Archer Limited

Thank you, Kenneth. Good morning, and thank you for joining Archer's First Quarter 2026 Results Presentation.

I am Dag Skindlo, CEO of Archer, and I'm joined today by our CFO, Espen Joranger. We will start with Q1 highlights and key developments, then provide an update across our business areas and finally, cover our guidance and capital allocation priorities before opening the line for Q&A.

With that, let's move to Slide 2. As a reminder, today's discussion includes forward-looking statements and certain non-GAAP and IFRS measures historically.

These statements involve risks and uncertainties, and actual results may differ materially. Please refer to the presentation and our disclosures for additional information.

Let's move to Slide 3. Before we get into the quarter, a quick reminder of who we are.

Archer is a global oil service company with more than 50 years of operating history. In 2025, we delivered around $1.2 billion of revenue and generated EBITDA of approximately $167 million.

Our year-end 2025 backlog of about $4 billion includes [ options ], provides strong visibility across our core markets. We operate across 4 business areas: platform operation, well Services, land drilling and renewable services with roughly 3,500 people across 40 locations.

With that context, let's move to Slide 4 for the key Q1 takeaways. Q1, traditionally a slow seasonal quarter was another solid quarter with good underlying activity and continued margin improvement across our core operations.

Reported revenue was $278 million, down 7% year-on-year, reflecting the divestment of our Argentina workover business. More importantly, excluding divested workover operations, revenue increased by about 15% year-over-year.

EBITDA of $37.2 million was in line with Q1 last year and up around 12% year-on-year when excluding the divested workover business. The EBITDA margin improvement improved to 13.4%, up from 12.5% in the same quarter last year.

Adjusted EBITDA was $41.1 million. As with revenue, reported year-on-year change is affected by portfolio changes, but the underlying development in our core business was positive.

Operationally, we strengthened backlog through new awards and extensions, including 2 integrated P&A contracts with Equinor and a contract extension for wireline services with ConocoPhillips. We did complete the divestment of the workover business in Argentina.

In Argentina, we now have focused on the growing drilling and completion activity in Vaca Muerta. The transaction is an important step in simplifying our portfolio and sharpening our focus on core higher-margin service lines.

Subsequent to the quarter, we continued to execute on our strategy and were awarded 2 contract extensions with Equinor as well as an integrated geothermal drilling contract in Nevis for Iceland Drilling. Finally, we continued our shareholder return program with a distribution of $6.4 million in Q1, and we have approved a further USD 6.6 million for Q2 distribution, corresponding to NOK 0.62 per share.

Let's move to Slide 5. This slide highlights a key strength of Archer, resilient EBITDA and consistent margin expansion.

We have delivered strong annual EBITDA growth of 21% since 2022 and 13% annualized since 2017, driven by both organic and M&A. Even in a somewhat challenging market environment, Archer underlying performance was -- has continued to improve.

In Q1, our EBITDA adjusted for Argentina divestments has developed very favorable compared to industry peers, which in average declined by 10% year-over-year. The takeaway is that our exposure to essential brownfield and P&A activity supports both robustness and margin expansion.

Next slide, please. Turning to Slide 6 and capital returns.

We have approved a cash distribution of approximately [ NOK 6.6 million ] for Q2, equal to NOK 0.62 per share. This marks the fifth consecutive quarter of distributions under our shareholder return program.

At today's share price level, the direct yield remains attractive and is competitive relative to our peer group. Let's move to Slide 7.

Slide 7 shows the foundation of our outlook, a USD 3.4 billion backlog, implying about $550 million in EBITDA backlog. We have started the year strong with about $420 million of firm contract value added to our backlog year-to-date.

The backlog additions are characterized by multiyear duration, strong counterparties and an increased share of integrated scope, which all improves execution control and revenue visibility. Key awards include Equinor Subsea P&A execution scope covering 30 wells on the Norwegian continental shelf, and integrated deepwater P&A contract in the Gulf of America and the wireline and intervention extension with ConocoPhillips Norway, supporting platform-based well intervention and production optimization.

After quarter end, we also secured additional extensions with Equinor, including a 2-year extension of our frame agreement for the provision of P&A solutions, fishing and downhole mechanical installation services with an estimated contract value of NOK 700 million and a separate wireline intervention service extension worth about NOK 1.5 billion for Archer. Through Iceland Drilling, we also secured a geothermal drilling contract on Nevis Iceland in the Caribbean.

The contract value is about $45 million. Overall, this reinforces our position as a leading provider of intervention services and integrated P&A services.

Next slide, please. On Slide 9, we reiterate our financial guidance for 2026.

We continue to expect single-digit growth in EBITDA for the year despite the EBITDA shortfall following the sale of the low-margin workover business in Southern Argentina. We expect continued margin expansion, an estimated 2 to 4 percentage points improvement from 2025.

EBITDA in the second half of 2026 is expected to be 10% to 20% higher than the first half due to timing of project start-ups. Timing has changed slightly from our initial guidance in February with a stronger first half following higher activity and favorable product mix and some delayed start-ups of projects impacting the second half.

CapEx is expected to be 6% to 7% of revenue in 2026, driven by growth investments to secure new contract awards, while maintenance CapEx remains stable around 3% of revenue, in line with historic levels. With that, we'll move into a brief business update by segment.

Espen will take over from here.

Thank you, Dag. Starting with platform operations.

Revenue in the quarter was $107.1 million, up 1% year-on-year. EBITDA was $14.2 million, and the EBITDA margin was about 13%.

Operationally, we suffered from down-manning by about 200 employees in Brazil as we ceased the Peregrino drilling and maintenance contract. We have had this contract since 2010, and we want to thank our teams and crews for outstanding performance over the period.

At the same time, we see high activity across Norway operation. And in U.K., we initiated mobilization and recruitment to support upcoming activity growth for second half of the year.

Overall, platform operation remains a core contributor with resilient earnings supported by long-term contracts and disciplined execution. Next slide, please.

Moving to Well Services. This was a strong and seasonally favorable quarter.

Revenue was $83 million, up 22% compared to Q1 2025. EBITDA was $16.2 million, up 11% year-on-year with an EBITDA margin of 19.5%.

The quarter benefited from higher activity in Norway related to P&A projects and high product sales in U.S. From an order intake perspective, we continue to firm up backlog.

We were awarded contract extensions across -- sorry contract extensions across wireline intervention services with ConocoPhillips and Equinor, secured an extension with Equinor for P&A solutions, fishing and isolation services and awarded a DMI contract with Equinor in Brazil. The key message is continued strong activity and improved visibility in intervention and P&A operations.

Next slide, please. Turning to Land Drilling in Argentina.

Reported revenue was $48.4 million, down 24% from the previous quarter, driven by sale of the workover business in the South. Adjusted for the divestment, underlying revenue was up modestly and EBITDA improved significantly year-on-year.

Margin in the quarter was strong at 18.2%. Operationally, drilling activity increased by 1 additional rig in Vaca Muerta, and we completed the sale of the workover business during the quarter, an important step in simplifying the portfolio and focusing on the higher return operations in Vaca Muerta.

The market backdrop in Vaca Muerta remains favorable with continued demand for additional drilling capacity in the basin. As previously announced, we will mobilize the 2 rigs leased from Patterson for YPF late in Q2.

At the same time, as clients are asking for more additional drilling rigs, the supply side remains tight. Increased activity in the U.S.

land market, combined with additional demand linked to Venezuela is limiting the number of rigs available internationally. Overall, these dynamics continue to support a constructive outlook for utilization and market fundamentals in Vaca Muerta.

Next slide, please. Finally, Renewable Services.

Revenue in the quarter was $39.8 million, modestly higher than previous quarter with EBITDA of $0.9 million. Iceland Drilling performed in line with expectation, a soft quarter as 2 rigs was in transit from the Philippines.

However, we secured an important geothermal drilling contract in Nevis for about $45 million. The rig is expected to start operation in Q3 this year.

Within Vertical Wind and Offshore Services, we experienced seasonal lower activity in Q1, but with stronger demand firming up for Q2 and Q3. The floating offshore wind substructure project has experienced delays and higher-than-planned costs, and we continue to work closely with the client to achieve safe and efficient completion of the project with current expectations for fabrication finalization during this summer.

Next slide, please. Let me take you through the condensed profit and loss for the quarter.

Revenue in Q1 came in at $278 million, down around $21 million year-on-year. However, this decline is fully explained by the divestment of the land drilling workover business in Argentina.

Adjusting for this, the underlying business increased by approximately $35 million, mainly driven by higher activity in Well Services. EBITDA before exceptional items was $41 million, corresponding to a margin of 14.8%.

This is slightly below last year, reflecting mixed product sales and the mentioned divestment of workover business. We recorded exceptional items of $3.9 million, mainly related to the mentioned downsizing and manning reductions in Brazil.

Reported EBITDA was $37 million, in line with last year. On a like-for-like basis, adjusting for the divested business in Argentina, EBITDA is up around 12%, demonstrating solid underlying growth.

EBIT ended at $16 million, down from $18.5 million last year, mainly reflecting higher depreciation and one-off effects in the quarter. Net interest expense was $13 million, significantly lower than last year, reflecting the refinancing completed in 2025.

This resulted in a net profit of $3.6 million for the quarter compared to a loss last year. Adjusted net income came in at $6.7 million.

This adjustment excludes exceptional items and other nonrecurring or noncash effects, providing a better reflection of underlying earnings. Overall, while reported numbers are impacted by portfolio changes and one-offs, the underlying business continues to grow with improved activity and solid profitability.

Next slide, please. Let's move to the balance sheet.

Looking at the asset side, total assets ended at just over $1 billion. The development from year-end is primarily driven by the reduction in assets held for sale following the divestment of the Argentine workover business.

At the end of the quarter, we had available liquidity of $61 million and net interest-bearing debt of $469 million. As a reminder, the first quarter is typically a cash challenging quarter for us, building up working capital.

This is driven by seasonal buildup of working capital and timing of our semiannual interest payments. In this quarter, specifically, cash flow was impacted by the mentioned biannual interest payment on our bond, removal of the Norwegian guarantee related to employee tax and a temporary buildup of working capital.

The working capital buildup is related to increased activity revenue in the quarter and Archer Wind, where we have seen delays in client approving change orders and one vendor failing to deliver. On the liability side, total debt remains broadly stable with long-term debt at approximately $423 million.

We do see an increase in the current portion of interest-bearing debt, which reflects drawing under our short-term Ora facility. Equity ended at $118 million, broadly stable compared to year-end.

Noncontrolling interest of around $20 million mainly relate to our ownership in Iceland Drilling and Vertical Services. Overall, the balance sheet remains solid with stable leverage and sufficient liquidity, although temporarily impacted by normal seasonal effects, timing of cash flows in the quarter.

Next slide, please. Firstly, shareholder returns.

We remain committed to regular and sustainable quarterly cash distributions and to increasing distributions over time in line with earnings growth. Next, M&A.

We remain selective and disciplined, focusing on accretive bolt-on acquisitions that are synergistic and cash generative. Thirdly, CapEx.

We expect investments at moderate levels, targeting total CapEx of 5% to 6% of revenue over time. We prioritize growth investment with attractive returns in the 30% to 50% range -- and in Argentina, our CapEx program is designed to be self-funded.

Finally, balance sheet discipline. We target a long-term debt -- long-term leverage ratio of 1.5 to 2x, maintain solid liquidity at all times and aim to reduce overall cost of capital in the long term.

With that, we will open the line for Q&A. Operator, please open the line for questions.

Thank you for joining us today. We appreciate your continued support and look forward to updating you again next quarter.

Have a good day.