December 1, 2022

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Debt free and equipped for big profits

Debt free and equipped for big profits

The Fredriksen-controlled NorAm Drilling IPO reported a strong increase in both earnings and operating profit in the third quarter, according to Stock announcement Monday evening.

Fleet utilization ended at 98.9 percent compared to 94.8 percent in the second quarter of 2022.

On average, base daily rates were $25,200 per day, which represented an increase in daily rates of 17 percent from the previous quarter.

Revenue thus ended at $26.5 million, up 19 percent from the previous quarter. Operating profit before cuts increased 104% to $8.4 million.

The company is also hinting at good fourth quarter prospects.

After the start of the third quarter, we closed five contracts with average daily underlying prices of more than $31,000 per day, the company said in the exchange announcement.

(million US dollars) 3. qv. / 22 3. qv. / 21
Billed income 26.5 22.3
operating profit 3.7 −0.6
The result is before taxes 1.9 -2.4
The result after tax 1.5 -3.6

Rigged for a 25% dividend yield

When NorAm went public in October, they announced that it would become a full dividend company. Management previously stated that the company will pay all free cash flow in dividends to its shareholders after debt is paid off.

In October, Pareto Securities, which also facilitated the IPO, estimated a dividend yield of 25 percent in the future.

This makes Noram one of the stocks in Norway with the highest dividend yield, Christopher Mo Deje, Pareto analyst at Finansavisen, said a month ago.

The company recently raised NOK 800 million in an issue that was to be used to pay off a bond loan of about the same amount.

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During November, Noram paid off the bond loan in full, Noram reported in connection with the quarterly numbers. Thus the company is debt free and able to pay dividends.

In the past month, the company is up 24.4 percent on the stock exchange and is at NOK 56 at the time of writing.

In mid-November, Pareto’s price increased from NOK 56 to NOK 70 due to higher than expected daily rates and price increases in comparable companies.