Ole B. Hjertaker - Chief Executive Officer and Chief Executive Officer of Ship Finance Management AS Harald Gurvin - Principal Financial Officer and Chief Financial Officer of Ship Finance Management AS

Fotis Giannakoulis - Morgan Stanley, Research Division John Reardon Eirik Haavaldsen - Pareto Securities AS, Research Division

Good day, and welcome to the Q2 2013 Ship Finance International Ltd. Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to your host today, Ole Hjertaker. Please go ahead, sir. Ole B. Hjertaker: Thank you, and welcome, everyone, to Ship Finance International on our second quarter conference call. With me here today, I also have our CFO, Harald Gurvin, who will take us through the financials; and also Senior Vice President, Magnus Valeberg. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. These statements are based on our current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include conditions in the shipping, offshore and credit markets. For further information, please refer to Ship Finance's reports and filings with the Securities and Exchange Commission. Net income for the quarter was $25 million or $0.29 per share. Aggregate charter revenues recorded in the quarter, including 100%-owned subsidiaries accounted for as investment in associate, was $153 million, which is in line with the previous quarter. This is excluding any cash sweep from the Frontline vessels in the quarter. For comparison, in 2012, the average cash sweep was $0.16 per share per quarter. The EBITDA equivalent cash flow in the second quarter was approximately $121 million. And last 12 months, the EBITDA equivalent was $523 million. The Board of Directors declared a cash dividend of $0.39 per share, which is in line with the previous quarter. The $0.39 dividend represents $1.56 per share on an annualized basis or nearly 10% dividend yield based on the closing price yesterday. We have now declared dividends for 38 consecutive quarters, totaling more than $16 per share since 2004. In the second quarter, and including all 100%-owned assets, more than 50% of our charter revenues came from offshore segment, less than 30% from tankers and the remaining 20% split between our drybulk and container assets. We have invested nearly $1 billion this year and see additional growth opportunities, particularly in the container and offshore segments. With the robust financial position, we believe we have significant firepower for the right opportunities. The recently ordered newbuildings will be delivered in 2014 and 2015 from Daewoo's main shipyard in Korea, who are also building the 18,000 teu newbuildings for Maersk Line. These vessels will be built to very high specifications, including high reefer capacity and the latest in eco-design features. As a consequence, our vessels will be best-in-class in terms of consumption and can be operated efficiently in a wide range of speeds, providing a lot of flexibility for container lines. The 9,000 to 10,000 teu class is regarded as the new Panamax size. And while even bigger vessels can traverse the new extended canal from 2015 onwards, this size will have more flexibility in container ports with size and depth restrictions. We have not yet chartered the vessels, but have initiated dialogue with some potential charterers and expect to fix the vessels well before delivery from the shipyard. Bank financing would also be arranged in due course, and we expect the equity investment to be up to approximately $25 million per vessel or $100 million in total. The West Linus transaction was finalized just before quarter end, and we paid $195 million of the purchase price in June. The drilling rig is expected to be delivered from the Jurong Shipyard in Singapore in December this year, and we will then pay the remaining $405 million. The total financing of the transaction is a combination of $125 million of equity investment and $475 million of bank financing. And the remaining payment in December is fully covered by the committed bank facility. North Atlantic Drilling is responsible for yard supervision, and there are no additional expenses for Ship Finance linked to delivery and commencement of the charter contract. The rig will be mobilized to Norway and expect that startup on the subcharter to ConocoPhillips is in April 2014. The charter rate through North Atlantic Drilling from the -- this subcharter is approximately $375,000 per day for a period of 5 years, with extension options up to 9 years. Our charter rate with North Atlantic is approximately $85,000 per day during the mobilization period of approximately 4 months, and this will effectively cover the interest on the financing plus also some returns on our invested equity. Thereafter, the charter rate increases to $222,000 per day for a period of 5 years, and there will be a very significant reduction in debt over this period. Afterwards, the charter rate will be reduced in line with reduced debt level, and the structure is designed to give us a stable cash return on the invested equity over time of approximately 15%. As for the Seadrill rigs, North Atlantic will compensate us for fluctuations in the interest rate environment. And we have a put-option at the end of the 15-year charter period, which, similar to the Seadrill rigs, then means that the rig will be accounted for as an equity investment under U.S. GAAP. The backbone of our business is our significant portfolio of long-term charters. Most of our vessels are chartered out on a long-term basis, and we have more than 10 years weighted average charter coverage. Full details on a vessel-by-vessel basis is available by contacting us on e-mail at ir@shipfinance.no. We had $5.8 billion of fixed rate order backlog at quarter end, which is the equivalent of approximately $62 per share. And the EBITDA equivalent backlog is $4.7 billion or around $50 per share. These numbers include only the reduced base rates from the Frontline vessels and do not include expectations for cash sweep or profit share. Any rechartering after end of current charter are also excluded. We have a total of 17 customers and nearly 40% of the portfolio is with companies with a market cap in excess of $5 billion. If we include all listed companies, the percentage is 86%. In addition, the majority of the backlog in the private segment is with companies with a public rating. If we look at the average weighted charter tender, as indicated on the right side, we see that around 2/3 of the portfolio is in excess of 10 years and only 5% shorter than 5 years. In light of the soft tanker market, we would again like to highlight our financial exposure relating to the vessels we have on charter to Frontline. The original fleet of 47 vessels was acquired in 2004 and another 5 vessels added in 2005. But after that, we have only reduced the number of vessels, and we are now down to 22 vessels after recent sales. This has been through the sale of the oldest vessels in the fleet. We are amortizing down the debt on these vessels very quickly and have reduced the financing amount by nearly 2/3 over a period of only 4 years. Compared to reported scrap value levels, the financial leverage is moderate, and the scheduled amortization continues with more than $70 million per year even with the reduced base rates. And currently, only approximately 50% of the loans relating to these vessels are drawn. The graph on the right side illustrates the difference between the loan amount over time and the scrap value of the fleet based on the current scrap price of around $400 per ton. While there has been no cash sweep effect in the first and second quarters, the cash sweep effect for 2012 was $52.2 million or approximately $0.16 per share per quarter on average. As the cash sweep is based on an annual calculation, we would need nearly $6,000 per VLCC and $2,000 per Suezmax in excess of the base rates for the remainder of the year in order to be in a position for a cash sweep this year. Given the soft market right now, we do not expect this to happen. And if in a worst case scenario, Frontline should default on their payment obligations to us, we will then be able to trade the vessels in the market with a low cash break-even rate and retain 100% of any chartering upside. Ship Finance also expects, as part of the fleet renewal strategy, to continue selling all the vessels and correspondingly reduce the counterparty exposure to Frontline over time. I would like to note that Frontline is current with all their charter rate payments to us, and they reported more than $83 million of free cash at the end of the second quarter and they also have some other assets, including a stake in Frontline 2012 with a market value of approximately $67 million. In the second quarter, the share of our EBITDA contribution from the Frontline vessels was approximately 18%. If we then switch to our performance last 12 months, the normalized contribution from our projects, which includes vessels accounted for as investment in associate, the EBITDA, which we define as charter hire plus profit share, less operating expenses and general and administrative expenses, was $523 million in the period. This is equivalent to $6.23 per share. Net interest was $120 million or approximately $1.43 per share. But more importantly, when normalized, ordinary debt installments relating to the company's projects was $301 million or approximately $3.60 per share. This is excluding prepayments relating to sale of other assets and assuming all loans were fully drawn. The illustration shows $102 million net contribution if all loans were fully drawn. But in reality, the debt amortization was lower, as we had not drawn all loans fully, in particularly, the loans relating to our Frontline vessels. And the amortization on the Frontline vessels was $74 million in the period. If we keep significant amounts undrawn on revolving credits, there will be a lower cash payments in order to service the debt, leaving more to the net contribution. Since 2004, aggregate net income has been approximately $23 per share, while aggregate dividends have been $16 per share in the same period, illustrating the conservative long-term distribution profile of the company. And with that, I will leave the word over to Mr. Harald Gurvin, our Chief Financial Officer, who will take us through the numbers for the second quarter.

Thank you, Ole. On this slide, we are showing our pro forma illustration of cash flows for the second quarter compared to the first quarter of 2013. Please note that this is only a guideline to assess the company's performance and is not in accordance with U.S. GAAP. For the second quarter, total charter revenues were $153.7 million or $1.78 per share, slightly up from $152.8 million in the first quarter of 2013. Suezmax and OBO earnings were down in the second quarter due to the sale of a Suezmax and the loss of our OBOs in the first quarter, while offshore earnings were up due to an extra day of earnings under the bareboat charters in the second quarter compared to the first quarter. Vessel operating expenses and G&A were $34.8 million, slightly up from $33.6 million in the previous quarter, mainly due to the amendment from bareboat charters to time charters for 2 of the vessels in May 2013. We also had income of $2.5 million on financial investments during the first quarter, in line with the previous quarter. There was no cash sweep from Frontline in the second quarter, but we recorded a profit share of $100,000 relating to 1 of the Handysize drybulk carriers. Overall, this summarizes to an EBITDA of $121.5 million for the quarter or $1.41 per share, in line with the $121.6 million in the previous quarter. We then move onto the profit and loss statement as reported under U.S. GAAP. As we have described in previous earnings calls, our accounting statements are slightly different than those of a traditional shipping company. As our business strategy focuses on long-term charter contracts, a large part of our activities are classified as capital leasing. As a result, a significant portion of our charter revenues are excluded from our booked operating revenues and instead booked as revenues classified as repayment of investment in finance leases, results in associates and long-term investments and interest income from associates. If you wish to gain more understanding of our accounts, we will also, this quarter, publish a separate webcast, which explains the finance lease accounting and investments in associates in more detail. This webcast can be viewed on our website, shipfinance.org. Overall, for the quarter, we reported total operating revenues, according to U.S. GAAP, of $66 million. As mentioned, there was no cash sweep accrual from Frontline in the first quarter, while we recorded a profit share of $100,000 on 1 of the Handysize drybulk vessels. Interest expenses were down in the quarter, mainly due to the lower amounts drawn under revolving credit facilities and the refinancing of the 8 1/2% senior notes during the first quarter of 2013. So overall and according to U.S. GAAP, the company reported net income of $25.1 million or $0.29 per share for the quarter. It should also be mentioned that the number of common shares outstanding at quarter end includes the 8 million new shares issued in connection with the public offering in June 2013. Moving onto the balance sheet. We showed $41 million of cash at the end of the quarter. In addition, we had approximately $220 million available for drawdown under revolving facilities. Available-for-sale securities of $66.7 million includes the $47.6 million invested in short-term tradable securities as a short-term liquidity placement. In addition, the second lien notes in Horizon Lines are recorded under available-for-sale securities of $19.1 million or 40% of par value including accrued interest. Newbuilding and vessel deposits increased during the quarter due to the investment in the 4 8,700 teu container vessels and further installments paid on the 4,800 teu container vessels. The 3 ultra-deepwater units on charter to Seadrill are included in the balance sheet under investment in associate and amount due from related parties long term. Our investment in the subsidiaries owning the units is in the form of both equity and shareholder loans from the parent company. The total equity investment in the rigs is thus a combination of the 2 and is split between equity and shareholder loans from quarter-to-quarter will append on intercompany accounting. In addition, the newbuilding harsh environment jack-up drilling rig, West Linus, will be equity accounted similar to the Seadrill rigs due to the conservative nature of the transaction. The total investment is $600 million, of which $195 million was paid in June 2013. The $195 million investment is included under amount due from related parties long term in our consolidated balance sheet. Short-term debt and current portion of long-term debt includes a $70 million short-term pre-delivery facility relating to West Linus, which will be repaid from the proceeds of the $475 million long-term post-delivery facility upon delivery of the unit. It is also worth mentioning that Frontline took an impairment on the carrying value of 3 of the vessels on charter from Ship Finance in the second quarter. The impairment relates to Frontline's expected future cash flows from the 3 individual vessels compared to the carrying value of these vessels in their accounts. They have not made any impairment on the lease obligation to Ship Finance. Ship Finance carries out an impairment review of all vessels each quarter, which also includes the residual value of the vessels, which, of course, is ours. Based on the analysis, no impairment has been made in the quarter. Stockholder equity stands at approximately $1.35 billion, including the $145 million of deferred equity. Book equity ratio, including deferred equity, was approximately 42% at the end of the quarter. Then looking at our liquidity and financing status. As mentioned, the company has total available liquidity of approximately $261 million at the end of the quarter, which includes $41 million in cash and approximately $225 million net available under revolving credit lines. We also had $67 million in available-for-sale securities at quarter end, as previously described. On the debt side, we had approximately $2.9 billion of gross interest-bearing debt outstanding at the end of the quarter, of which $1.1 billion is consolidated bank loans and approximately $1.2 billion is bank loans in our subsidiaries accounted for as investment in associate. In addition, we had approximately $650 million of consolidated senior unsecured notes outstanding as per June 30. The figure includes the new $500 million bonds maturing in 2014, of which $72 million is net outstanding; and the new $600 million bonds maturing in 2018, of which $99 million is net outstanding. The figure also includes the new $350 million convertible notes maturing in 2018 and the $125 million convertible notes maturing in 2016. Both our outstanding convertible notes can be repaid in shares at the company's option at maturity. We have been active in both the capital and banking market over the last month and have refinanced a significant portion of upcoming debt maturities and also entered into new financings at attractive terms. We continue to demonstrate our premium access to the bank market through the refinancing of the 2 ultra-deepwater drilling units, West Polaris and West Hercules, and the financing of the newbuilding harsh environment jack-up rig, West Linus. The 5-year $420 million facility for West Polaris was drawn in January 2013, and the 6-year $375 million facility for West Hercules was drawn in June 2013. We also received a commitment for a $475 million post-delivery facility for West Linus. This facility is currently in documentation and will be drawn upon delivery of the rig, which is expected in December 2013. The facility has a term in excess of 5 years and will mature in the second quarter of 2019. Ship Finance only has a limited guarantee obligations for the 3 facilities. All of these facilities were oversubscribed and demonstrates that, in the banking environment where many owners have no or limited access to bank financing, the bank is focused on the core client, benefiting strong owners like Ship Finance. In January 2013, we also issued $350 million of convertible notes due 2018. The offering was significantly oversubscribed, and the offering was upsized from the originally targeted amount of $250 million to $350 million. The majority of the remaining debt maturities in 2013 is related to ultra-deepwater drilling rig, West Taurus, which matures in the fourth quarter of 2013. The loan has a final payment of $376 million, representing less than [ph] 55% of the current charter-free market value of the unit. The facility will be refinanced in due course while we, in the meantime, enjoy the benefit of the attractive margin on the existing financing. The next slide provides some more detail on our newbuilding program and the remaining payments for the shipyards. As of June 30, we had 1 jack-up drilling rig and 8 container vessels under construction. The graph shows the committed financing in the blue bars compared to the remaining shipyard installments. The $600 million investment in a newbuilding harsh environment jack-up drilling rig, West Linus, has a final payment of $405 million due upon the scheduled delivery in December 2013, which will be fully funded by the long-term bank facility. The upfront payment of $195 million was paid in June 2013 and is not included in above numbers. In May 2013, we entered into contracts for 4 newbuilding 8,700 teu container vessels in Korea with expected delivery in late 2014 and early 2015. The total contract price is $340 million, with the majority of the payments due upon delivery of the vessels. We have not yet entered into any financing with respect to these vessels, but have seen interest from both commercial banks and export credit agencies. We will arrange financing for the vessels in due course, and the expected equity investment is up to $100 million. We also had the 4 4,800 teu container vessels under construction, with expected delivery between the fourth quarter 2013 and the second quarter 2014. We have arranged a 12-year financing for the vessels at attractive terms and have already paid significant amounts to the yard, while we had chosen not to fully utilize all available pre-delivery financing in order to reduce the interest expense during the construction period. The net remaining equity investment on the 4 vessels is only $14 million. We are in compliance with all financial covenants under our loan agreement. Free cash was $245 million compared to the minimum requirement of $25 million. This includes $204 million available under revolving credit facilities with maturity in excess of 12 months. Working capital was $74 million compared to the requirement of being positive. And the book equity ratio was 42% compared to the minimum requirement of 20%. And under loan agreements, where we have minimum value covenants, we were fully in compliance at the end of the quarter. It is worth noting that Ship Finance has been in full compliance with all financial covenants for each of the 38 quarters since the company was established. Given the financial turmoil and depressed shipping market over the last years, this gives us a very strong standing in the banking market, as recently demonstrated on the refinancing of the 2 ultra-deepwater drilling units and the financing of the harsh environment jack-up rigs. Then to summarize. Net income for the quarter was $25 million or $0.29 per share. The aggregate EBITDA was $122 million or $1.41 per share. The Board has declared a quarterly cash dividend of $0.39 per share for the quarter. This represents a dividend yield of 9.9% based on a closing share price as of August 27. We have premium access to the bank and capital markets and have raised more than $2 billion in bank debt, bonds, convertible notes and equity over the last 12 months. We see growth opportunities in multiple segments and have, since May, invested close to $1 billion in state-of-the-art units in the offshore and container space. And with that, I'll give the word back to the operator, who will open the line for any questions.

[Operator Instructions] And we will take our first question from Fotis Giannakoulis from Morgan Stanley. Fotis Giannakoulis - Morgan Stanley, Research Division: I want to ask you about the potential deals that you see in the market right now. We have seen, the last couple of months, asset price is, for most shipping segments, moving higher. For most of the traditional ship owners, that means the assets are more expensive, it's more difficult to acquire vessels. What does it mean for you, given the fact that you are looking at transactions that has come with secured cash flows? Are the cash flows that you see -- the charters that you see more attractive right now? And in which sectors do you see more opportunities in acquiring vessels? Ole B. Hjertaker: Yes. Hello, Fotis, and thanks for calling in. We still see good opportunities in several sectors. And while we have seen prices, at least, stabilized, I wouldn't say that we've seen any dramatic movements upwards. And we're talking from historic low levels in many segments. I think part of that is that we saw the shipyards taking in a lot of orders in the first half of the year. Maybe they are now a little bit more relaxed, as they have covered more of their more pressing and immediate positions and therefore not so aggressively selling yard positions where they may actually take a loss on building vessels. Overall, I think it's still a very interesting time to invest in shipping assets. And we have, as also demonstrated by our -- by where we have put our money, we still think both the offshore space and the container space, at least for us, are the segments where we more easily can see the mix of attractive asset acquisitions and also cash flow characteristics matching our expectations. With that said, I mean, we definitely also look at other segments, and there are also opportunities there. I think between the 4 main segments, in addition to rigs and containers, we also think there could be deals to be done in the tanker space and also in the drybulk space. But we see more long-term charter prospects in the 2 first mentioned segments. Fotis Giannakoulis - Morgan Stanley, Research Division: Can you be a little bit more specific about the chartering of the container ship vessels? You mentioned that you are in active discussions about these vessels. When do you think that these discussions will bring some results? And at what levels do you see the cash flow yields for these vessels being developing? Ole B. Hjertaker: Yes. I mean, we, of course -- as we have not finalized anything, we cannot be too specific on commenting on those vessels other than that we are in discussions with some potential charterers. These vessels are not delivered. The first vessel's delivery is in October next year, so we have more than a year until delivery. We know that the yards are basically full. We hear yards now quoting potential deliveries towards the end of '15 and into 2016 for new ordering in certain sizes and particularly this size. So if that is the case, we believe there could be a value in holding these positions because we believe these vessels are very, very efficient for container lines. And therefore, we can -- we hopefully can get some nice charter rates on them. So therefore, also, as we are in -- some have some discussions, I don't want to be specific on charter rates either -- other than that we, of course, hope that these vessels will be accretive and also that we may, over time, also develop our investments in the sector. Fotis Giannakoulis - Morgan Stanley, Research Division: Can you also give us a little bit of the positioning of this sector? I understand that the offshore sector is pretty robust, and the growth there looks positive and it's a pretty stable market. But there is a lot of focus in the recovery of the traditional shipping markets, particularly the drybulk sector. What is your view -- at which point of the recovery are we right now? How quickly do you think that this recovery is going to come? And also, it was -- for most of the people, it was a little bit strange that your focus is still on the -- is on the container ship market. Can you explain to us how do you view the container ship market vis-à-vis the drybulk market and also the tanker markets? Ole B. Hjertaker: Yes. When we make investments -- and particularly, when we make investments where we hope to charter these assets at long term, we have to look beyond, call it, the near-term cycles. So when we make an investment, we focus on several factors. One is, of course, where is the entry point, i.e. what's the level we're buying the assets at. Two is the counterparty. Are they speculative players, or are they industrial players in terms of their -- the use of these assets? And of course, also, what kind of residual do we think we can expect at the end of the charter period. And the interesting thing with both shipping and offshore assets is that these are assets that typically built in Korea, China, Singapore and -- while they are quoted in U.S. dollars. So you have an interesting dynamics there where we buy and invest in U.S. dollars, but they're really built with local input factor, with most of the input factor being local currency. And we have, in some of these areas, seen very significant inflation, which, of course, could -- if that continues, it will have an impact on replacement costs over time. And in terms of the charter coverage, what we see is that, typically, on the drybulk side, you see more spot-oriented players, shorter-term charters and you don't see that many long-term charters to industrial players. So while we, of course, always look for interesting opportunities and can also take market positions from time to time, our core business is really long-term charter coverage. And then, there are not as many opportunities on the dry side for us as it is in some of the other segments. And in terms of where the -- when and to what extent the market will recover short term, I would leave the question over to you because you are probably more better positioned to answer that. We have a more long-term view on our investments and are not so focused on the near-term movements in charter rates. Fotis Giannakoulis - Morgan Stanley, Research Division: I was counting on some help for my work, but thank you for your answer. My last question is a usual topic. I think you've been -- you've answered this question many times about the risk of Frontline. Gensan [ph] just earlier at the conference call was not very optimistic about, at least, the near-term prospects of the crude tanker market. I understand that the company has sufficient cash for the next couple of quarters. What will happen if Frontline is not able to serve the capital lease obligations to you? What will be the impact to your bottom line, both revenue and operating expenses? And is there a mechanism in place to take over these assets and operate them yourself? Ole B. Hjertaker: Yes. To answer this last question first, absolutely, we can very easily -- if they should default, we can -- I mean, we own the vessels, and we have them on time chartered Frontline, so we can easily charter them out in the market ourselves. But I just want to stress that Frontline is paying the charter hire on time, and they do have other assets. It's had more than $80 million of cash as of second quarter, and they have some other assets there as well. And our key focus over the last 1.5 years after we restructured in 2011 has been to delever this asset quite rapidly. Before the restructuring, we're talking November 2011, we had approximately $750 million of debt associated with these vessels. We are now down to -- around $420 million if all loans were fully drawn. But as we have $220 million nearly undrawn, only 1/2 of that is drawn. And that compares to a scrap value, which, depending on the market quotation and your expectations for scrap value, could be in the region of the $300 million to $330 million perhaps, gives us a relatively good caution also -- just also just comparing that to call it scrap values if that was what it came to. But we believe these vessels do still have a commercial life, and we started off with a full interdependency between us and Frontline. We had all our vessels are chartered to Frontline. That was 100% of our cash flow. In the second quarter, only 18% of our EBITDA came from the Frontline vessels. And as we expand our business with the new rig, we hopefully -- with the new container ships that are coming onstream that the percentage hopefully will continue to be marginalized. So the short answer is that, of course, we monitor the situation. Of course, we will take care of our interests in -- if the market could -- should continue as weak as it is right now. But we have a lot of other assets and a lot of cash flow coming from elsewhere, and we are not so dependent on Frontline as we used to be.

And we will take our next question from John Reardon from Crowell, Weedon.

Just to address the prior questioner's concerns, in addition to the other assets that Frontline has, they also have a relatively recently announced equity funding mechanism with Morgan Stanley. So I think there's plenty of coverage. Ole, when I look around the world, it seems like with the exception of a few land shale plays, all the big oil exploration is offshore, the Deep Gulf, the Gulf of Guinea, Angola, Madagascar. And now, of course, the Barents Sea and the Arctic is looming. Do you -- could you just give us an overview of what you think of the offshore drilling environment and, in particular, the harsh drilling environment going forward, given your recent investment? Ole B. Hjertaker: Yes, absolutely. I mean, first of all, I'm not an oil market expert. So, call it, detailed analysis on the oil market and expectations, I would leave to the professionals who do that for a living. But of course, we have a view on the oil market when we invest in drilling rigs. What we've seen is that the offshore oil production has been relatively stable over a long period, but we've seen a very significant increase in assets deployed in the exploration. And what we've seen is that the vessels are becoming more and more complex, and we see -- and of course, we see a lot of -- and we see more expensive equipment going into production from offshore. For the most recent investments, of course, part of our analysis was linked to who are going to use this rig. Is it a, call it -- is it a what we call a standardized-type asset, where the oil companies have -- will be attracted to it. And we see there is a sister rig, West Elara, that's been operating for Statoil for a long period very successfully. This rig here will go on charter, a 5-year charter, to ConocoPhillips. But that's not only ConocoPhillips, they're only fronting it for the license. You have several other oil companies who are fully committed to pay the charter higher to North Atlantic during that charter period. And the charter can be extended to 9 years. So there's a lot of cash flow there that we see coming from -- for this rig from production drilling. So what we see is that it's an interesting market. The oil companies, they want the newest, most efficient equipment. And another factor here is also the supply side. You have relatively few yards who can build these highly sophisticated units. And therefore, you have some dynamics there that is also interesting from a commercial perspective. So we do think it's still a very interesting area to invest in and, particularly, when we combine it with long-term charters to good quality counterparts.

So given that outlook, do you see, on a going forward basis, Ship Finance getting more involved in the offshore drilling and harsh environment drilling area on a -- of course, on a price opportunity basis? Ole B. Hjertaker: Yes, I can confirm that. It's -- I mean, we have the 3 deepwater harsh environment, call it, deepwater drilling units in our portfolio already. We have this jack-up -- harsh environment jack-up, and then we also have a more standard benign water jack-up drilling rig built 2007, and we have some PSVs and anchor handlers. But it's definitely an important part of our portfolio.

We'll now take our next question from Eirik Haavaldsen from Pareto Securities. Eirik Haavaldsen - Pareto Securities AS, Research Division: I actually have my question answered previously. But how are you thinking in terms of your cash position now at $41 million? How comfortable are you with that going forward? Ole B. Hjertaker: Well, the way we manage our liquidity is to -- we think it's more efficient for us to reduce drawn amounts on revolving credit instead of necessarily holding it them on deposit accounts earning virtually nothing. So the combined, call it, available liquidity at quarter end was around $260 million or so. And we can draw on that any day if we like to. So we are quite comfortable with our liquidity position.

[Operator Instructions] So it appears that we have no further questions. Ole B. Hjertaker: Okay. So thank you. And then, I would like to thank everyone for participating in our second quarter conference call. And if you have any follow-up questions, there are contact details in the press release. Have a nice day.

Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation. You may now disconnect.