Q3 2019 Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by welcome to today's Q3 2019 Frontline Limited earnings Conference call.
This time all participants are in listen only mode. There will be a presentation followed by a question and answer session at which time. If you wish to ask a question you will need to press star and one on your telephone and Wayne I named <unk> announced I must advise you that this conference is being recorded today.
Wednesday trench seven so in November 2019, I would now like to kind of gone friends CIS Speaker today, Mr. Rob Mcleod. Please go ahead sorry.
Thank you very much brighter.
Thank you for dialing into Frontline's earnings cool the third quarter.
We find the markets very favorable pricing it looks to Todd will save us on the second half full 2019 represent completely different fundamental earnings compared to the festival.
Let's go straight to the first started please look at Q3.
We reported a net loss of $10 million.06 per se.
Thanks were 22900 on these 16 to on Suezmaxes and 59 quite all too.
Q4 is completely different level would be sunshine coach to 64000 on dice books, Suezmaxes, almost 50000, I'd add up to around the time too fast and Mark.
So you've seen in the report we do expect this to school. This will fall us we booked about us dice towards the end of the quarter.
On based on this I would like to highlight Suezmaxes.
How much most deliberately and the Atlantic in Q3.
This is a patient stronger fundamental.
This explains relatively low numbers for Q3, but a great start to Q school.
I think it's important to always look at earnings over time, not just one quarter and always have a clear charting strategy.
To support the largest shareholder it's on questionable the 275 million facility was rolled until May 21.
Hey, Scott Drake joke, securing commitments might CBC to find out the 10 Suezmaxes we acquired in Q3.
You can expect cash breakeven for suezmaxes to shouldn't drop.
The board also the class it's discretion at 10 cents dividend for Q3, despite the loss in the quarter and we expect Q4 to show more cash to our shareholders building on the $6 billion well for dividends, we have paid since listing in the U.S.
Oh, a kind word over to ingo.
Thanks, Devin and good morning, and good afternoon, ladies and gentlemen, then turn to slide four and five.
And look at the finest highlights and income system.
Sometimes achieved total operating revenues and that the voyage expenses of $94 million and EBITDA adjusted for certain noncash items over $40 million into third quarter.
Sometimes reports and letting them know about $10 million dividends, just six cents per share.
No so just for certain non cash items.
10.1 million, it's evident to six cents per share in the third quarter.
The cash items. This quarter consisted of 4.7 million unrealized gain a marketable securities.
2 million share results on a skill sets company and a 2.6 million loss on derivatives.
The third quarter shows the decreased $13 million against adjusted EBITDA of 6 million and a decrease of 14.1 million against adjusted net income of 4.1 million in the second quarter 2019.
The decrease.
And then nothing income into third quarter of 14 million, it's mainly explained by a decrease in to sell sometimes hard to basis.
Oh that person to $7.1 million due to the luxury fourk TV rates in the third quarter compared to the second quarter.
An increase in operating expenses of $6.5 million, mainly expense increase in datacom.
With 1 million in the quarter.
Let's take a look FMC on slide six.
The changes to the bankruptcy.
September Thirtyth.
From June .
Good mainly relates to.
And increasing cash cash equivalents of $17 million.
Which is the knick effect on Capex payments.
But of that Jordan that.
Sure Corporation.
Procedure issuance of shares on the dam program.
And then we had an increase in the food.
$823 million.
Mainly due to the children finishes the right of use Cisco Hi, Chuck you have instance, Mr. Cheekiness finance leases on their balance sheet.
Yes.
I think you run into trouble.
Dr. Trafigura will be brought onto the balance sheet only upon closing the transaction.
This is due to that according to use gap the charter in unchartered out the agreements cancel each other and we don't have can drive use of these sensors in the children between signing and closing the acquisition.
Then we have an increase in the long term assets August $17 million.
Just mainly relates to Pete paid concentration in relation to the shares issued for the Slach execute on vessels that the Chuck Baxter, Jessica and hence no accounted for financing.
Then indexed the item is that we had the decrease in depth.
Okay and $30 million in the quarter.
Okay.
We had an increase in obligations and the finance leases.
The first $1 million to $270 million.
Mainly due to the initial recognition the rise of use.
Thank you analysis cheated on finance leases, which I mentioned.
And then an increase in equity of $165 million, mainly due to share issuances.
And just I think you restaurants action and relation to the ATM program offset by a net loss in the third quarter.
At the end of September for all time highs turns and 74 million in cash and cash equivalents, including the undrawn amounts under our unsecured loan facility marketable securities and minimum cash equivalents.
On the remaining Newbuilding capex requirements as of end of September amounted to $222 million related to one suezmax tanker and one lymphoseek, which are both expected to be delivered in May 2020.
And also to two and a two tankers, which are expected to be delivered in January and March 2021.
With approximately 175 million debt capacity for Newbuildings.
And the near term debt maturities.
Then, let's take a closer look at cash breakeven rate.
Our opex on slide seven.
We estimate the average cash cost breakeven rates for the remainder of 2019 of approximately $23400 per day for the need for speed.
$21100 per day for the Suezmax tankers.
At $16500 per day, 40, and our two tanker.
You say other all in day rates.
Smelser to cover divestitures operating costs and the Drydock estimated interest expenses on charter and be able tire installments on loans and DNA expenses.
In these and breaking this we have included charter cost.
Steve two suezmax tankers, Enron and ask you to enter into fourth quarter 2000 on team.
Jonathan low cash breakeven rates offers a strong downside protection against the low rate environment and at the same Tommy create great upside potential in a strengthening tanker market.
As we have said before every $1000 per day in and that's in achieving six system on a cash investments.
Translates to approximately 22 million in incremental cash flow after debt service per year or 11 cents per share.
Which shows the high importance on maintaining the snow cash speaking.
Then in the graph.
Right hand side side, we have shown incremental cash flow after debt service per year and per share.
Well $10000 $20000 $30000.
For $2000 per day in achieving rate in excess unlevered cash breakeven respectively.
As an example, assuming any of the CV to over $65000 per day, and any thoughts relative suezmax tanker in acute activates basis. The clarksons can your knowledge.
We get to an average rate.
Four to $6000 per day.
Which is approximately $27000 above our average cash breakeven rate.
Dust in such a scenario sometime will have a cash flow per share after debt service.
Dollars and 98 cents close to $30.
Yes.
The operating expenses per day in the third quarter 2019 were $11600. Please proceed.
$8400 for the Suezmax tankers and $7000 for data to tankers.
As product Corvisa season, two suezmax tankers in the third quarter and pretty busy season, two suezmax tankers in one and two tanker.
Scheduled for dry dock in the fourth quarter 2019.
With this leads to another together.
Hi, Thanks very much.
Let's look at the key market developments please.
Actions gross panic in the talk to markets start to the first quarter.
Let me phrase rights to record levels.
Well the search will shortly be could not have occurred without a constructive on the line markets.
So seasonal increases in rates throughout the year indicated at the markets comments was pipeline.
Setting aside a certain rights the market has remained strong overall in Q4.
In recent weeks and the more sustainable way than early in Q4 in our view.
The most important takeaways.
The strong demand fallen in the market is tight.
Fundamentals are highly supportive.
We expect right rates to remain strong.
You as exports is as we've discussed in the past and important driver ton mile demand continues to benefit from rising us exports.
As production growth is forecasted to slow, but export capacity is ramping up.
This will results on slide six results in more global trade as the demand pool continues to grow from the east.
That is virtually all new hardwood capacity is being built.
Let's look at the next slide and how deliveries are declining whilst the fleet is aging.
Tied to fleet growth is obviously, a key factor for the market bottoms.
Despite the higher deliveries recently, we are seeing strong right, which is very encouraging.
That's very encouraging sign that the markets finally, as better balanced after years of low rates low volatility and poor. Thanks.
Importantly, desktop and a large increase in new building orders this year, despite widespread optimism for stronger rights.
The removal of the overhang caused by large order book is a significant development, but new orders kind of course quickly change this.
The price of recycling has also slowed down but it's improved two highlights dot 168, vlccs are greater than 15 years of age which is expected to double over the current order book on Vlccs.
The market is increasingly firing modern ships or customer saw on this trend will only increase going forward.
This we believe will play to continents advantage as we have one of the losses on the most model crude tanker fleets in the industry.
Okay, let's summarize.
In conclusion.
Various factors to core top cost as markets outlook.
In the short term rates are strong.
Some significant cash flow asking it was explaining due to the source of our fleet and are very competitive breakeven levels. We believe frontline and frontline is an ideal position to capitalize on what we see as a new market normal.
Again, it was highlighting on earnings per share after that services frontline comes out to us number one.
Selling and saw it impacts the Costco sanctions the market has already begun to move following extended refinery maintenance ahead of the IMO 2020 .
Well they start this points to the positive risk our global slowdown in GDP growth continues to own the news headlines and it's a real risk does have added volatility so the actually markets.
Also there is always the theoretical chance that Yamamah 2020 implementation will not go as expected soon we'll see the new regulations being enforced how well, we don't know yet, but we expect to see widespread compliance.
We think the market remain relatively high levels going forward I do not yet see any supply side by side factors emerging in the short term that would lead to a different conclusion.
Although there are always risks multiple possible.
Our market drivers should result in strong entered the year and continued strength into 2020 .
Against the backdrop open expected strong markets. We believe we are well positioned to generate significant dividend capacity going forward and to create value to our shareholders.
With that.
Operator, I would like to turn two questions. Please.
Thank you ladies and gentlemen, then we'll now begin the question and answer session. As a reminder, if you wish to ask a question. Please press star and one on your telephone and wait for names you May announced.
Questions coming from the line of Jonathan Chappell from Evercore. Please go ahead.
Thank you good afternoon, Robert in here.
Robert first question for you is on the revenue recognition I think you did a great job in the press release, explaining just what's happening there and I think most quarters. It makes a lot of sense.
But given what's happened in the VLCC market, especially over the last couple of weeks rates gapping up which we would assume to mean utilizations very tight and can you kind of showed it in your chart on slide eight as well would it be crazy to think that there would be fewer bowel stays in the ended the year because your ships with discharge and immediately be rebooked.
Rebooked it at higher rates and what you booked so far each being kind of conservative with saying that the fourth quarter rate could be lower than than what you've already booked year to date, despite the market moving in the opposite direction.
John My question is it's very good question as an ex extremely volatile so well due to saw without all use Q2, sorry, I used to Q2 reporting where we guided on Q3 as an example, so.
And we we guided 83% having been fixed and the fact is I don't think this will happen probably ever again, but the fact is off to we guided we didnt book a single cargo that loaded in Q3. So they ended up being old about 17% ended up being followed space.
It's virtually impossible to say how many how many.
Next we'll do with loading in December one cannot say is that we definitely will have ships loading there in the plants.
And this would not just the father's day for sure, but we're starting to Vlccs. For example is that we've held them relatively short we've been doing over last quarter almost.
Virtually almost just see the AG stronz addressing we've only booked those are a few days that alerting and.
We'll go into 2020 . So so we have a lot of positions.
Opened this year, so we'll do a lot of bookings but.
Give you a percentage. This is this is what.
Every quarter because of new accounting rules. This gives the uncertainty, but I can't say will we will have quite a few booking so so, let's see where where comps, but india, but we've got some ammunition less than we've got this ammunition left because we believe that we would run into high rates at the end of the air So at least we position for that but how it's going to be divided between.
Q4 in Q1, let's wait and see but the important thing is to the cash will be coming our way.
Okay great.
Appreciate that clarity Robert and that was my second question is the cash come your way.
Borrowing if you will from the fourth quarter to date.
A dividend for the third quarter of 10 cents makes a lot of sense given the transparency that you had on what you booked already for Fourq, you inning or kind of laid out a sensitivity.
As to what your cash flow could be in a certain rate environment of almost $3 a share. So I. Just wanted now that we've kind of hit this inflection point in the cash is coming.
What's the kind of the cadence at the board is given.
We look for a payout ratio similar to kind of legacy frontline of nearly 100% payout in earnings would you expect given the leverage that you just took for the Trafigura acquisition in the loan still outstanding to Hammond It maybe closer to 50, 60% I know, it's a board decision, but now that the cash flows coming how do you think you should message that kind of payout ratio.
To investors.
Okay I'll give you the in Brazil go to give the the exact on this but if you look at historic lows.
It's very briefly in the beginning has it.
Sure front on shows $6 billion being paid out or should $6 billion of of.
Value being paid out dust and as we're going to stop building. It up numbers. Now we are we are in a great positions I think its many years and strong thats been in such a good position. So all I can say developing the the board will be posted paying out.
And we will be these be ready to return to shareholders.
Okay.
Appreciate it thank you Robert.
Thanks, Kim next question is coming from the line on Gram per unit from VTI Gene. Please go ahead.
Yes. Thank you thank you and good afternoon.
If we could dive a little bit in to the balance sheet.
As we kind of come through come through regular debt amortization as we think about.
2000 wanting.
And we think about the company position and its balance sheet. It sounds like you're very comfortable with your current leverage.
Should we be thinking about.
Just as as we think about going through and paying out our schedule data amortization or should we storage, there's the potential and a stronger market to maybe accelerate some of those some of some of the outstanding debt and kind of.
Paydown dead and with the goal of maybe lowering those all in cash breakeven seen any kind of color around that.
I.
Don.
Thank you Wayne.
And is quite.
Comfortable with.
And then administration as we have today.
And.
Which is not a targeted and 65% on market data on our missile.
As an obvious.
And I think Dan.
Assuming that.
So specifically for let's say.
Prepaying.
Accelerating that.
Repayment of debt I don't think that's something we looked at Pilar counts.
Okay perfect.
And then then my follow up question was Robert you mentioned in the prepared remarks, you expect suezmax cash breakevens.
Kind of had lower here.
I think any can you sort of.
Talk a little bit about that in terms of is or some sort of target there or do you. Just mean, a that you're happy vessels are coming in and with that our cash breakeven is going down in we're comfortable with that out just trying to get any more color around that.
Great Thats related to the finance that any us just.
Got committed so we're pressing the.
You Cindy.
The breakeven there.
For full ownership hardened ships hard and then the now with asset sales and we're getting that done.
Considerably better terms than.
What the ships or how that presents.
Okay. So maybe we maybe though it was those vessels, maybe we shouldn't expect the suezmax overall cash breakeven them to maybe go much lower from where it is currently.
Good luck on the right way to think about it that's what's going to drop is a ton of the Suezmaxes will will will very soon hopefully much better financing and then the cash breakeven willful I'll give you the exact figure, but we're heading back to where we were a few quarters ago.
Thanks, Attentive specs is they have today.
Good to great done cities have defined about labor and we aren't any refinancing this with our new occupancy and financing.
So uncertain of 230 basis points, which said if it sounds like 45 basis points in between and in addition, we have a longer pro fine than that.
Well I think you that which we are now paying them I on their behalf.
The difference between these two elements.
Say it will come to around $2500 today, maybe a bit more and add on those 10 vessels, but obviously that will be abis alcatel the vessels that.
Okay, Great and then just one more for me on on the traffic or a deal.
I guess it looks like its drifting further a little bit back.
To that just any.
Any sort of thoughts around the was that just.
Just given the quickness in which the deal was done and then signed up in August that it just things just had to get get aligned to close this transaction or just kind of curious maybe why didn't close as quickly as we might have thought.
This is the Buda journey the financing Gregg said it just attaining ended at the terms, we wanted took longer and as a lot of pipe work.
So folks to compete as well so so this but we were confident on kosygin, we'll be back with timing on that soon.
Okay, but traffic or still has received those shares as of August . Despite the transaction not closing that's correct. Yes. So we got full access to earnings and.
By the fact that we've been we've been we've been.
You have the same exposures if you've been ownerships. So so we've got.
We got the instant access to to the earnings from the vessels.
Okay perfect. Thank you very much for the time.
Thank you next questions coming from the line of 19 cadence from Jefferies. Please go ahead.
How are they all have regard.
Okay. Thanks.
All right so.
Looking at October you sold 4.3 million shares raising about $47 million over the past few months you raised about $100 million in aggregate so while at the use of these proceeds.
Going forward or kind of why raised $100 million seawater.
Yes.
So these proceeds have already use them and liana.
Portion left which we are going to you sit and wait so let's say as of the end of September we have there.
Steve at approximately.
As you see Ron.
It's more than 50 million on the proceeds.
And then that's supposed to use the in connection with.
Thanks, Kevin capital expenditures of pad in that period.
And related to them.
Newbuilding installments and related.
Several investment.
And then as now in the fourth quarter.
Probably in the first quarter, depending upon the two single.
The Trafigura transaction.
Hello spend them.
And it still is proceeding.
And related.
And covering the.
And invest on the equity portion, which is a small portion and then also the.
And increase them in a cash requirements that we would have in relation to London agreements.
With respect to the financing on staffing analysis, and then also in relation to that for the scrap investments and Newbuilding capex payments that we have now in the fourth quarter. So that this accounted for roughly uses proceeds for.
Okay.
And then you mentioned how much you like kind of scrubber fitted suezmaxes, but you did not exercise the options to acquire for more suezmaxes from traffic era. So why didn't you let those options expire.
No that was going to call that.
I might have made a while ago does the market to spot market was still still lagging.
We were also on the deal where are our share price and Todd mood considerably from the what Weve issued shares so.
Permit.
It didnt seem to us to be the right thing to do in the meantime, the.
The values are going up a little bit but overall.
This not.
This this not many buyers out there so I don't think we missed the big opportunity.
But not taking those options and we don't regret not doing it.
Okay, and then I guess lastly from me updated cadence of your either off hire days or capex or number of scrubber installations.
By the end of year them by the end of the first quarter.
Okay got it I'll take the other scrubber, Paul I'll give you the scrubber straightaway, which is but one out of three ships do we have on the water now and that's going to increase to about half the fleets within within next three four maybe five bucks.
Okay. So by.
End of the first quarter, maybe April has the fleet, but no no more plans for additional scrubbers thereafter or is this kind of an ongoing strategy. So so we intensified we've made to call on scrubbers.
To April May of next year, all the costs. We've made have been on ships that were due to dry dock. So so the next wants to be coming up will be.
Tricare in terms of decision, making because they will be outside of dockings. So the whole cost will be scrub rather late I think we'll be underwrites environment, which is a lot stronger so the.
Cost will increase but what we've got as Weve, obviously, we hope they position and ESMA side gives us great taxes that companies, that's going to be even better worse when the marine barges completed so our access to all the equipment is.
Obviously excellent and when it comes to spending we've.
Looking to two specific yards. So we have things lined up so that we can go along side and do the installation.
On a number of ships at a pretty much 95% fixed costs. So now what weve watching as the performance of the scrubbers, we're very happy so far with washing the fuel spread the fuel spread is developing products with patients and we think it will widen into Q1 and then we will have.
Start, making some calls they will not be easy calls given the overall cost of doing this but we are positioned to do and we can make calls we need to make calls three or four months prior to actually doing the job. So we've got to look we've got things at least and up so we got the Optionality and we are ready.
Into its makes a decision where we need to which with the current time looking probably second half of Q1 there'll be some cost of Mike.
Okay.
Great color. Thanks, so much.
Thank you next questions coming from the line of Michael when Bob from Weber Research. Please go ahead.
Hi, Good morning, guys. How are you most of my.
My questions have already been answered, but one of the zero went on kind of sustainability.
The uptick and rates in profitability here.
Obviously now ramping a payout period the payout early the nice aggressive staff and I think thats.
Most of the market would agree to there'll be a lot of casegoods done out of the out of the business in the next 12 18 months, but.
Obviously, the sustainability of rates above kind of mid cycle level biggest question I guess are most investors. So Robert you mentioned something at the end earmarks around Cabot slow the slow build in the order book or kind of a lack of a lack of orders.
Even on the back of a rate cyclically saw earlier this month.
We've heard either all of that there is kind of a heightened fear of obsolescence risk, especially around tech.
And our propulsion.
This kind of.
Permeating, the mindset and some private owners and maybe there are like that to be last the last guy in all technology and Thats one of the reasons why we haven't seen the order book responded the way typically has when you've seen kind of this kind of rapid profitability I'm. Just curious are you seeing that.
And then just to kind of your general thoughts around right how youre the what kind of supply response, you'll think we'll see.
So what should be a pretty firm rate environment in 2020 as it pertains to the other sustainability of these kind of rate.
So maybe your thoughts you on a lot of.
Lot of though I'd point, so I'm not going to repeat the new that they observation on several the other calls and.
I'll do instead, Michael I'll focus on where we as frontline see things and then the end of the also what our strategy will be.
Hey, going forward, because we love Greg.
We'd just love the fact that the order book is not increase in like Luckily, it's normally when rates from like.
The outflow did you have at the moment, which is as strong as we've seen for long long time then.
But would normally such we're not seeing for every every week remains the case, we are building I believe the next cycle lengths. So what we're very disciplined but obviously, we've got visibility from here until the next new ship can deliver it to US why wouldn't you order so you'd have them.
Visibility of somewhere between 14, and 18 months cyber, let's let's call it a year and off.
And just overall effect so for next year and a half than that I don't think on the supply side I don't think we've got so much to worry about the old ships will not be able to compete against new ones. Then there will not be recycling, but we'll have a lot of ships going into it if it's for storage may we get contango storage who knows but.
All the shifts.
As you saw on the chart the old ships.
Yes, so ships on order so.
When looking at how to to protect front on this position than one of the obvious place to do tend to secure income is to do some time charters on the we've held back in that we've been very firm in our view. Unfortunately, we get it right, saying that the second half of my team will be a lot better than the first off.
And Weve added clear strategy on increasing spot exposure.
As we come into 2020 and strength I think we'll see the time charter market, becoming more active and then we will look at doing some coverage of course that is the right thing to do it at the and strong markets. We did it we've done it before in 2017, we how the year, we would have lost.
$60 million, but we lost 10, because the time charters saved us form of from 50 of them. So we will look at that but we will look at the longer deals because we don't think theres any point when the period you how disability being 12 18 months then.
Looking at that we're happy with it would ask plus exposure. So a charter frost our daily three ask assembly stocks, we stopped taking coverage of some of the the period, it's not not visible to us so that will be the aim maybe we'll look at two years as well, but I'm absolutely convinced that we will see the time charter market.
Which has been very disappointed I say it has been more after the last three months than the previous six or nine but.
I think this that that market to us a lot to go up into rates are also whos going to increase so we're not jumping at anything now, but we're watching it very very closely and we will will take action and protect future earnings and it's a great tool and I think that tool will be much easier to use and 2020 . The.
And it was in 2019.
Got it.
Helpful. Just one more on asset values and.
The interplay between Newbuild prices and use so right now the spread between grain crop in newbuild prices around 8 million bucks wider than I guess.
Since 2015 very seriously.
You got to go back to 2010 minutes of the final last time, you saw the spread between something on the water, new and something on order, which was more than 10 million box. That's obviously got right around the time, we saw the last night of exhaustion, a shock to the tanker markets around trying to turn that Akiko do you think you think that kind of spread something north of 10 million Bucks and play.
The 2020, or we could see secondhand prices move to.
100, 500, 1000, 12 million Bucks, what kind of a lag associated with kind of a deeper lag on newbuilds prices because there is that because there that reluctance to.
The tax they spend money on obsolescence obsolescent proportions.
The what we're seeing now that spread.
Let's take the first 0.1st the the amount of both.
Is actually so this seems to be at all time low right. This is there a few that certainly there will be some popping up gross but low very low activity the spread that you're absolutely right. It's around hates maybe maybe $10 million if I had a choice between the prompt one or a 18 months toward I would definitely pay the ISO.
$10 million, so I think you'd make start in the meantime, being being the recent number one and Andy I was released number two is the ducks I'd, rather not see the order book CRO right pits.
This the spread as though and I think you you'll be on the on the on the right side of the trade by taking the parent drug ruling.
Gotcha and Thats helpful guys I appreciate it.
Put on the full front I don't know on the on the local if you look at the 18 month period, then you need to our cash breakeven you'd you'd look at having to somewhere someone that plus minus 50000, depending on depending on the vessel evidence.
Hello.
The ballpark figure us.
Yes, no 8 million definitely seems like a beautiful number in terms of that spread at certainly partner when it comes to looking at names on an 80 basis and how much Jason could say on secondhand prices or that kind of dynamic so.
That's helpful. I appreciate it guys.
Thank you hear next questions coming from the line of Eric, albeit from Clarkson Secrete Securities. Please go ahead.
Sorry, I was hoping to get them so high.
On a dollar per day basis, and the current spot markets. We are seeing 4000, a day as of today. So.
And also seeing loading mid December so do you think these.
Earnings artificially high as owners are now starting to move into central or are these earnings achievable.
Yes.
Achievable.
Perfect. Thank you.
Thanks.
Thank you and next questions coming from the line George from Capstone launch. Please go ahead.
Good afternoon, Thanks for taking my question.
Couple of quick ones will quake, the recently announced joint venture between Golden Ocean, Trafigura and yourself on the.
Fuel facilities.
What are the advantage itself, having this versus just going the way we did before and secondly can you comment on the merge often seen company I think you own hour that 15, 20% stake in it what will that dual for you I saw it had a 2 million dollar loss this quarter.
Do you expect out of this this joint venture investment.
Okay, alright, thanks, very much on the taking that one first I think the change we're going to how.
Q4 ships worldwide is one of the biggest changes those LIFO for loan on time, and it's going to me in a lot of disruption and overall disruption posted for the time to market. So this situation is going to be one of the drivers for the time to markets we us the.
John Fredrickson group of companies, we bunk on our own about a million tons a year.
We're very close to several of the traders and trafigura socially one of them by doing this.
Group would trafigura, we're going to increase our volumes significantly we're going to have access through trafigura system, where they have some very strong areas around the world, which we've been using for years with good results. So it was very natural that too. So look at the end discuss what volume and access will be key so what we want.
Alex This is.
Delivery at the right time, we want the the right.
Quality and obviously it was we also want the right price. So I think this joint venture. This there's all this company, which we we will have an operation very soon.
It's probably going to be the first of January that's the startup date it puts us in a better positioned the most I think and we'll keep our waiting time down and.
Rule will will be in.
Oh position when it comes to fueling our fleets.
Scrub the side.
Really say on the process on.
Membrane and.
This is that.
My understanding is that things are going going according to plan. It will successfully close and once it closes then front on will hold a position of 14.45%.
Okay and do you expect this company to do what for a final and you get and.
More advantageous.
Fitting spots, there and or.
Going as expected profit share, where you might spin the company off to shell those that could deal with ship finance.
I think.
We have the access we have some decisions coming up on equipment and it's obvious that we will be going here for our own equipment. The best price, we're very happy with the quality. So so that doesn't doesn't you see an obvious choice I think overall on the scrubber market.
For full everyone. It's been relatively quiet in terms of new orders I think the spread in Q1 will would widen and I think there's going to be a new wave of orders there and Thats also one reason I'm very pleased that we're doing this.
14 Marine group Inc. 2020 will be a very good here for the company and then the strategy through our sales and going forward, having to sort of holding is.
Yes.
It's not a natural thing for type companies to do we're very pleased that we've done that because of in common 2020 such a big event and it was extremely important to position ourselves and I think we can we can clearly say that it's been a success. So let's see how things develop its one option.
Would be two to give this out sort of or the shouting as a dividend to sort through all showed we will we'll see how things develop goods put its on being we will focus on doing our part in this.
Turning and making it a successful company with its definitely well positions.
Great. Thank you very much.
Thank you once again.
And one huge jeffs question.
When you have no further questions coming through please continue.
Okay over as I think will.
Disrupted often.
Thank everyone for call again.
Also a special thanks to everyone in frontline full for the hard work and.
Yes.
That does conclude conference for today. Thank you for participation you may all disconnect.