Q1 2020 Earnings Call
[music].
Good morning, My name is keeping he and I will be or conference operator today.
This time I would like to welcome everyone to be Gaslog limited and Gaslog partners first quarter 2020, <unk> results conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be question and answer session.
As a reminder, this conference call you being recorded.
On today's call, our Paul Wogan, Chief Executive Officer of Gaslog Limited.
Andy recur.
<unk> Executive officer of Gaslog partners, and Alister Mxntwo Chief Financial Officer.
Joseph Nelson head of Investor Relations will begin your conference. Please go ahead.
Good morning, or good afternoon. Thank you for joining the Gaslog limited Gaslog partners first quarter 2020, earning conference call for your convenience.
This webcast presentation are available on the Investor Relations section of our website Www Dot Gaslog LTV dotcom Www Dot Gaslog MLP dot com, where a replay will also be available.
Please now turn to slide two of the presentation. Many of our remarks contain forward looking statements for factors that could cause actual results to differ materially from these forward looking statements. Please refer to our first quarter earnings press release.
In addition, some of our remarks contain non-GAAP financial measures as defined by the FCC. A reconciliation of these included in the appendix of this presentation.
Paul will begin today's call with a discussion of Gaslog first quarter highlights and results followed by a brief discussion of the LNG market after which alister will discuss the group financial position and financing activity and finally, Andy will walk you through the partnership's first quarter. We will then be happy to take your questions with that I'll now turn it over to Paul Wogan.
CEO of catalog.
Thank you Joe Good morning, good afternoon to all of you.
The koby 19 outbreak posed unprecedented challenges to gaslogs commercial and operating environment during the first quarter.
But I'm pleased to advise that our employees rose to the challenger to ensure that our fleet operated with 100% uptime.
We were fortunate compared to many businesses and industries and that we could continue to operate the business. Despite the turmoil achieved despite the turmoil achieve highlight rate levels of utility vessel utilization.
Dedication I'm professionalism under these challenging on on certain circumstances.
In particular, we owe a huge debt of gratitude to our seafarers, who continue to be separated from their families and loved ones and it's difficult times.
Slide six shows a cue Wong financial highlights.
The two chops on the left display the consolidated revenues and even about wholly owned fleet as well as a contribution from gossip columnists.
I'll focus on flick utilization delivered stable revenues compared with Q. on 2019.
Well I've continued focus on operating on overhead cost saving initiatives allowed us to grow even though I'm old and 4% year over year.
In addition.
<unk> earnings 15 cents per share into one what's the 34% increase year over year and you just buy low interest expense forward declines in libel.
It's like seven highlights the approximately 77% charter coverage for 2020 across a fleet.
This high degree of revenue and cash flow visibility is especially welcome. During these uncertain period and other places are resilient business model.
The vast majority about contracted revenues are fixed daily rights of higher with no commodity price exposure.
Well, so long time customers some of the LNG marketing major participants, including shell Jan Yeah, Jetta Centrica hotel took out on Endesa.
[noise] slight ache details new build equity athlete, which to date has experienced no go with 19 or like a delays.
We will take delivery of seven latest generation X.D.F. vessels in Twentytwenty and Twentytwenty wrong.
All of which will go on charter to high quality customers.
<unk>, they will generate an incremental $145 million.
Even one supposedly delivered.
Last month, we took delivery the gospel of Windsor, which immediately began to send me a charger to centrica, whilst the gas Little Wales <unk> on may 11th flowing which the vessel would immediately commands a 12 year chocolate <unk>.
In total the 12 vessels on the slide comprise one of the largest fleets of modern and highly efficient to stroke N.X.T.S. vessels.
The contract to the revenue backlog of over $2.5 billion.
And I'm, you will even <unk> contribution of $265 million once fully delivered.
They tend to slide nine.
We took the prudent decision to reduce I'll come into evidence to five cents per share for this quota to retain cash within the business.
This is a difficult decision as we viewed cash returns an important part of delivering shareholder value.
However, both the capital market turmoil and the commercial uncertainties caused by the code with 19 outbreak, making important to focus on near let us near to liquidity business resilience.
The slowest dividend when combined with the distribution rebalancing already announced capital partners will lead to the gas look group retaining $22 million in cash this quarter relative to the cash page two external shareholders in respect of Q. for.
It's like 10 provide some detail on the L. and G. commodity marketing Q. whoa.
Early in the quota allergy demand faced headwinds from a warmer than average northern hemisphere winter.
Generally hi imagery levels of natural gas analogy.
Covert 19 and created huge market them certainty.
Although the impact varied by month on by region.
For example.
<unk> 2019, Chinese first quarter demand decreased by over 5% to 15 million metric tons.
Meanwhile, European demand grew by over 4 million tons, all 37% gas pricing favorite Coulter got switching the power generation and LNG continue to replace indigenous gas production.
In total allergy month was 98 million tons and Q1 of 2020, a strong 10% increase on Q1 2019.
Looking ahead to cope with 19 pandemic.
Related lockdowns and consequently, plying in global economic activity continued to create a high degree of uncertainty for near to M.L. and G. demand.
<unk> for allergies shipping.
That could potentially exacerbated the usual seasonal for now than G. train, giving too too early Q3.
In addition to several major energy produces havoc knowing the bias of Council sheds, you would call goes over the course of June and July.
Although some of these Chicago's may still be shipped in marketed by trade.
However, as the right time chart shows.
G demand has started to pick up quickly in China.
<unk>, it's locked down regulations and bias take advantage of historically low energy prices.
Overall potion estimates April Twentytwenty LNG growth of 3% year over year, which compares very favorably with the mountains destruction scene for coal and oil.
Slightly 11 shows would Mackenzie forecast of an additional 92 million tons of broad based energy demand growth over the next five years, a healthy compound annual growth of 4%.
Attorney to slide 12 for a summary.
Kobe has to cope with 19 outbreak unfolded <unk> quickly introduce measures to.
And sure the safety of our employees.
On on interrupt service for our customers, which demonstrated the underlying resilience of gas looks business, which is supported by our 70, 777% contract cover in 2020.
I'll continue focus on cost controls, where we remain on track to deliver at least $6 million being G.N.A. savings like Twentytwenty Wow.
Buy a new book program, which when fully delivered in 2021 will generate an additional hundred and $45 million a fixed rate he picked up.
By our decision to preserve additional cash within the company through a reduction of the dividend and finally as I was too low high like pretty significant progress we are making in refinancing our twentytwenty won't debt maturities with that I'd like to turn it over to our stuff.
Thank you Fools on good morning, a good off and then you will.
The length of the current environment I wanted to to address the impact that it has had on our financial position I'm to bleep you on off announcing plans regarding alpine facilities maturing and 2021.
It's like 14 set side, all consolidated balance sheet metrics there'll be ends up to one.
Schedule debt repayments over the next several years on capital expenditures for the remainder of 2020.
We ended the first quarter wouldn't that that the total capitalization of 60% on total liquidity if $252 million.
This in mind includes $150 million, a restricted cash related to the financing up against the window.
But exclude $81 million attached classical posted with all swaps kinds of policies.
And does not reflect $38 million a child the highest for April the routine shortly after the course around.
Oh gross liquidity position has remained consistently strong over the last several courses despite the impact of accounts environment.
Financial resilience will be reinforce part the reduction in the dividends are <unk>, So partners cookie one.
I'm fine all continuing success in <unk> operating on O.G.N.A. expenses.
<unk>, having very constructive dialogue with all kinds of policies.
To to identify and executes measures to reduce costs collateral posted under the existing interest craze and of course coming to school.
Looking forward.
Total that will increase as we take delivery of on new buildings will be amortizing all bank debt at a rate of approximately $255 million per annum. When the fleet is fully delivered.
Over the period 2020 to 2023 inclusive we will advertise a total of over $1 billion.
<unk> take some time with the underpinned by all consolidated chunk of backlog.
I have $3.8 billion.
Finally, we have approximately $37 billion of new building cash equity payments remaining do this year.
We expect to meet meet capital commitments with cash on hand, plus operating cash flow.
Slide 15 demonstrate that while the curve at 19 environment test impacted the mark to market value of all derivative liabilities.
We all took benefiting meaningfully.
In terms of the reduction in a interest expenses.
The fools and interest rates.
Central banks around the world to reduce that funding rates and injected substantial liquidity to soften the impact of the virus on the capital markets.
Quarterly three month libel average has declined by some 200 basis points from 2.6% and T. 120, 92, approximately 50 basis points currently.
If interest rates, which remains to be levels for an extended period.
200 basis point reduction would be equivalent to an annualized intra saving of almost $30 million.
37 cents per share when applied to the portion about that we're just comedy on <unk>.
We can decide 16, which provides an update on the status of the refinancing about 2021 debt maturities.
March 31st Twentytwenty, we had $1.1 billion outstanding under all five that's still facility and all legacy facility, which maturing April on July 2021, respectively.
We're in the process of refinancing both of these facilities and I'm pleased to report that the group continued to receive strong support from our diverse on high quality group of cool relationship banks.
Today, and despite the covered 19 related disruption to global banking and credit markets.
We have received commitments totaling approximately $900 million from oddly banks.
I believe but this is a testament to the quality of our assets.
Operating in commercial phone.
Constructed backlog.
On the strength of gas those long standing banking on commercial relationships.
Proceeding with syndication on documentation and are on track to complete these refinancings by the third quarter of this year.
We believe that the combination of the refinancing program together with the incremental cash flows from a fully contracted you build vessels.
The capabilities and commitment of sea Faring, then sure based employees.
Progress with our cost saving initiative started last year.
The benefit of lower interest rates and I'll prudent dividend policy will leave the group and a strong financial position.
Well place to emerge from the current environment with highly competitive breakevens.
And an industry, leading platform offering on parallel service to our customers.
Active returns to our shareholders.
And without alternative Andy to discuss the partnerships first quarter.
Thank you all Sir.
18.
Partners performance in the first quarter of 2020.
I'm pleased to announce financial an operating quarter for the partnership. Despite the challenge is related to cope with 19 as Paul discussed earlier.
During the first before we reported revenues of 91 million adjusted EBITDA of 64 million.
Earnings per unit of 42 cents increases, the 6%, 2% and 1% respectively over the first quarter of 2019.
Two of our vessels steam turbine proposing six new multi modal charters.
<unk> expended decreased by more than 10% of the year on year.
We retired approximately 33 million of debt.
And we declared a common distribution of 12 and a half cents per unit.
While we were encourage bar performance during the first quarter. There remains a high degree of uncertainty in the commercial environment, given a significant economic disruption cause by the covert 19 pandemic.
Accordingly, we are withdrawing or previously now the dogs for 2020.
However, we are pleased enough that all 15 of our vessel are currently on charter.
In addition.
31, our fleet is 78% chartered for the remainder of 2020, representing approximately 209 million of contracted revenues.
Including our recent charter, but nothing read Andre that we completed in April.
Coverage for the year now increased over 82%.
You'll see the positive impacts are reduced distribution has had on our coverage and liquidity.
As the charts on the slide show or distribution coverage ratio for the first quarter is more than 4.6 times.
Moreover, the 12 and a happens distribution represent a conservative 30% hey out of our adjusted earnings per unit for Q1.
In total dollars are declared distribution represents a quarterly cash flow of 6 million.
Retain approximately 21 million more cash in the business.
Pair to the partnerships distribution level for the fourth quarter of 2019.
Turning 20 had a discussion of the allergy carrier spot market.
The first quarter of 2020, sorry record 102 spot in short term charter stuck according to potent.
24, approximately 20% of the total <unk> carriers.
This activity includes to steam baffled owned by got four partners.
Nothing else in Victoria, which is now fix for nearly all of two two and into her drydockings scheduled to commence this summer.
Methane read Andrea which is now fixed through the third quarter.
At Paul discussed earlier, we continue to focus our commercial offers on maximizing fleet utilization in the coming months.
Like 21.
Partners balance sheet metrics plan debt repayment over the next several years and capital commitments.
The partnerships credit profile continues to be robot with net debt to trailing 12 month adjusted EBITDA, a 4.7 times.
The capital remains a strong 54%.
As of the end of the first quarter, we have 93 million of available liquidity.
We expect to continue string thing our balance sheet in the near term beginning with the retirement of approximately 82 million of debt over the remainder of this year for a total of 115 million retired in 2020.
Reducing debt balances will reduce our cash flow break even levels over time, improving the competitiveness of our sweet.
Lastly, it's important to know that the partnership has no committed growth cat backs, but we will spend an additional 14 and a half million and maintenance capital expenditures related to our three remaining drydockings in 2020, including the installation of Dallas water treatment system as required by regulatory compliance.
Turning this like 22, and a discussion of how our focus on debt repayment graves equity value for our unit holders.
On this chart, we demonstrate how amortizing our debt balaji capacity and book equity value using our most recent acquisition at the gas for Glasgow as an example.
Oh God partners.
Level and this that amortizes at roughly twice the radar shift appreciate.
If you can see from this slide or loan to value on the Glasgow declines by over 9% during the two year period from the end of 2019 through to the end of 2021.
During the same period or book equity for the vessel net appreciation.
The increase by 14 million, which represents a 10 per cent compound annual growth rate inequity value.
As as compelling value creation demonstrates we believe that prioritizing debt reduction supports the partnerships growth in book equity value per unit.
Today's standard approximately $12.50.
Above the current trading prices are units.
Try to fly 23 in summary in the first quarter. The partnership delivered another solid operating in financial performance.
The challenging economic conditions, resulting from covert 19.
Or focus remains on ensuring the highest degree fleet utilization, while continuing to reduce our unit G.N.A. and objects costs.
The partnerships capital allocation strategy for this year prioritizing debt repayment further improving the resilience of our business.
Finally, as one of the largest independent owners of LNG carriers are scale and continue to focus on operational excellent cost control and reducing cash flow break even.
Improve the partnership competitive positioning in a growing LNG market.
[noise] without I'd like to now open it up for Q. in a.
Tiffany could you. Please open the line for any question.
Yes.
At this time, if you were asking question <unk> and the number one.
<unk>.
So arm line well pots for just a moment you can house.
Here.
Yeah first question comes from the line of Michael Leper, what's the weather research.
Good morning go story.
Hi, Michael Fine How're you doing.
Good.
Obviously a lot of.
But <unk> talk this quarter and conversations around kind of interesting is the trade slow et cetera, but I actually wanted to.
It all by asking you about some new business.
Floating around in the middle of all this you know we saw suck cutter.
Come out and so I'm, you know what looks like a tentative agreements to.
Build a big slug about once you carriers in a in Hudong in China, which should be the largest order ever place. There now so I'm just curious <unk> one what you think about that and then too you know as you think about you know the next several years for for gas log.
You know do you have it would give any qualms with taking on you know you know several hundred million or a million dollars capacity that could be you know built in China, I mean, if I'm a residual value risk perspective, just just curious how you think about that in general because it is kind of one of the data points. It kind of flies against the grain in terms of everything else, we're seeing right now.
Yeah.
Yeah I'm sorry.
Yeah, it's interesting isn't it yeah, I I'm like I think coal and oil what we're saying some pretty drastic demanded the destruction right now yeah, what we're saying with allergies, it actually holding up quite well. Despite you know the downturn and and the economist and I think that's because.
With L. and G. I think it <unk> <unk>.
He says no a systemic fall in demand in fact, we're still seeing it going up so I'm certain that we're going to need more LNG in the future without it down so I didn't like the car is in that and then moved to to a expand left production is correct I think well they probably does though it push.
Some other projects to the right you know I don't think you'll see as many F.I.D.'s taken this yeah I think that will fall back into next year. So people have more certain things.
It could be one of the people who have the ability to to do that but you know we do we do see continued increasing demand for L.N.G.
They ordering vessels.
I think the Qatar as we'll we'll also come to an agreement with the odds in Korea, because I didn't they want to make sure that they have a lot of capacity. So they can hold back if it isn't agreement to agree right now there are no sort of but but in terms of or China, who don't I think the <unk>.
<unk> continued to increase in terms of.
Quality, a et cetera at all of that L. and G. carriers, and so word gas, let's look at a building in Chinese jobs in the future yeah, absolutely, but we would do that we'd paid a a view on that at the time, we would go and as we do always look at the inspect them and make sure that we felt comfortable with both of quality.
But especially with the with the safety that.
Yeah sure Okay, but that's helpful. <unk> just along the lines of of the environment. We're in now and you know the notion of.
You know lower for longer angry using some of the some of the the the.
Commodity prices were allergies kind of indexed off of our Benchmarked against you know it would seem like leverage to the downstream.
It is more important than ever nom as as you mentioned, we certainly see the basis of F.I.D.'s sliding to the right now I'm pretty considerably <unk> in terms of you know Gaslog has always been you know.
Reluctant is probably the wrong term I would say, maybe like going thoughtful about about how it would develop downstream capabilities.
And you know be a few acquisition or or building up in house expertise I'm, just curious with with what we've seen as far as as the day is the the focus.
Changed at all or is there is room beam a bit of a heightened focus on developing you know more downstream capabilities as an outlet for your for your legacy tonnage or it's just you know kind of that.
The the aspect to devalue chain. It sees the most attention I'm in the next several years as we work off you know well boy battery.
And what what what would they actually look like.
Yeah, I mean, I think [noise].
As a business.
It's a really good question then it goes around so I think sometimes in the middle of old Yeah. We we do get I think quite rightly focused on the uncertainty that we're seeing when the covert right now, but yeah looking for what we have we have a lot of him, though growth, which is coming into gas low where the seven new buildings that we're talking about I think.
On number one priority is to.
To take delivery those two to make sure that we run those ships well so that we get the the revenues from those battles and to to make sure, whereas efficient and effective as possible you know we've talked about some of the.
Cost saving initiatives that we've introduced and we introduce them before you know all this uncertainty with Kobe, which were saying they're going to take a a pretty soon going to take at least $6 million out of our G.N.A. next year. So those are the things I think is where where where where focused on right. Now I think coming out is that as a company that will be.
I think at night strong position as we advertise off the debt and bring down the leverage of the business I think we'll be in a great position given our operation platform to look at other other options along the value train, but I think not something that's gonna, becoming a you know a year or two down the line, Mike rather than something that we would be focusing on right now we've got.
<unk> to chop to make sure that we deliver on all this <unk>. So that we've got coming we'll do that first and then when we're in the stronger position in the coming out of this uncertainty, yes, I think those those sort of things are gonna be quite interesting to look at.
That's true, but that's helpful and just just one more maybe near term question you know obviously with with a lot of the X. borders you know we've been seeing and following the the idea cancels cargoes make we've seen.
Because you have to 40 this quarter or <unk>. Just curious you know obviously the it's it's.
Less of a direct impact on on on gas log in that scenario mysteries, one you know.
Do you think you think those kind of numbers going to the you know if you know.
Fortyish cargo as cancelled as we move to the second quarter are realistic and then too if you could kind of Walker Sue and it forgive me. If you. If if you mention is already I'm from a different call, but you know if you if you could walk through the actual mechanics of how that impacts your business if at all.
Yeah, I I'm I'm not sure we have a better insight into into any constellations than others, because I think that the calculations are being done by privately between the people who are going to pick up because I was in the people who are producing them.
It doesn't say that some of those going to be with.
With companies, where there's a towing agreements. So the question is.
If the cause of the council.
The the other come to the companies you know, saying Yeah. For example decide to actually <unk> pro process. The got themselves they call the cash flow from the the telling agreement maybe they do it I I, maybe they protest the gas themselves and export so interesting to see what happens there, but we have done some work.
Round, yeah, if we saw those type of levels of.
<unk> Colorado's what does that mean for shipping we think that surround about 10 vessels. If you up at 2025 <unk> the U.S.
We always felt that this yeah was going to be quite time and to be honest with you. The 10000 materially make a big impact on that sort of level. We see we <unk> <unk> fixtures is honesty spoke about.
Yeah, just from the volume's coming on so I does obviously, it's not good news for as it is important it is something that we would prefer not to happen but to put it in the context, you know those type of levels. These people living tilting isn't a huge number of of ships, which which would be affected.
Gotcha Alright, that's helpful.
Thanks.
Thanks.
The next question comes from the line of Randy I'm.
<unk> Jeffrey.
Hi, Good morning, Jo and this is Chris Robertson on for Randy how are you.
Hello, Chris good thanks.
Hi, so <unk> more of a market level question, what what are your expectations for fleet supply growth. This year, it kind of taking into account disruptions both at the yards due to <unk>, but also to shut down of the scrap yards.
Yeah, I guess, you know we were not expecting a matching the web scrapping this year, Chris to be honest that I.
We were thinking really going to be somewhat close around 40 vessels are delivered this year.
View is that we are likely to see some of those vessels pushed off a into 2022, a number of them no fixed and I think they the owners are those vessels may well want to delay. So I think we could see that in 2020 pushed into 21 and then.
Into 22 so.
<unk> headline right is 40, but I suppose, but we would expect a number of those to fall back into 2021.
Gotcha that makes sense moving on to to the <unk>.
So have the 900 million kind of secured to date, how many financial entities does that represent and then how much more running room do you have.
Terms of future negotiations.
<unk> I was still would you like to take that.
Absolutely.
So <unk>, the 900 million a seven bind across three different facilities.
No question, we mean tons of running <unk>, but we are now in the protests as I said in my remark syndication and preparing the the associated documentation.
And placed on all the conversations we've had today well I you know I'll have to say that what I've indicated sometimes a commitment is what is quite is approved.
On on confident that we will be able to raise.
The remaining.
270 old million dollars that we need to like in order to fill that those three facilities based on conversations with.
A wide range of banks, almost all of whom then does too off today, so familiar with the credits and we have existing relationships.
Onto the question.
Yes. It does thank you for that and yeah by running room I meant remaining to be secure it. So you answer that as well thanks.
This is kind of related to what Mike was talking about but you know kind of given the allergies supply glad that's been you know over hanging the market since last year with some of these weaker winters and then of course to cobot situation economic slowdown.
Now what are some demand catalyst at the market needs to see to to help alleviate that low underlying price are you seeing any accelerated cold a gas switching and somebody emerging markets that spring on you know building of new gas turbine power plants et cetera, you are these low prices.
Kind of a a good thing looking forward.
Yeah, I mean, I think so it it just got a bit of a monitor.
Prices is low prices because I I definitely does stimulate demand and I think you so that with both India in Europe in the first call to you know Europe continues to switch from cold to gas.
The the U.K. as an example, we've just gone 24 days without a single piece of coping bird.
And that means that gas is being used to supplement a young backup the renewables in the U.K. and it it's happening across Europe, So Europe, but increased 4 million tonnes, 37%, increasing the first call to because it was taking advantage of the low got prices to swap.
Out of out of coal India was another Great example, which you know is a very.
Cost conscious.
The market for L. and G. in the first quarter demand went up 37% now of course as a then get started to low down we're going to see that probably coming off and until they come out of love down, but again, India start you know started to so that's the type of growth excuse me an expecting for a while based upon those.
Prices and so yeah, we well pretty bullish in terms of well the low prices are going to do in terms of demand. The uncertainty is what's happening around the kobe than the close they're all you know some of the economy's and then the.
Fall in production and things like that how long does it come to to get out of this up because those I think of the uncertainties that we're seeing right now, there's making us be cautious around up there, but in a cautious around sort of how we seem to teach ya.
Right that makes sense last question for me is covered causing any disruptions for discharging in causing any delays are quote unquote forced floating storage just waiting at the port.
Yes that have been some of that there are some quarantine restrictions in both for example, Australian I'm Chinese pools, we have seen also where poets have been kind of clothes on a temporary basis chips, having to read a direct to go elsewhere.
So that we <unk>, we haven't go right now he's any storage around the pricing, but certainly if you like that some enforced storage, which has been happening around people trying to adapt to some of the the cope with delays. So I think that as being in a sense not the kind of demands you won't but certainly has.
Being helpful. I think in terms of shit utilization.
I think looking forward you know into the.
So the full quota we have seen Oh, the last couple of years storage.
Used as a.
Way to take advantage of the price contango I think we're likely see it again, because we're coming up very very low prices, assuming people see sort of more normal market in the winter as well. What's interesting is you know as we're leaving away with some of our ships the ships are becoming much more.
Efficient in terms of boil up et cetera. So you can actually still call goes on ships for longer to take advantage of that price contango, so well the ship for doing it with that fleet right now is actually helping that's sort of contango storage.
Play as well in the future.
Great makes sense. Thank you for taking my questions.
Thank you.
The next question from something line of John Chapel, whatever core.
Thank you.
Hi, Joe.
Paul we know the the markets the market analogy shipping is challenge right now and LNG global prices are challenged as well and there's really nothing you can do about that but the gaslog structure has been set up to kind of deal with those peaks and valleys in the market and it seems like the equity market take your appear spot player. So as we.
Think about the two potential areas of concern that it may be weighing on equity target trigger counter parties and and the balance sheet I know you've addressed each one but but if you'll allow me to to just asking but that more directly first on the contract you said that all your your charters are meeting all of their obligations, but.
You can you just speak to their ability to maybe back out or or delay payment or do something that would question the stability of that contract in a very extreme market environment like a global pandemic.
Yeah.
They I I think there a couple of things, which underpaid and confidence in our long term shots as in the high Jones. The first is.
We have I see chador ships to very strong.
Customers have good relationships with them some of the strongest people in the market as we talked about on the cool.
Second thing is.
We have actually <unk> the vessels too.
Companies rather than to any specific project.
Some of the allergy cars out there are actually Chaucer to a project and of course, if there are problems with project you know it's unable to to operates et cetera, then there's the opportunity for the charger to <unk> with us because they customer have the ability to take the ship to any.
In the world and to discharge any pulled in the world that is no no no the ability they have under the contract. So those two things I think give us very strong confidence that we will continue into the the the customers will continue to use those ships and continue.
To to pay the highest.
Okay that sounds good and then ouster I also nineties you spoke about the the refinancing which is very important and and even follow up question before but if we try to frame and number value. So new building commitments unfunded new building commitments for what you have in the bank today.
And what you have line of sight on on the refinancing for the next let's call. It 21 months to get you through 2021.
What do you foresee is the potential equity gap, you would need to sell to cash flow from operations of your revenue backlog or or maybe a news refinancing that you don't have lined up already.
You know over that period versus your liquidity today.
Yeah put on.
I suppose the might put the question the other way round address it for you.
We have multiple sources of liquidity for the business to cope with you know whether it is an extended period of of a slow market the existing capital commitments whatever it might be and those sources of liquid is include festival, the refinancing which is well advanced because I was upset and.
We are on trying to get that closed killing t. three.
There are other sources Oh liquidity in the same leaseback market.
You know we have experience of it through the 170 spent we've done so far and Oh investigating other opportunities in that market and that can also a very good.
In terms of liquidity and drew dynamites as well as in terms of cost and of course it could also.
Well you to put less pressure on the banking market. So various opportunities in terms of sources of financing.
Pool has to decide what would be activity, which is under way on the cost front on I think we'll competent that we can do better than the targets that we've already communicated and meaning for the better.
Hmm I talked about it in my.
So by the discussions that we're happy with all kinds of parties about releasing casket I flew what she's $81 million today.
And.
Those conversations or swimming constructive and I think that the all kinds of parties understand that affects.
<unk> pre payment of interest over the over the course of seven or eight years.
I'd certainly like it's as much and accounting issue was it is a credit issue.
And I'm confident that we will find solutions to the nabel some of that kind of cool significant amount of that counts collectible to be released over time, and then lost the benefit that we get from low interest rates, which as I said, you know she until onto a basis points could be studying but in builder, we benefit in terms of interest payments it's like.
Look at all of those sorts of liquidity and on absolutely confident that we will be able to meet all capital comments over the two and that's given an off the next yeah. Other than Drybulking, We have no committee Catholics.
Right, Okay Super helpful. In alleviating those concerns if I could just do one more all too quickly I'll watch change in the last three months three months ago. When you did this combine call definitely partners was getting buried in.
Yeah, So I was holding up a little bit if we look at the three months performance the opera.
Formants I've got both partners to guess like when it is.
35% off a bottom admittedly.
As your transitioning let's see so is your transitioning the offices as as we think about you know how the world is kind of change your last very long and sit there been any reconsideration of the two public company structure and.
You know how how do how do you think about the next step Sir.
To be honest Jones that hasn't.
You know some more likely to me what the last three months someone like to me is climbing a mountain in the fall, but I'm trying to find your way and it's really felt like that I think you know as we sit on the last cold you know that the we have the.
Options around the structure of the company at any point.
And we will revisit those I'm sure Oh, but time, but to be honest with you over the last three months I real focus is based on just making sure that we continue to run an old parade the business.
They said I think those kinds of those kind of discussions are going to be how being put off a until we kind of get to the other side of this.
Yeah that makes sense.
If you want to I don't think Tonight.
No that.
Right.
Oh.
Yeah that all the best you Alster thanks, guys.
Actually.
Thank you John.
Your next questions on some deadline.
Lets people.
Hi, This is Frank Wanty on for Ben.
I I want to follow up on a couple of the.
Allergy vessels supply questions.
Specifically regarding new export projects are at the the historical trend is to build new for all the supply what what like guitar, he's arguing but it is there a.
Answered expectation that.
Some of those acts for projects will use existing tonnage supposing it to the building new.
Hi that <unk> I think what's interesting.
As as well as we're seeing some of the Expo projects, you know maybe pushing to the right. The other really interesting thing. This year is we haven't seen any.
Conventional LNG ships audit.
And I think that is very good for the L. and G. shipping knock it.
I think there are a number of ships, which has been quotas, which haven't yet.
<unk>.
Contracts against them. My view is that you are likely to see new project, taking those ships before they all the new blacklist themselves. So I think you know from a supply demand perspective, you know if you like one glimmer of hope out of all this is the fact that we're not seeing you Oh. This makes it very difficult to.
Two I think finances ship right now if you haven't got any any contracts against it et cetera. So I do think what you're saying is correct and I think it will be helpful. In terms of the overall balance for for shipping going forward.
Okay. That's helpful thing.
And then kind of switching gears a little bit given.
Changing market conditions I wanted to talk about the Gaslog Singapore conversion.
Or is it a expectation timeline on the Panama projects still as close to one track.
Yeah.
That has been a a delay in terms of that we may see that project going back a one or 2123 months, but nothing substantial at this point.
Okay. That's helpful. Thanks very much.
Okay.
Your next question, sometimes on line of credit for Wetherby, but.
Hey, Thanks for taking the question.
It was a little bit on the costs.
Actual costs takeout opportunity.
You're you're interested.
And you highlighted in in the presentation, obviously, you from a cash flow perspective dividend reduction help there, but in terms of outback and maybe from an S.G.N.A. perspective.
How many <unk> you guys getting pulled you go through with likely to be sort of a fairly easily.
And certainly on certain time, just want to get a sense of you know how much you guys could be one.
Yeah.
Yeah I Chris.
I think you know as we talked about <unk>.
Before the Kobe to.
But then again, along we were already well into looking at a cost base.
We are advised that we are we're aiming to bring down O.G.N.A. by $6 million by 2021, which were so very much on track to do.
When you look out from that we view that there are some opportunities both in a whole effects and our G.N.A. to take out some more costs and I think that you over the next two to three years as we bring in those <unk>. Those initiatives you know that's probably it might be somewhere between 20.
$25 million that we can that we can take out of the cost of the business. So the long term that's my being smarter that's by using yeah, using looking out processes using.
Summation technology, and a smarter way.
Et cetera, and still deliver the same level of service into the customer. So I think it's fairly meaningful and as you've seen a already I think once we started target where we are pretty good getting after that target.
Okay understood.
And then just following up on me earlier question you know around that's a combination of the businesses and then I understand trying to make sure you kinda have all your ducks in a row during a fairly on sir.
<unk>.
Yeah.
Reasonable to say that once we get through this to basically everything is on the table in terms of how you think about these businesses potential combination with them.
<unk>.
I just want to get a sense of you're kind of how much of the action point that really use for you guys as it's something that will be on it.
More clarity.
You know what's going on.
Cool.
Sure. That's that's a question that affects both capital partners and guess what limited Chris and they have an answer the question yeah.
I think I will pass that one over time to.
Sure I'm thankful.
Look I think we're we're really focused right now and execution and pleased to see all of our ships on charter in an active spot market. Despite the site not as many term chargers for on the <unk> on the water Buffaloes as we discussed previously and so I think that.
Is that really is job one for today.
<unk> Oh, I think our job is to do share raises of course always to look at how how we can be maximizing value for our respective unit holders and shareholders and so in my mind structure is is kind of an ongoing a topic that were were responsible to evaluate but but today it's really.
About you know this weekend this quarter and executing safely and efficiently for our customers.
Okay.
The final four in on that what are the benchmarks, we should be thinking about in terms of from from your perspective. What are you looking forward to just sort of feel like we're in a bit of a more normalized environment.
Sort of.
Returned to work dynamics for for people kind of work being you know sheltering at home is it yeah, I I guess I just want to make sure I understand how you think about the potential benchmark see before sort of the court important normal kind of comes back because what could come come out of it because D.N.A. sort of.
An environment than it appears to be a little less than what we're used to it almost like if I'm just trying to get curious to know how you think about that.
Do you want to follow up Sunday.
<unk>.
I think critically thing we're we're in the period now which is really typical for our business, where two two tends to be one of the seasonally slow recorders and then we have the strengthening market typically over the summer in into the winter.
And so I think we're we're both gasoline and guess what partners trying to use that period and understanding the chartering opportunities and utilization opportunities. We can we can target for for the respective fleets I I think it's just it's just understanding that we can continue generating you know earnings in cash flow.
From the ships and feeling that we're we're we're as you say maybe in a new normal but something that resembles the typical yearly pattern with with strengthen the fourth quarter.
Okay. That's a that's helpful. I appreciate good appreciate the color and all the bus Elster thing.
Mm.
Like that.
Q.
Trying to call over back off that's finished until something else.
Actually I think I I'll take it thank you very much Tiffany.
Before signing off today I'd like to make mention too depressed weeks, we put out today about.
Maxwell leaving.
I have been very privileged to work with Alastair over the past few years. He has been a great colleague and and not highly successful <unk>. So.
And my cell phone and everyone I've got close I think is going to miss it.
However, he has done a great job in the meantime of preparing or <unk>.
To be hit a success right to take over from in my Mom I'm sure I'll also very much a enjoy a working more closely with with him but.
Where's that and where the very heavy how I'd like to handover <unk> hours to just give some closing comments.
Oh, Thank you very much indeed, and I I hope my head will sit out of the door off we finished on the on the cool, but I also wanted to say what a privilege. It's been sent me to <unk> over the last three plus he is.
I've learned an enormous amount about shipping.
Corporate life.
More recently about managing a big and through both good times and Motown losing time.
I don't think you've done last time until pleading the the company through the recent very challenging two or three month.
But most importantly, I've been extremely fortunate to work with a team of P.D. skilled and dedicated colleagues both in finance.
And the rest of against organization and I'm also very fortunate because you might want to have lots of capable an eminently qualified successful or not to last and I have so that you know that the company I know team.
An older vehicles tunnel stakeholders in the Finance committee, you're going to be in the best possible Hines when I leave at the end of June.
In the meantime, Ah I can assure everyone that I'm going to be working day and night.
<unk>, what feels like a very for the gender of refinancing smokes restructuring.
Costs savings on all the activities.
Unfortunately, <unk>, we'll make it very difficult for me to say Goodbye and V.C., we'll talk less in person or.
So I'd like to take this opportunity to thank you will you will support over the years.
This is not an easy time for any participants in the energy sector be to accompany on investor will lend a where we <unk>.
But I have every competence against what was going to continue to be a leader in our industry. In every respect them and one obey me survive, but we'll try whatever the environment little <unk>.
So on on that note. Thank you very much to everyone. Today. The listening. Thank you will continue to interest in gas slogan capital partners. We sent me appreciate it and pool, Andy Inoculated look forward to speak into next quarter in the meantime, you have any questions. Please do contact the investor relations team.
Tiffany that's nothing with.
Ladies and gentlemen, thank you for participating.
Conference call and give me now.
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