COMMITMENTS AND CONTINGENT LIABILITIES

6 Months Ended

Jun. 30, 2025

Commitments and Contingencies Disclosure [Abstract]

Assets Pledged


(in millions of $)	June 30, 2025	December 31, 2024
Vessels, rigs and equipment, net	3,227	3,462
Investments in sales-type leases	—	35
Book value of consolidated assets pledged under mortgages	3,227	3,497

The Company has funded its acquisition of vessels, jack-up rig and harsh environment semi-submersible rig through a combination of equity, short term debt and long term debt. Providers of long term loan facilities usually require that the loans be secured by mortgages against the assets being acquired.

Other Contractual Commitments and Contingencies

The Company has arranged insurance for the legal liability risks for its shipping activities with various mutual protection and indemnity associations in which the Company is subject to calls payable to the associations based on the Company’s claims record in addition to the claims records of all other members of the associations. A contingent liability exists to the extent that the claims records of the members of the associations in the aggregate show significant deterioration, which may result in additional calls on the members. The Company also has similar partially mutual insurance arrangements for its rigs.

Capital commitments

As of June 30, 2025, the Company had commitments under shipbuilding contracts to construct five newbuilding dual-fuel 16,800 TEU container vessels, totaling to $848.1 million (December 31, 2024: $818.1 million). The vessels are expected to be delivered to the Company in 2028. (Also, refer to Note 7: Capital Improvements in Progress and Newbuildings).

As of June 30, 2025, the Company has committed to pay $7.2 million towards the installation of optimization upgrades on five container vessels and two chemical tankers, with installations expected to take place in 2025 (December 31, 2024: $20.2 million on seven container vessels).

Also as of June 30, 2025, the Company has committed to pay $10.7 million for capital upgrades on the drilling rig, Hercules (December 31, 2024: $13.2 million). The installations are expected to take place later in 2025.

Other contingencies

On March 5, 2023, SFL Hercules Ltd., a subsidiary of the Company, served Seadrill Ltd. (“Seadrill”) with a claim filed in the Oslo District Court in Norway, relating to the redelivery of the drilling rig, Hercules, in December 2022. The Company has made the claim because it believes that the rig was not redelivered in the condition required under the contract with Seadrill and the Company is therefore seeking damages. In February 2025, there was a ruling in Oslo District Court in favor of SFL’s rig-owning subsidiary where subsidiaries of Seadrill were ordered to pay an amount equivalent to a total of approximately $48 million in compensation, including late payment interest and legal costs, as a result of its breach of contract upon redelivering Hercules to SFL in 2022. Seadrill has filed an appeal of the ruling.

There was also a related case concerning certain capital spares delivered by Seadrill to a subsidiary of SFL in connection with the SPS of Hercules in 2023 where the parties disagreed on the actual ownership and compensation of these spares (“Capital Spares Case”). In April 2025, the Company was fully acquitted and awarded legal costs in the case in which Seadrill had pursued SFL for approximately $8.0 million. Seadrill has also appealed this ruling.

The Company is routinely party both as plaintiff and defendant to lawsuits in various jurisdictions under charter hire obligations arising from the operation of its vessels in the ordinary course of business. The Company believes that the resolution of such claims will not have a material adverse effect on its results of operations or financial position. The Company has not recognized any contingent gains or losses arising from the pending results of any such lawsuits.