Ole Hjertaker: Yes. I appreciate that. I mean the Hercules as you mentioned, we just spent quite a bit of money on that rig in the first and second quarter of the year when it was out of service. And now it’s really only got started. So the charter rate in Canada, that was fixed more than a year ago. So it was at a lower rate. So that charter rate should be mounting now, as it is expected to start drilling in Namibia, already next week. And the charter rate in Namibia is based on the — if we include both mobilization to and from Namibia under drilling rate, should be well above the drilling rate we had or the rate we had in Canada. And then it’s going back to Canada later next year, for an even higher rate. And in fact, the drilling rate we have on Hercules, it’s the highest drilling rate I would say in this cycle today.
So this rig is a very capable unit and customers are clearly willing to pay for the services. Of nature, that market is a shorter-term charter market. So this is not a market where you normally get sort of 8, 10, 15-year charters. It’s typically shorter charters and we have deliberately not been so keen on fixing it long term because we see this market really building and you don’t really want to fix something at the low end of the cycle. We think this is a cycle that has legs. And therefore, we’re holding back a little bit before we want to – what we say look for really long-term charters on that unit. I think if we were to look at long-term charters for the unit you would have to accept lower rates than what we are fixing it at currently.
So that’s one asset. Of course, it’s a big asset. But also, if you look at the history of that drilling rig, I mean, this is a drilling that used to be on charter to sea drill. Sea drill ended up in two Chapter 11. We were offered in the last round a very — in our minds a very poor call it treatment in the restructuring. We decided to take it back. And I think we can be honest and say, it’s been a really good decision from the company side to do that, because returns we’ve had on this rate now with the rates we see is spectacularly better than the alternative would have been. But that is the history and the setting around that rate. If you look at some of the other assets look at the car carriers that, I think it’s sort of a segment. We used to have two vessels then we ordered the four vessels and we bought another vessel and then we have this quite spectacular both the transportation, if you could call it that on two of these vessels where we make more than 10% of construction costs just moving the vessel from Asia to Europe.
So you have a lot of other bits and pieces here that’s also generating a lot of cash flow. And then we have the re-chartering of the two older vessels to Volkswagen where we increased the dividend by times five compared to where it was originally simply because we own those assets and we negotiated it and Volkswagen seem to be quite happy with the service we provide them. So the rig is one piece but there are also other elements in our portfolio that is also adding. And of course, our mindset is yes our principal objective in SFL is to return cash to shareholders. I mean, that’s why we’re here. Otherwise there would not be any point in having a company like SFL, if we don’t really do that over time. And it’s been 79 quarters now and we’ve been always made money operationally every single quarter based on our distribution.
So I think yes — I think that, we are really just at the starting point in our minds so where we in terms of cash flow from some of these assets. So hopefully, there is more dividend potential also going forward.
Unidentified Analyst: Yeah. Super helpful. Thank you for that. I did want to ask kind of a bigger picture question. Clearly, across the more conventional shipping space where it’s definitely a market that you continue to look at and have assets and as SOFR has gone up, spreads have gone up. How has that changed the potential opportunities for SFL i.e. I’m talking to some ship owners and they’re looking at 8%, 9% or even higher borrowing costs. Has that created more opportunities for SFL i.e. is the transactions team busy here as we sit here in November relative to maybe where they were earlier this year? Or is it hey, the market’s been good for a couple of years and it’s kind of steady as she goes?
Ole Hjertaker: Yeah. It’s a good question. I mean if you go back to 2022, we screened or did really work on more than $20 billion of potential deal flow and we ended up doing one in the end for various reasons. I think this year has been — the volume has been lower in aggregate. And I think with the rising interest rate market, it’s also I would say the way we see it, it’s a time lag from where the underlying metrics and interest rates is one, asset replacement cost is another, maybe to a certain degree operating expenses to the extent there has been call it a little inflation in those metrics. It takes a little time for that to filter through in a customer’s willingness to pay off for those services. So that’s why I think 2023 has been I would say the more interesting deal flow opportunities has been I would say on a gross number, a little lower than 22%, but I think this is going to pick up again.
