SFL Corporation (UG6) Q3 2026 Earnings Report

The call was strongly positive overall. Management highlighted record-length shareholder distributions, approximately $5 billion of backlog, more than $1.6 billion of backlog additions during the year, strong liquidity, diversified fleet growth and significant expected proceeds and gains from the tanker sale. The main negative items were lower adjusted EBITDA, higher operating expenses, zero current-quarter revenue from Hercules during mobilization, lower reported tanker revenue and 50% energy-sector utilization. The number and scale of the highlighted achievements significantly outweighed the stated challenges.

Management expects to secure long-term charters in due course for the two unfixed car carriers with delivery positions in 2029; Hercules is preparing for a 400-day drilling campaign in Canada from March onwards next year, with the contract expected to commence in March '27, and is expected to generate significant revenues next year, while elevated rig operating expenses are expected in the fourth and first quarter. The two 8,800 TEU vessels are scheduled for delivery in 2027, the three ammonia carriers in the second and third quarter of 2028, and the 14 newbuildings from the second half of '27 throughout the end of 2029; remaining capital commitments total approximately $1.7 billion and are expected to be funded through a combination of existing cash and primarily pre- and post-delivery credit facilities. The company plans to keep one Suezmax in the spot market for now and may find a long-term charter down the road, while the two Kamsarmaxes will be kept in the spot market for now; the next vessel to come off longer-term charter is in 2028. The Trafigura tankers are expected to be delivered during the fourth and first quarter, with an aggregate book gain of approximately $175 million recognized over the next 2 quarters.