Koil Energy's Record Quarter and the Pivot to Services

Revenue up 78%, Brazil entry, and a renewed focus on rental and service drive a turning point.

DPDW · Earnings Call · 2026-08-13

A Record Quarter

Koil Energy (DPDW) reported a stunning second quarter, with revenues up 78% year-over-year to $9.2 million, driven by a 115% surge in service revenue and a 49% increase in product sales. EBITDA rose from a meager $146k to $1.1 million, a $955,000 improvement. The company's earnings growth is accelerating, as CEO Erik Wiik noted: “With strong momentum across the subsea industry, Koil's team remains sharply focused on execution and growth, delivering record financial performance quarter after quarter.” — Erik Wiik, Chief Executive Officer · 2026-08-13 This is not just a one-off; the quarter benefited from a major carousel project and early mobilization.

The Strategic Pivot: From Fixed-Price to Service and Rental

Koil is deliberately shifting its business mix from lumpy fixed-price engineering and manufacturing to a more predictable service and rental model. The company invested heavily in rental equipment, and the strategy is paying off. Service revenue now exceeds product revenue, and the mix is roughly 50-50. As Wiik explained in the Q&A: “Yes, absolutely. ... What we are set out to do this year is to deliver on the initiatives that we have been working on for almost two years.” — Erik Wiik, Chief Executive Officer · 2026-08-13 This pivot is new for the company, which in the past was predominantly a fixed-price contractor. The rental equipment business, long a minor side, has become a core growth driver. The carousel project exemplifies this: the company acquired a new 3,500-metric-ton modular offshore carousel while redeploying an old, fully-depreciated one, creating a "double effect" of rental income and service revenue.

Brazil: The Next Frontier

The company's biggest strategic leap is into Brazil, the world's largest deepwater market. After establishing a facility in Macaé and qualifying for work, Koil has secured its first subsea umbilical maintenance contract there.

In June 2026, Koil announced the award of a major project for subsea umbilical handling, spooling, and storage services. This project requires two large carousels, including a large mobile offshore carousel and a stationary land-based carousel to execute the work.
Erik Wiik, Chief Executive Officer · 2026-08-13

This is a landmark moment for the company and validates its Brazilian expansion strategy. The CEO emphasized the long-term opportunity: “Yes, so the subsea tieback is when the operator adds one or two wells, sometimes even more, to an existing field...” — Erik Wiik, Chief Executive Officer · 2026-08-13 Tiebacks are a key growth area, and Koil is well-positioned to capitalize.

The Roadmap to 2030

Koil has a three-part roadmap to 2030: distribution systems, Brazilian expansion, and rental equipment. The current results show all three pillars are advancing. The company's prior guidance framed this as a multi-year evolution: “We have been working so far on a 3-year strategy. The road map is now 2 years into the 3-year plan.” — Erik Wiik, CEO · 2026-03-31 The market backdrop remains supportive, with strong oil prices (partly due to Middle East conflict) and a resurgence in subsea activity. Interestingly, Koil's core market is increasingly in the Gulf of America, where tieback activity is robust.

Why This Matters

Koil Energy is at an inflection point. The investments made over the past two years are converting into revenue and margin expansion. The shift from fixed-price to service and rental reduces earnings volatility and improves the quality of earnings. The Brazilian contract, while small initially, opens a large new market. The 2030 roadmap gives shareholders a clear vision. The company is proving that its growth strategy is real. The prior quarter's discussion of the Middle East conflict and its impact on oil prices is now being felt: “So most of our business is related to what we call greenfield and those are the large investments, subsea that take years to plan, engineer and execute.” — Erik Wiik, Executive · 2025-04-15 That long-cycle nature is what makes Koil's recent momentum so notable—it implies customers are committing to projects despite geopolitical uncertainty. In summary, the quarter was a clear demonstration that Koil Energy's strategy is working. The record financials, the strategic pivot, and the Brazil breakthrough all point to a company with a strong growth trajectory.