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    The Bull Case For SFL (SFL) Could Change Following US$170M Hercules Drilling Contract Win In Canada

    Simply Wall St·03/10/2026 10:17:07
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    • On March 6, 2026, SFL Corporation announced it had signed a drilling contract in Canada for its Hercules harsh-environment semi-submersible rig with a large investment-grade multinational oil and gas company, an agreement worth about US$170,000,000 over a minimum 400-day term starting in early 2027.
    • This deal moves Hercules from warm stacking to earning US$425,000 per day under Odfjell Drilling’s management, materially strengthening SFL’s offshore cash-generating capacity and asset utilization.
    • We’ll now examine how locking in US$170,000,000 of contracted Hercules revenue reframes SFL’s investment narrative and risk profile.

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    SFL Investment Narrative Recap

    To own SFL, you need to be comfortable with a dividend focused, asset heavy shipping and offshore landlord that depends on long term charters to smooth out cyclical markets. The new US$170,000,000 Hercules contract directly addresses one of the key near term risks by reducing idle time on a major rig and firming up offshore cash flow, but it does not remove exposure to energy transition or container market concentration.

    In that context, the July 2024 announcement of five LNG dual fuel 16,800 TEU newbuilds on 10 year charters, adding around US$1,200,000,000 to backlog, connects neatly with Hercules. Together, these contracts highlight how SFL is leaning on long duration deals with strong counterparties to underpin revenue, which matters if shipping demand softens or if its sizeable newbuild capex coincides with tighter financing conditions.

    Yet, while Hercules now has work, investors should still be aware that SFL’s heavy capex and dividend commitments could become a problem if...

    Read the full narrative on SFL (it's free!)

    SFL's narrative projects $742.1 million revenue and $132.0 million earnings by 2028.

    Uncover how SFL's forecasts yield a $9.42 fair value, a 14% downside to its current price.

    Exploring Other Perspectives

    SFL 1-Year Stock Price Chart
    SFL 1-Year Stock Price Chart

    Some of the most optimistic analysts were already modeling roughly flat revenue and earnings of about US$240,500,000 by 2028, so this Hercules contract could either strengthen that upbeat thesis or highlight how dependent it is on harsh environment drilling staying healthy.

    Explore 4 other fair value estimates on SFL - why the stock might be worth less than half the current price!

    Reach Your Own Conclusion

    Don't just follow the ticker - dig into the data and build a conviction that's truly your own.

    • A great starting point for your SFL research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
    • Our free SFL research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SFL's overall financial health at a glance.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.