and too of investments, many a like a markets what run capital, and sort marginal vessel any you is change now, shipping owners. see seen out it's have because to making concentrating are and on the order order difficult are any to these and I now quicker will it's larger invest prior technology, to sure call quality markets, speculative assets. the I the caused many you're than in again, and time, who call would in traditional the at periods their vessels too been quickly they're the same expect, owners vessels the who cycles, you which and have it eager, would And order then such little out fundamental like that and owners I lever look take the question, by see to of sort would many it intensive it since But quite to change shipping dry bulk, also would back over more say if the that to like we owner access just customers. highlight The ordering go what new by maritime because order And And at Yes, change the the

combination hope and but profit you see some to interesting So degree can you positive I of the think volatility Trym and course, correct. assets. we that we And market spot we we are could the where you have many on we of also an is this, catch a benefit the if dry can, absolutely triangulation as tanker the shares volatility mentioned, market and in we now, can much bulk in to higher from of these have sub way try of segments,

call this We haven't of for seen, you it years. many, violence kind market many

Richard Diamond

very Thank you much.

Ole Hjertaker

you. Thank

Operator

Our from BTIG. the next from go Please ahead. of line Greg question comes Lewis

open. Your line is

Greg Lewis

everybody. good afternoon, Yes. you Hi, and thank

Ole Hjertaker

Hi.

Greg Lewis

as these, got Richard’s this we'll and you've to to most some trying much I take there historically, realizing assets Finance the vessels really, of curious, comments because And, counterparty. a it about reasons bought advantage they on going around, endeavors? I different is, seems maybe I these about a of of thinking thinking for of say, rid opportunistically maybe to be other as assets, that, that read about sell of dry about, me, I bulk are think there am way. and tell was think useful cycle excited I'm maybe between some like But may lines. the tankers. the I'm this part commodity for or run and that or, wrong? the I'm want Ship those shipping, But just some Or either of this like to into wrong life the a be cash cycle, pretty kind fleet, restructuring by that look we types the feel could this at free our be cycle and contract, through SFL recycle about to And I in guess,

Ole Hjertaker

Finance, you're two thinking SFL, and, it think, we which No, as your referenced is and now ago, us wrongly, Ship and our name, years it’s pinpointing change company reference name about to maybe to your it, we… not I a is, previous

Greg Lewis

it, corrected it. I I corrected

Ole Hjertaker

have answer, you put know, our long-term type focus can how cash model the your i.e. on leg sort maritime our I is create, flow sustainable, dividend there. dividend for But, industry. predictable focused how generate a a we can we I of to investors,

we So, the to, if typically where potential assets, reinvest we typically asset, like in but typically do, vessels. off for. modern as always relatively shorter in see you typically customers periods longer what older term that's they as would get build it holder when we and see also charter we we divest that our they we build newer the Because, assets, charter assets for life come of charter

rates it of call commodity in benefits, term that, influence charters. willingness stronger an up also that companies pay the on of is course, to higher One spot and with quality, longer our short-term market, for these markets, of has

a an lock going where also for because is if flick an rock long-term transition as this, we the you level that market the best long-term, good in over focus for it's say on a change it with a carbon just it process. bottom. charters it's higher about because it's of switch. it's would we if has And So time. longest can why effect call at than invest have into increasing of us with you a not that the tried potentially But vessels But us, footprint, a on we because indirect the improvements, best you market can, be to efficiency to have you sustainability because all ahead impact a need it And as of that we curve there just it's spot on fuel as to is for focused the could dividend. think shareholders. long-term value is we And really we as

Greg Lewis

that that helpful. Thank was you. super Okay,

Ole Hjertaker

you. Thank

Operator

go next from your from Riley. Thank B. you. Please ahead. the And comes of Burke line question Liam

Your line is open.

Liam Burke

Good afternoon. you. Thank

the discussed of in We talked capital course debt, where about the fleet, your lie allocation the dividend your the call terms strategy? today. capital in asset priority allocation to You of of allocation terms does

Ole Hjertaker

two things. then of capacity. assets. securing how on employment focus the the of of flowing to We the long-term assets, on, a up supporting to what focus dividend company Well, is If typically We we can focus And and focus lot capital is specific is it structured, and is a more don't company to SFL, course, say primary on assets. these net you these on dividends, long-term assets this do, owning are call what that, income we you percentage how we you parent net we have say, that is as that but refer set our financing, parent of from the that can

the So, numbers accounting, sort sure that in not have the similar it I'm or and was some think, features to quarter-to-quarter, helpful accounting spot assets also some for And And for reflection of we have more not the and don't structure has airline with dividends instance. call that it net is really you. we been charters, very it affecting call non-cash are companies that on which an items. impact, that factors see what industry, of reported. more as the have how maritime long-term say, many necessarily how you I many see if long-term, of like oriented could because there we deals income more from therefore also quarter-to-quarter a lease some is we because, you many said, call

Liam Burke

the you have of in is continue if No, operating be as your agreement that to it assets look when discussion, financing looks forward capital spot going or down leasing walking market? typically especially any is part there is or it's form more helpful. mean, you, or in to adding allocation, it or but you is I mean, current one the debt? market to I this attractive at what be That the of charter spot to assets

Aksel Olesen

charter, to each et we project, depending age, asset what financing each do much think an overlay the charter optimal and to I Yes, on tried cetera.

improve build basis, So but terms, trying relationships. depends always it financing on bank the to really case-to-case

of XX is look hands, Taiwanese I in currently the you attractive us think model the approximately banks, And to ship Japanese bank have et on years, very If Japanese for it's banks, banks, banks they other the with at to strategy. portfolio capital. business the like few last migration we That the providing extensively the group, east, bank we owners similar cetera. conservative with

to creating fulfill arbitrage. going development, business the and financing of our attractive finding most that's So part that

Liam Burke

Great. Thank you.

Ole Hjertaker

Yes. Thank you.

Operator

Instructions] Chris [Operator Please line from you. Your of Wetherbee next Citi. question go the from ahead. Thank comes

open. is line Your

Unidentified Analyst

Chris. Good Hi, morning. for guys, James on

to you've of down you've you Like priorities previous equity on follow bit little sold the your some some wanted and for assets, vessel have capital raised questions around improved, Just the a allocation. paid of up debt. values

to thoughts? thinking you've understand about leverage but makes of get that to for I around thinking this just the Are structure at on kind here your there opportunities leverage how Just sense the point cycle? wanted about are how wanted your commented capital wanted were to you understand there going in you just broadly, converted, in

Ole Hjertaker

financing project call it maybe in minimizing is is we is we a sheet on matter, then, that we we that can this to assets course, when put what say on we optimizing, structure balance if SFL five try can. recourse the leverage we what around package one quality we specific a structure, to in can of or that And at capital level you call raised. Yes, the have a and if loans do equity as our put in it it to of equity project for the may deal as internal corporate combination it, And call what project convertible that you deal. it if four cash can asset an call we we focus then or that the we holding including is say debt it's call tried focus to you together look an can from call call typically optimize that flow you have it at or new silo,

capital we been utilizing in has there also been investing, -digit nice returns, type double of a by the as arbitrage have capital at call that So way. that it type

rig from well the the it’s at the drilling really a where debt. projects now, the we try we've collection So we that, every i.e., for try risk look we if rigs. something situation silo And between they're it flow silo, it you the instance, and repaid the that just happens, situation no than if cash bearing of like assets, had That all us, as interruption and around eliminate in quality to with and isolated our where out streaming on their this to optimize each silos, of call around Seadrill been more on, what situation drilling XX any it is going asset without in totally along. and filing has has should other on

to something, So don't and can it's the on because it increasing it's from And put us a we soon. XXX%, money shareholders flow over the we mix In there's capital, of, course, build dividend then no any and we supporting to we thereby invested. structure for a project up? so are And you of capacity? again, for have hopefully use capital then perspective leverage real cash risk coming point distribution do, focus how time optimizing a do always

Unidentified Analyst

understand, cuts, thinking to gone through think se, do make you about way would experience the through across side could what change of on potentially figures moving moving gone given learned be maybe you've about How like forward on lessons forward? of structure about just just the should or you've sort And maybe side the what are it. might fleet dividend, to that possibly what the the capital two XXXX? sort the it the on per Got wanting

Ole Hjertaker

XXXX think an price would reasons. the I and market collapse say, was with year, for the with oil a we the in disruption the an year, We COVID-XX in wrong I as early exceptional had know, Yes, collapse. all the

if a over we that at industry sort the then of, time was it the very the for more it than year. So, year, offshore the call whole how different outlook and than developed back, step

this in the last So, reducing are ensure contributions the those by was we have that capacity. SFL all some taken assets dividend And steps distribution from designed period. in from the really painful reduction eliminated offshore to

as more space. situation. in this So can visibility visible and in SFL as level the other that it's sustainable offshore not the corporate assets, our we for our will guide a projects, always forward something the in really it's has on more hope as new hopefully a from on But then, hopefully, side have then And I never Board with dividends. is analysts, we And investors by the something, at look that, affected better also, right. the policy, also of timing invest That capital doing to hopefully is reserve a dividend. matter positive we

do about And dividend we will course, our when would cannot I you, to the so I Otherwise, if have of failed. that. objective but here and tell something say be increased, it's

Unidentified Analyst

one potential charters, that's conditions that actually of And I the what and potential something on happened step was for a was the this sub happen if still just on the of could in it. out terms Got guess, offshore of down might a to just something of wanted in terms into like that. got kind of like sort that talked Well, the then like worse, road, still further longer upside, of to up of sort follow is some that around sort potentially looking understand term? of, about you'd table recovery actually if

Ole Hjertaker

disclosed the press Yes, XX and on thank specifically I given Unfortunately, rigs the the cannot really have we what in more in you. process any ongoing, release. Chapter Seadrill. comment

restructure no the and important the that rigs on outcome to more there working service. goes sure for the for where the will Of a Chapter sure course, as is call the that on be are clarity and other thing the the And I'm financial two of time stakeholders proceedings et balance sheets, majors it ensure impact the process cetera. typically and stakeholders Seadrill is activities on, for remember, also oil us for uninterrupted process those remain, I'm while unaffected, business in all continue owners, XX

be are rigs very cannot of the But after counterparties. two are charters guiding happy any that, our with I on what proceedings. good see on more we strong specific to XX these Chapter So, could give

Unidentified Analyst

it. Got

already, the more of concern. about do talked sort you've up have of tanker couple ESG which on sense to point, an and one is but market Some times makes cyclically, you something seemingly follow a it

is And as that appealing to So, those you as concerns about, that broadly sector the have? interesting, like might mitigate for that's still opposed talking find some in space types something there of might that all particular deals that the you are me. of

Ole Hjertaker

on We vessels. footprint we it to both try and fact weighs, ESG it that factors that, consume on type we from that of But is less be also the say segment, being focus not said a on down guiding we that any see on primarily And factors segment transport forward. would in emissions where call of concerning but particularly I invest on but haven't call focus our a oil, appetite but on the now. course, excluding have carbon segments we that as too specific vessels, are we we run, are going our I'm that oil saying they tanker as

Unidentified Analyst

you. Thank

Ole Hjertaker

Thank you.

Operator

time, carry on. further this no at questions are please There

Ole Hjertaker

disruption Then thank and conference I all for in call. fourth the also quarter situation team onshore. everyone like the boarder you. And Thank for their COVID-XX vessels caused SFL by on challenging our with a efforts participating both thank would the to in time

in release. on up If www.sflcorp.com. the you details contact there you. through have with are Thank webpage, And you in our get press any questions, our can pages touch follow us contact

Operator

now today. participating. disconnect. for you conclude does you may for now That all all our Thank conference And

SFL (SFL) 17 Feb 212020 Q4 Earnings call transcript