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FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS In certain situations, the Company may enter into financial instruments to reduce the risk associated with fluctuations in interest rates, exchange rates and commodity prices. The Company has a portfolio of swaps which swap floating rate interest to fixed rate, which fix the Norwegian kroner to U.S. dollar exchange rate applicable to the interest payable and principal repayment on the NOK bonds and which swap floating commodity prices to fixed prices. From a financial perspective these swaps hedge interest rate, exchange rate and fuel price exposure. As of December 31, 2024, the counterparties to such contracts are DNB Bank ASA, Nordea Bank Finland Plc., Skandinaviska Enskilda Banken AB (publ), Danske Bank A/S, ING Bank N.V and Sumitomo Mitsui Banking Corporation. Credit risk exists to the extent that the counterparties are unable to perform under the contracts, but this risk is considered not to be substantial as the counterparties are all banks which have provided the Company with loans. The following tables present the fair values of the Company's derivative instruments that were designated as cash flow hedges and qualified as part of a hedging relationship, and those that were not designated:
(in thousands of $) | 2024 |  | 2023
Designated derivative instruments -short-term assets: |  |  |
Interest rate swaps | — |  |  | 4,333 |
Non-designated derivative instruments -short-term assets: |  |  |
Interest rate swaps | 121 |  |  | 284 |
Total derivative instruments -short-term assets | 121 |  |  | 4,617 |
Designated derivative instruments -long-term assets: |  |  |
Interest rate swaps | 1,631 |  |  | 2,357 |
Cross currency interest rate swaps | 2,212 |  |  | — |
Non-designated derivative instruments -long-term assets: |  |  |
Interest rate swaps | 11,515 |  |  | 11,251 |
Cross currency interest rate swaps | 165 |  |  | — |
Total derivative instruments - long-term assets | 15,523 |  |  | 13,608 |
(in thousands of $) | 2024 |  | 2023
Designated derivative instruments -short-term liabilities: |  |  |
Cross currency swaps | — |  |  | 11,845 |
Non-designated derivative instruments -short-term liabilities: |  |  |
Cross currency swaps | 14,884 |  |  | 85 |
Commodity swaps | — |  |  | 436 |
Total derivative instruments - short-term liabilities | 14,884 |  |  | 12,366 |
Designated derivative instruments -long-term liabilities: |  |  |
Interest rate swaps | 103 |  |  | — |
Cross currency swaps | — |  |  | 8,965 |
Total derivative instruments - long-term liabilities | 103 |  |  | 8,965 |
Interest rate risk management The Company manages its debt portfolio with interest rate and currency swap agreements denominated in U.S. dollars and Norwegian kroner to achieve an overall desired position of fixed and floating interest rates. As of December 31, 2024, the Company and its consolidated subsidiaries had entered into interest rate and currency swap transactions, to achieve fixed interest rates. Due to the discontinuance of LIBOR after June 30, 2023, and notwithstanding the automatic conversion mechanisms to alternative rates, the Company has entered into amendment agreements to existing swap agreements for the transition from LIBOR to SOFR. The Company elected to apply the optional expedient pursuant to ASC 848 for contracts which are designated as cash flow hedges within the scope of ASC 815. This meant that the Company was not required to de-designate hedging relationships as a result of changes to loan and swap agreements which related solely to the replacement of LIBOR as a benchmark rate to SOFR. The summary below includes all interest rate swap transactions, involving the payment of fixed rates, in exchange for SOFR plus applicable credit adjustment spreads, most of which are hedges against specific loans. The fixed interest rate below includes the impact of credit adjustment spreads.
Notional Principal (in thousands of $) | Trade date | Maturity date | Fixed interest rate
$100,000 (remaining at $100,000) | August 2019 | August 2029 | 1.2% - 1.3%
$46,053 (remaining at $46,053) | April 2020 | January 2025 | 0.2%
$81,600 (remaining at $81,600) | November 2024 | November 2029 | 3.9%
$78,735 (reducing to $59,557) | November 2024 | August 2029 | 3.9%
$113,739 (reducing to $42,285) | December 2024 | December 2029 | 3.7% - 3.8%
$59,604 (reducing to $13,564) | December 2024 | January 2030 | 4.1%
The summary below includes all currency swap transactions, involving the payment of fixed interest in U.S. dollars in exchange for NIBOR plus a margin in Norwegian kroner, some of which are hedges against the NOK750 million senior unsecured bonds due 2029.
Notional Principal | Trade date | Maturity date | Fixed interest rate (payable) | Margin on NIBOR leg (receivable)
NOK750 million ($69.4 million) | September 2024 | September 2029 | 6.4% - 6.5% | 3.3 | %
The total net notional principal amount subject to interest swap agreements as of December 31, 2024, was $0.5 billion (December 31, 2023: $0.4 billion). Foreign currency risk management The Company is party to currency swap transactions, involving the payment of U.S. dollars in exchange for Norwegian kroner, some of which are designated as hedges against the NOK750 million senior unsecured bonds due 2029. During the year ended December 31, 2024, the NOK600 million senior unsecured bonds due 2025 were redeemed early in full. In conjunction with this redemption, the related currency swaps were de-designated.
Principal Receivable | Principal Payable | Trade date | Maturity date
NOK600 million | US$67.5 | million | January 2020 | January 2025
NOK750 million | US$69.4 | million | September 2024 | September 2029
Apart from the NOK750 million senior unsecured bonds due 2029, the majority of the Company's transactions, assets and liabilities are denominated in U.S. dollars, the functional currency of the Company. Other than the corresponding currency swap transactions summarized above, the Company has not entered into forward contracts for either transaction or translation risk. Accordingly, there is a risk that currency fluctuations could have an adverse effect on the Company's cash flows, financial condition and results of operations. Fair Values The carrying value and estimated fair value of the Company's financial assets and liabilities as of December 31, 2024, and 2023, are as follows:
|  | 2024 |  | 2024 |  | 2023 |  | 2023
(in thousands of $) |  | Carrying value |  | Fair value |  | Carrying value |  | Fair value
Non-derivatives: |  |  |  |  |  |  |  |
Equity Securities |  | 3,736 |  |  | 3,736 |  |  | 5,104 |  |  | 5,104 |
NOK700 million senior unsecured floating rate bonds due 2024 |  | — |  |  | — |  |  | 68,426 |  |  | 68,919 |
NOK600 million senior unsecured floating rate bonds due 2025 |  | — |  |  | — |  |  | 58,089 |  |  | 59,181 |
7.25% senior unsecured sustainability linked bonds due 2026 |  | 150,000 |  |  | 150,975 |  |  | 150,000 |  |  | 146,310 |
8.875% senior unsecured sustainability linked bonds due 2027 |  | 150,000 |  |  | 154,737 |  |  | 150,000 |  |  | 152,820 |
8.25% senior unsecured sustainability linked bonds due 2028 |  | 145,200 |  |  | 149,874 |  |  | — |  |  | — |
NOK750 million senior unsecured floating rate bonds due 2029 |  | 63,592 |  |  | 63,778 |  |  | — |  |  | — |
Derivatives: |  |  |  |  |  |  |  |
Interest rate/ currency/ commodity swap contracts – short-term receivables |  | 121 |  |  | 121 |  |  | 4,617 |  |  | 4,617 |
Interest rate/ currency/ commodity swap contracts – long-term receivables |  | 15,523 |  |  | 15,523 |  |  | 13,608 |  |  | 13,608 |
Interest rate/ currency/ commodity swap contracts – short-term payables |  | 14,884 |  |  | 14,884 |  |  | 12,366 |  |  | 12,366 |
Interest rate/ currency swap/ commodity contracts – long-term payables |  | 103 |  |  | 103 |  |  | 8,965 |  |  | 8,965 |
The above short-term receivables relating to interest rate/ currency/ commodity swap contracts as of December 31, 2024, include $0.1 million which relates to non-designated swap contracts (December 31, 2023: $0.3 million), with the balance relating to designated hedges. The above long-term receivables relating to interest rate/ currency/ commodity swap contracts as of December 31, 2024, include $11.7 million which relates to non-designated swap contracts (December 31, 2023: $11.3 million), with the balance relating to designated hedges. The above short-term payables relating to interest rate/ currency/ commodity swap contracts as of December 31, 2024, include $14.9 million which relates to non-designated swap contracts (December 31, 2023: $0.5 million), with the balance relating to designated hedges. The above long-term payables relating to interest rate/ currency/ commodity swap contracts as of December 31, 2024, include $0.0 million which relates to non-designated swap contracts (December 31, 2023: $0.0 million), with the balance relating to designated hedges. The above fair values of financial assets and liabilities as of December 31, 2024, are measured as follows:
|  |  | Fair value measurements using
| December 31, 2024 |  | Quoted Prices in Active Markets for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs
(in thousands of $) |  |  | (Level 1) |  | (Level 2) |  | (Level 3)
Assets: |  |  |  |  |  |  |
Equity securities | 3,736 |  |  | 3,736 |  |  |  |  |
Interest rate/ currency/ commodity swap contracts – short-term receivables | 121 |  |  |  |  | 121 |  |  |
Interest rate/ currency/ commodity swap contracts - long-term receivables | 15,523 |  |  |  |  | 15,523 |  |  |
Total assets | 19,380 |  |  | 3,736 |  |  | 15,644 |  |  | — |
Liabilities: |  |  |  |  |  |  |
7.25% senior unsecured sustainability linked bonds due 2026 | 150,975 |  |  | 150,975 |  |  |  |  |
8.875% senior unsecured sustainability linked bonds due 2027 | 154,737 |  |  | 154,737 |  |  |  |  |
8.25% senior unsecured sustainability linked bonds due 2028 | 149,874 |  |  | 149,874 |  |  |  |  |
NOK750 million senior unsecured floating rate bonds due 2029 | 63,778 |  |  | 63,778 |  |  |  |  |
Interest rate/ currency/ commodity swap contracts – short-term payables | 14,884 |  |  |  |  | 14,884 |  |  |
Interest rate/ currency/ commodity swap contracts – long-term payables | 103 |  |  |  |  | 103 |  |  |
Total liabilities | 534,351 |  |  | 519,364 |  |  | 14,987 |  |  | — |
The above fair values of financial assets and liabilities as of December 31, 2023, were measured as follows:
|  |  | Fair value measurements using
| December 31, 2023 |  | Quoted Prices in Active Markets for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs
(in thousands of $) |  |  | (Level 1) |  | (Level 2) |  | (Level 3)
Assets: |  |  |  |  |  |  |
Equity securities | 5,104 |  |  | 5,104 |  |  |  |  |
Interest rate/ currency/ commodity swap contracts – short-term receivables | 4,617 |  |  |  |  | 4,617 |  |  |
Interest rate/ currency/ commodity swap contracts – long-term receivables | 13,608 |  |  |  |  | 13,608 |  |  |
Total assets | 23,329 |  |  | 5,104 |  |  | 18,225 |  |  | — |
Liabilities: |  |  |  |  |  |  |
NOK700 million senior unsecured floating rate bonds due 2024 | 68,919 |  |  | 68,919 |  |  |  |  |
NOK600 million senior unsecured floating rate bonds due 2025 | 59,181 |  |  | 59,181 |  |  |  |  |
7.25% senior unsecured sustainability linked bonds due 2026 | 146,310 |  |  | 146,310 |  |  |  |  |
8.875% senior unsecured sustainability linked bonds due 2027 | 152,820 |  |  | 152,820 |  |  |  |  |
Interest rate/ currency/ commodity swap contracts – short-term payables | 12,366 |  |  |  |  | 12,366 |  |  |
Interest rate/ currency/ commodity swap contracts – long-term payables | 8,965 |  |  |  |  | 8,965 |  |  |
Total liabilities | 448,561 |  |  | 427,230 |  |  | 21,331 |  |  | — |
ASC Topic 820 "Fair Value Measurement and Disclosures" ("ASC 820") emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels one and two of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within level three of the hierarchy). Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in level one that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability, other than quoted prices, such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the assets or liabilities, which typically are based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. As of December 31, 2024, investment in equity securities consist of NorAm Drilling shares trading on the Euronext Growth in Oslo. As of December 31, 2024, the estimated fair values for the 7.25% senior unsecured sustainability linked bonds due 2026, the 8.875% senior unsecured sustainability linked bonds due 2027, the 8.25% senior unsecured sustainability linked bonds due 2028 and the senior unsecured floating rate NOK bond due 2029 are based on the quoted market prices as of the balance sheet date. As of December 31, 2024, the fair value of interest rate and currency swap contracts is calculated using established independent valuation techniques applied to contracted cash flows and SOFR/NIBOR interest rates as of the balance sheet date. Concentrations of risk There is a concentration of credit risk with respect to cash and cash equivalents to the extent that amounts are carried with DNB Bank ASA, Nordea Bank Finland Plc., Skandinaviska Enskilda Banken AB (publ), Danske Bank A/S, ING Bank N.V, and Sumitomo Mitsui Banking Corporation. However, the Company believes this risk is remote, as these financial institutions are established and reputable establishments with no prior history of default. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk however certain of the Company’s counterparties require the Company to periodically post collateral when the fair value of the financial instruments exceeds or is below specified thresholds. As of December 31, 2024 and 2023, the Company posted cash collateral related to derivative instr uments under its collateral security arrangements of $5.0 million and $7.1 million, respectively. As of December 31, 2024, t he balance is recorded within Other Current Assets (Refer to Note 12: Trade Accounts Receivable and Other Current Assets) and was previously included within Other Long Term Assets (Refer to Note 16: Other Long Term Assets). The Company also sometimes enter into master netting and offset agreements with such counterparties. As of December 31, 2024, the Company has International Swaps and Derivatives Association (“ISDA”) agreements with its swap counterparties which contain netting provisions. There is also a concentration of revenue risk with the below customers:
Charterer | Number of Vessels /rigs chartered as of December 31, 2024 | % of consolidated operating revenues (Year ended December 31, 2024) | Number of Vessels /rigs chartered as of December 31, 2023 | % of consolidated operating revenues (Year ended December 31, 2023)
Maersk A/S (“Maersk”) | 14 | 23 | % | 16 | 28 | %
ConocoPhillips Skandinavia AS ("ConocoPhillips") | 1 | 7 | % | 1 | 10 | %
In addition, a portion of our net income is generated from our associated company, River Box. (See Note 18: Investment in Associated Companies). In the year ended December 31, 2024, income from River Box accounted for approximately 6% of our net income (December 31, 2023: 9%). As discussed in Note 25: Related Party Transactions, the Company, as of December 31, 2024, had one outstanding receivable loan balance granted by the Company to River Box to taling $45.0 million (December 31, 2023: $45.0 million). The loan granted by the Company is considered not impaired as of December 31, 2024 due to the fair value of the vessels owned by River Box exceeding the book values as of December 31, 2024.

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