Q1 2020 Earnings Call
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Good morning, and watch the Euro now Q1 2020 earnings conference call.
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After today's presentation, there will be an opportunity to ask questions.
Please also note today's event is being recorded.
Somebody like you're trying to call, let's go over to Brian Gallagher Sir. Please go ahead.
Thank you good morning, good afternoon, everyone and thanks for joining urinary Q warm twentytwenty guns cool before stops I'd like to say if you watch.
You mentioned discussed on this call was placed on information as of today. So it sounds that might told people.
Well may contain forward looking statements involve risks uncertainties.
Forward looking statements with my comments with respect to equal that's I'm financial performance May include statements concerning plans objectives goals strategies future events performance underlying assumption general statements, which you all know statements of historical facts.
All forward looking statements attributable to the company, what's supposed to that.
Well, it's supposed to qualify <unk> you know in talty bottle instead of risks uncertainties and other factors discussed in the company's problems would love to see which are available Charlton instances website the problem.
Well I still don't talk.
I don't want on somebody's website at your enough Dot com.
You should not place undue reliance on forward looking statements each school when looking statements speak only as of the dates the particular statement on the company undertakes no obligation to publicly update or revise any forward looking statements actual results may differ materially from these forward looking statements.
At least to take a moment to read our safe Harbor statement on page two of the slide presentation I will now paulson to see El Chico's state stopping agenda slide you go over to you.
Yeah. Thank you Brian.
We're going to do something a little bit different a and more in depth with today's quality coal given the number of factors, which are impacting on Texas markets currently.
So a first scale will run through to Q1 highlights before passing on to leave or seafood provided full financial review of the income statement in balance sheet. Then we'll look at it can theme seemed to take a markets and euronets outlook before we take questions.
So if we move to slide for the highlights speech I think it's fair to say that the first quarter was an extraordinary corridor for many different reasons.
Q1 was was a very strong photo bill building upon the solid foundations, we experienced in Q4, but of course. It was also a very volatile quarter with events such as the coffee 19 pandemic and the old price war between the Opic plus members in fencing dramatically the market freight trades as we've seen them.
Did you see where as high as $200000 today, but also as Louis 30000 in the latter part of a Q1.
The average delivered Giotti Sea Ray was very robust and on average we managed to book seven to 2000 or little bit more than $70000 per day for Vlccs and nearly $60000 for the full suezmax quite a recalled.
These outstanding rate environment has foods I spoke so far.
Into the second quarter, two higher levels with our VLCC feed reporting so far $95000 per day photophobia, She's as I said and photos shoes back $65000 per day.
So this allows us to pay a very strong dividend related to the first quarter of 81 cents per share as we mentioned many times in the boss, we will as of this quarter be quarterly dividends through your NAV shareholders, but the good news is that we will also be or final dividends related to 2019.
After all makes the E. G M. In me so you're not shareholders will receive $1.10 cents in June in cash dividends, which represent the current share price more than 10 per cent dividend yield [laughter] and this is within the first six months.
After a year.
So quite extraordinary you will admit I will return later with more commentary on the key themes in our business, but now I would like to hand over a tourists here for leave to run through the financials on slide five leaf over to you.
Thank you he school good morning, Good afternoon, Oh, No me in deep Ah two presented the key figures of the first quarter.
<unk> revenue generated or $417 million.
EBITDA generated was $360 million, but if we add to the gain on sale and a the income from it could be into Steve This is $358 million.
Yes, we talked at the end being up in come off $255 million.
At the company if that's the problem the strong freight market. This industry clearly the operational leverage that bank a company companies that's it.
Namely every $5000. They revenue you don't have generates over a quarter.
Translates into $27 million net income, culminating in a dividend up about 10 cents per share for Q2.
A key highlight that they want to mention is also one it's related to over a few procurement strategy, which generated gains or nearly $20 million.
Good that's clearly came under pressure as the old price and other related commodity fell as the corporate 19, Vivus and do related economic restrictions in fact it.
The company. We also assessed if a write down should be accounted for the remaining compliant fuel inventory.
As the market value of the fueled up let's not get calls you, what's it $56 million lower than it then its book value.
The company concluded that that's no write downs requires does this time in view of the robust freight market for Q2, and possibly the rest of Twentytwenty.
Which will offset to be higher weighted average consumption goes off the them could all goes you from that inventory.
Well I've heard this assessment has to be performed each quarter.
Moving now maybe to slide six SUNS balance sheets.
So the balance sheet acute enough remains strong we have increased the absolute level of skus at our disposal to over $300 million.
Even though people are active during the quarter in purchasing four vlccs resell.
Requiring a down payment of $100 million.
Our leverage is now below 40%.
Yes, and revolving credit facility liquidity liquidity or at $1.1 billion into April.
This contributes <unk> for sure in managing over to your liquidity, Wendy which remains a core philosophy, if you're going up.
I don't know handed back to you go to expand that further on developments in the tanker space.
You know over to you.
Thank you for MACI, we cannot move on slide seven Capstead allocation at your NAV well kept separate occasions very important, especially when markets are so strong I'd euronav, we always made should it be balance, but especially consistent in our allocation.
We do have some mandatory debt repayment as well some revolving credit facilities reductions, which as far as they are considered on non cash.
But as we target a leverage or 50% all lists we do not need to retain more days for the time be.
We have design or return to shareholders policy, taking all aspects of the business into account and indeed, we're very pleased to be in a position to be he wants and dividend related to the first quarter. In addition to 29 cents related to the year 2019, as I mentioned earlier.
During the quarter, we haven't both bancshares when we do so we will always tried to create long term shareholder value rather than giving support two a share price that has been very volatile times. During the quarter. We also bought a very very small portion of or a bond back during small selloff, we wish we could have done more but the value of oral.
Bonds bounced back very quickly to bar or even a busbar how's your trading today.
We also took advantage of the S&P market volatility as illustrated on the next slide slide eight.
That seems lifetime I go now we picked up a full VLCC resales of contract. That's on average 93 million a significant discount to the advertise sales price at the time or even when compare now this expansion visit this expansion, though is part of an active fleet management strategy.
As we also sold three older vessels. So far this year for prices went about the index for same vintage ships. This recycling of capital in the rejuvenating over a feed is key to managing a tanker feed and a feature we keep up as as part of our long term strategy.
We cannot move no moved to a slide nine.
The progressive moves into freight markets since early March when the Saudi volume increases and price cuts were announced have allowed tanker operators. Some optionality to lock in high rates for the upcoming six months, we have fixed a number of shipstation inventor of these opportunities and have now 19% of our feet, which.
She is on time charter for various durations you will remember that at the end of last year, we only at 10% of ore feed under fixed contracts. It is important to note at when we take a decision to fix a ship for six months time charter, we will always compare the rates offered to what we can do into spot market for a next voyage.
Often a shorter spot for each office you more than six months' time charter fixed contract.
Moving on to slide 10.
The fuel procurement strategy.
When we look back at the IMO Twentytwenty. Our approach has been to purchase compliance fuel I had the of January twentytwenty, primarily to reduce any potential risk on either the quality of the new compliance you all to avoid the big spread that was foreseen between let's say for an agency food in the early stage of this new mine.
Market regulation this approach benefits to our operations initially and into first quarter as indeed, a bomb the implementation of the regulation. The NSC four jumped to much higher levels than what we had procured over the course of 2019, we have concerns consumed a little less than half of our stock offering 10.
20000 tons.
Inventories and repurchase indeed in 2019, however, as Lee mentioned the market has not developed does anyone expected in terms of fuel pricing or in terms of spreads between LLC for nature. So during twentytwenty and certainly recently and the prices as well as a spreads between those two.
New products and no fallen fallen to a level below or entry cost.
We have not taken an impairment in the first quarterly as leave explained earlier and we will continue to look at opportunities around the you will see see Oceania, where the fuel is being sold to create value around this operation. It's all remember that if we had chosen a strategy of retrofitting scrubbers on our fleet, we would have had to deploy more.
And 350 million dollar.
I would know hand over to Brian Gallagher, our head of research and Investor Relations to talk about current market themes and I will be back for the questions. Thank you Brian over to you.
Thank you again.
Slide 11 as you go says looks at a number different features and then it starts in particular why the storage accrued on chip just come into play I'm coming to play so quickly with 90% of us on some form of look down over the past 44 page in March and April.
Hey, good cost at the Mt crude has fallen by around 25 million Boes per day during that period, yet during that same period, we see production actually be maintained at similar levels. This disconnect. We believe is produced somewhere around about 1.1 billion barrels of actions crude saying, that's one of the <unk> and others estimate was the global onshore could possibly the storage.
The next day, one cents reported that that storage facility is on showing youre already well.
This is reflected in the recent moved to use ships to store oil in particular over the last three to four weeks, we believe that despite the fact that cuts which are starting to park in the last week or so and production shutdowns by commercial plans any additional excess production from here is lucky to have to find some coupon on storage amongst young ships.
Well, so we'll keep talking about market over the summer months, but we believe that slide 12 shows no storage is created equal.
On slide 12, we believe it's important to take a step back and look this post this is only just the job.
It's important to remember that we've got the Iranians plates with around 38 deals. He sees a permanent number of around about 20 to 22 businesses, which are always storing oil and as part of the infrastructure trying.
This is nothing to do with the current 'cause it 19 related issues.
That's all around about 8% of the bills to seek later in the World has always been otherwise employee before this disconnect between consumption production started.
What is also interesting from slide 12, but unlike other schools limits on storage you called them. This is not just the deals to see shop.
<unk> estimate that 61 suezmax not currently use for what we would some market storage reasons not to what do you, 11%. The fact that you get a fleet and 65 deals. These days in market storage at the end of April.
The true stope scale and impact of storage, we believe that who has not yet fully been revealed given the speed and scale of the changes that up going on going in the disconnect between production and consumption.
Now how do we see this developing what we like it sounds like go team with a very simple stuff that's it.
We look at the mountain storage that does not just didn't buy both cities to Rob to drive traffic by contango. It also increasingly bar logistical planners, who are focused on the involuntary or voluntarily does use ships in order to transit oil or store oil.
We believe that lets phase will persist well into the second half the twentytwenty.
Clearly on the market focus has been very acute illness, there will be a transition plays in the mid term as we site on slide 13 into a different phase.
The inventory draw it stops if it's slower than we believe the disruption to shipping would also be slow.
If it is more rapid and accelerated than past experience suggested that the contango parts structure can remain in place for a prolonged period of time in 2000 or do you think census, we still had 20 plus years. He sees used for storage even when the market went into backwardation in 2016.
Many commentators believe this mid term size will kick in sooner rather than later on the inventory drawdown will be rapid and therefore will impact in shipping much quicker.
We find it difficult to get your shipping sector works in real time horrible.
Oh boy just like on Sundays months on often spend all the courts and limits on often take longer than the simple calculation. How long those voyages will take there was planning there was congestion and there aren't a lot of external factors that impact on our business. However, we are not complacent management, a year and I do recognize.
This middle page will provide challenges going to tanker sector. When the inventory drawdown stops that's money to et cetera, right and bring pressure on all business in terms of break rights.
Well they will also bring we believe it's the last phase and slide 14, or 15 sustained pressure for recycling the global tanker fleet, which we looked at in the last couple of sites.
Slide 14 shows the large tanker fleet. We believe is right for recycling financings, becoming avago almost increase like lights, you can always lot Basel cool I mean, <unk> environmental pressures from the <unk>.
Hi, This is Andy comes to intensify.
Constructing a new order just prevent you bought.
Requirements for the news you propulsion system in order to make these new stringent involved into requirements within 18 to 20 alike on average for VLCC and Suezmax ordering a new vessel is also having additional challenge, but the likely medium term trajectory will demand. He talks are going to be a negative pressure.
All of this is a fairly restricting the new supply tank is reflected in a 23 in low there'll be say in the order book.
On slide 15 to sum up we look at the local continued grounds for optimism on the existing fleets in which the on March on little time constraints in terms of the Fccs and Suezmax as an awful lot of potential change coming on average so.
So every quarter that between now and into 2021 27 be able to see equivalents to for special survey on vessels, aged over 15 years of age why does this matter.
The surveys will require several million dollars worth of investment to be spent.
What does it give your ships justification for the following 13 months. Although this will have to have confidence and visibility that they'll be able to making return in these times right, which was nice tank rights is going to be harder to justify.
One of the better frame. This pinch point is critical and is starting to often been so this is usually a catalyst for ships, leaving the fleet, so an alternative use or to the scrap yards.
To put this into context, Doug it's two thirds of the vessels that we see on this final slide what's the lead the fleet on slide 14, the global tanker fleet would restart almost instantly so in oil consumption level of 95 million barrels a day, which were another commentators believe even on the bearish scenario, that's where the consumption levels when neutral.
So now probably can live up to some some questions that concludes the end of the prepared remarks I'll now pass it back to the operator. Thank you.
Ladies and gentleman at that time will begin a question and answer session to ask a question you May Press Star then one if you are using a speaker phone. We do ask you place pick up your hand that before passing the key.
It's all your questions you May press star into.
Any interest of time, we ought we do also out you. Please limit yourself to one question a single follow up.
At this time, we'll pause momentarily to assemble the roster.
Our first question today comes from Amit Malhotra from Deutsche Bank. Please go ahead with your question.
Thanks, operator, or how you go I'm congrats on a good quarter I wanted to check your temperature on the commitment to the dividend in the event that you know the public equity markets don't give the company full credit for what you guys are paying out I mean, the strategy itself is quite clear I believe it also.
I'll give you a little bit of wiggle room to reallocate a re purpose the funds for share repurchases and then obviously you have that E. G M meeting coming up on on or on their votes on that on that aspect. So I just want you to talk about under what circumstances. The company you know will not pay at least 80% of its net earnings I think that just be helpful and into.
I understand you know where your mindset with respect to that specific item. Thanks.
Yeah, Hi, I'm very good question Youre, absolutely right I mean, when when we were thinking about or a return to show this policy.
Initially so more than a than four years ago and then when we.
Put the guidance out in the January we're thinking about when to fly dividends and went to apply share buyback I think thats in the first quarter or line of foods was very much a geared towards dividends because we wanted to showed a market that.
We can distribute agent sort of or indeed.
I think that we heard that some people, where we're well skeptics about it and I think it was important to demonstrate that when we see something we will follow that policy. Obviously, we're not satisfied with the share price where it is right now.
That doesn't data, we have not been satisfied with the share price throughout the quarter. It has been very volatile quarter, none of them in terms of rates, but also in terms of share price.
And as I said in my a in my prepared remarks.
Our goal is not to change the share price and not to supported this is the share price at every single point in time. So if we feel that the share price is we just for a prolonged period of time.
Then obviously, we will prefer a share buybacks and dividends I don't think that she will ever see us getting completed dividends, that's not something that we will ever do in anyway, we have a policy for a minimum fixed dividend.
But the balance between share buybacks and dividends will very much dependent on a share price weakness and as I said at the moment.
It doesn't the good I mean, I don't think its normal.
That we are distributing a dividend which represent only for the first six months of the year in fact, only the first three months and then a little bit from last year.
11 person here I mean this is a this is crazy clearly abnormal.
Right Okay.
Okay I appreciate that it's pretty clear I wanted to just pivot on my follow up to just maybe a more fundamental question about just oil markets and I want to understand from your perspective, you know what the eventual the impact will be from kind of the eventual de stocking of inventories and how you think that plays out in terms of absorption.
The tanker fleet, obviously, its right to assume there's going to be some weakness in rates as vessels are kind of released from 40 stores I think we're already kind of starting to see that in some respects, but how quickly you know after that do you think the tanker market Rebalances you talked a lot about an aging fleet, but typically you know.
Sweet sleep aren't scrapped unless you know rates are below opex levels, obviously, there's quite a bit of like down to get there. So if you could you talk to US how quickly do you think the market can rebalance how how how long do you think the the weakness in the tanker market could last if we do get you know a bigger de stocking of inventories. Thanks.
Yeah, we've tried to explain that on slide.
13, I believe so future market developments and we've split that between short term mid to long term short term is clearly.
What we are living through now and we see that piece. We have continued demand for both trading transportation, but also storage as Brian said, we believe that storage demand will continue to increase and influence or mark as Cindy support or market. Its limited with BT that when people say yeah.
The rates have harvest in the last two weeks.
Yes, right, but you know what we still fixing vessels between 60 and $75000. The you look at the pie App and I think the vessel was just fix at $90000 of it.
It doesn't mean that the average, but I'm just trying to see.
When we're making good money, but we are coming from extraordinary.
Territory, the people I'm, not happy and I wonder why because personally or at you and now we're very happy with the market at 60, 65 or 70000 barrels a day when it comes to a specific to your question of de stocking I think that there are two scenarios. There is a quickdraw and has slowed rule.
A quick drew is basically where people are just dumping the or that have been stored on board. The ships and ships are returning quickly to the market, which will lead very quickly to the column call long term at all going to come back to that in a minute.
What is likely to happen is the slowed rule and why do I see that will simply because the last time, we had contango. It took about 12 months for the ships that have been taken on storage and potentially for launch in the contract to come back fully into the trading feed and when you think about it there is a there is a reason for that.
If tomorrow all the all that has been installed is coming back to the market at a point, where the market is demanding 95 or potentially 100 million barrels of consumption per day, well, obviously the off price will be negatively impacted and if its negatively impacted by the draw on the inventory it.
Means that there is a contango being created because the oil price will be at 15 or $20, but everybody knows that when the joy stone the oil price will be higher creating the contango curve. When you create the contango curve you, obviously ask more ships to play that game into store the always for that contango story. So.
That's that's a little bit what we believe it's going to happen, it's not going to be a supportive as what we have seen in the last month and what we are expecting to see probably in the in the not too distant future.
But it will not be catastrophe.
I think that when we will hit.
Weakness in the market.
It's probably would older ships are coming back to the market and again it could be quick, but we don't believe it.
And when they are hold back we will need to see what sort of consumption. The result, there because many predictions are set forth below 100 million barrels of consumption, which is the consumption we had prior to covidien.
As Brian said what is interesting is then to get a the older part of the peace and people will take the decision to scrub the ships way way way before it hits opex level as a matter of fact.
You cannot fives.
One the tanker markets until he VLCC, which on average is printed less than $18000.
Today in the last 20 years and Nevertheless, we have had incredible years in terms of scrapping the last one being 2018.
So it's eight 9000 above opex and nevertheless, it must be its people to scrap and why is that because people need to spend.
Big amount of capital and node is even more because of ballast water treatment system, which is costs crossing one and half million. So you will need to return in the next two and a half years, when you're taking a ship to drydock, which is more than 15 years of age in the next two and a half years. After your dry, though you will need to get full.
All five sometimes $6 million back before you even contemplate the first scent of profit. So I don't know a lot of owners will do that especially especially after appeared would we have where we have around so much money do things, we are earning money only two wasted.
In older assets in passing dry docks I don't believe.
So the immediate the defeated oversupplied, we have the perfect solution and as you can see on slide 15 every single quarter. There's a collection of ships that will need to phase that critical question, how do I spend capital Oh do our we see 15, 16, 17 18 million whatever the scrap is good.
Giving you.
Million dollars.
I think I know the answer.
Right, Okay I'll leave it there. Thank you so much everybody appreciate it thank you though.
Thank you and our next question comes.
Our next question comes from Randy given its probably Jefferies. LLC. Please go ahead with your question.
Oh, the gentleman has gone.
Yeah, Great I knew.
Good good Yeah, you know I think we can all get bogged down some details, but congrats on a record quarter, it's clear that the second quarter will be another record quarter. So keep the good work going now looking at slide nine on your charters can you give a little more details around that or how many vlccs average duration average rate.
Right when do they began.
What we need some details here.
Yeah.
Well, it's a it's obviously on purpose that we didn't give a two liters.
I can tell you that it's both vlccs and Suezmaxes.
I can tell you that it's not only a contract for six months as one effect. The last one is a two year contract.
On a on the non eco vessel.
And we will continue to to look at opportunities I think when it when it's a six months contract.
Quite frankly, we shouldn't differentiated between spot and six months contract because you will look at the spots you will look at the next voyage.
You are being asked to deliver the ship promptly which means that you can completely compare NSS what is more lucrative leading into into the spot market or putting it on six months charter. So of course in that percentage, we have three or four vessels around six month charter.
But we only accepted the to book them because at that time, there might be a little bit of weakness in the spot market in that time.
The six months contract was paying more we've had plenty other opportunities that we passed on because when you compare $75000 today, which is a laboratory we were offered for six months.
And the voyage that can.
Give you $130000 and obviously you take the $130000 for 90 days.
So that's a little bit how we've we've assessed this we've doubled the number of ships under time charter. That's a that's correct. We are hopeful that we will see more opportunities for longer duration than six times, because I said sweet spot is very much like the spot market.
And whenever we see those opportunities we are likely to try to grab them.
Because it's good to have a sort of a balanced approach.
Okay, and I guess touching on that you know we saw some one year time charters above 70000, a day a few weeks ago Where's that market now how robust or liquid is that market for the one year and then any inquiries for three years.
No. We just did two years option one.
And that was something.
I would say unrelated to the current environment is it's a it's an all major.
That has a programming to every year they come with inquiries for.
Two years option, one or even three years.
So we just bought spaced out a tender and we happened to have a good relationship with them and we have service that contract already.
So I would say we had a head start.
The rest that we've seen was more like six months, we've seen that others have picked up a one year contract.
At that time, we decide to borrow some either because it would have meant for us committing an eco ship vessel and we didn't seem that the there was very into doing that.
We had no older ships in position to do it all because we saw that we feel that the rates was a little bit reach for that matter.
At the moment, we're not seeing.
Many a one year contract.
Especially Mike on with Greg How're you doing.
My My high Greg.
Hey, So you do it once you just go to slide 11 senior deck I think just kind of.
Thumbs up for the market is yeah, I'm pretty concise way.
[noise], it's I I, obviously, I want to dig into storage that each first and foremost you look at the the demand recovery that's implied by the I Ain't numbers right, you're talking about $20 million to $25 million spiking demand between now and July you know given the lead time associated with with international transport are.
Are you guys see the green shoots of that kind of the main recovery yet considering that in a based on.
Most of the publish.
International estimated recovery data it would have it would've.
And starting at this point.
No, but I don't think that we're the best people see the S.B. choose a indeed.
If there is a recovering demands I mean, it's up to get that there's quite a lot of a product that if installed.
That's very much where you see the the main so that you men will come from the consumers of petroleum products, which are for will then send a signal to the refineries and the refiners will then take more crude and if they take more crudele there were probably <unk> the stuff that they have boots on started stem cells nearby to have.
<unk> before touching either strategic facilities or even the what is on board of vessels.
Yeah, maybe I can frame frame it if it differently like we can use we used to be rate as an indicator there, but there can be a lot of momentum when you get into rates that are you know two and three times to your reference rate right when you're getting into that you know closer to $100000. A day a lot of that is based on on our momentum and and frankly kind of him vigil negotiating so I'm just curious what have you seen anything from.
Operational standpoints that that would suggest it <unk>.
If I if I look at the you know the that implied here shows you know kind of a peak in June it about three to 400 million barrels a storage based on what you're saying right. Now do you think that's the right month, we see a beacon storage and obviously this can change quite a bit, but where would you where would you panic accumulated floating storage speak for up for the market right now.
It would help everybody quite a bit but you could just <unk>, you know way and knowing everything could change very quickly so not only through a third where's the <unk>.
<unk>.
I don't think that's when we when Brian was kind enough to to read the for the looking stays with <unk>.
She was that we always had to be able to school I was thinking this has never been so true the information to discuss on this school is based on information to be.
So I suddenly right things can change very quickly I think that the reason why does cross on on page 11 is because we need that's a a very lucky similar so yes. Indeed, we see the storage on board of vessels decent so distorted everywhere, but said he on board or the vessels between June 20, what it said.
The the start of the mother Middle most of the end of the wrong don't ask me and then they forget that most of those contracts will six bums and so he won't they six months before you release that or into the market and we'd be needed. The food. So that we will be grabs a from the storage us from the land storage into wants that on me to the the facilities.
But I think that it.
It is goojje to monitor that into money to what happens until the end of this month and says he in June.
As as a as we've seen the number of vessels that are being taken at the moment on storage evolving almost everyday you see that through different reports you can money to that Bloomberg and it's it's a number that continues to creep up at the moment.
Mike.
Interjected slip on Gallagher here with the numbers just everyone's appear on record as well I think it'd be helpful. We're taking an extraordinarily well what we think of <unk> extremely <unk>. If you build up we've got to remind you were assuming 14, one school many of files would probably have disconnect.
Let me see that crossing in a very conservative I don't think too many additional bowels thing to disconnect in June. So that's why you have got flattening out another what the research you've written and others have written what suggests that would actually they are quite an aggressive outcome on the positive side and things were turning back.
So to normal very very quickly. So if anything we would signed a risk from her chunks, we're putting it I'm actually not trying to sort of back all case, but we believe that the storage is going to continue to be an issue we're not doing it because with the just the bottles. Those are those will sense that this could actually sort of drift slow the killer right and that's all right cool we look at what we said no prepared.
<unk> that <unk> shipping doesn't work in real time, she's going to set your stereo leading to we don't anticipate the <unk> finishes in the middle of June the old <unk> will be redistributed in the third we could you chipping doesn't work on that and like I say, we believe there's a latent amount of storage capacity, which is yet so.
Sort of no because ships you were on their way to take these contracts and then go into storage. So this is going to be a very fast moving in dynamic market. As we know we've tried to be very conservative on this blog.
Right <unk> and I guess, it's kind of what I'm getting out so there's always a degree of natural Conservatives winter versions of the mean anytime you're talking about variables of taking your stretching out for a number a quarter. So what do I think that there's a lot of.
There's obviously a lot of ambiguity because we're we're in uncharted territory. So what I'm asking you. If you were to overlay. Your your estimates in terms of where you actually think you know the implication is that we're not <unk>. Your impressions were not on building, yeah and that that should.
<unk> Francis for awhile and into slope of that recovery, probably a bit shallower it and what kind of D.B. I ate data was just so I guess, what I'm asking you that you could put a a vague number on on where you think that became to be based on what you can see Friday right now and what month, you think that ends up being.
I think a degree of clarity around that would be would be helpful. Just he's considering.
Considering we're all dealing with some pretty you know pretty vague <unk> out slopes here.
You know we are we are a little bit on on the same can because who knows but if the number that Brian mentioned to 14 million barrels to be build up in.
And and go to those that we are in me and only $2 million in June.
<unk> Katie you could see twice as many V.L.C.C. and twice as many she just likes being taken for storage.
And then obviously a that would happen before the end of June. So you will P.D.C. that and that would have posted impactful to ship star training because those two all demand for transporting the oil so despite the market you'd be a reflection of to diminishing supply sort of a of the world feed as far.
He oh the side of the trade is concerned I eat when we conceded the always being drawn from those ships I'm not going to repeat what what I said to to 90, a question on the page 13, and they all different scenarios. It seems that a slow drool is more likely to.
Happened than a than a quick drove because the impact on the old probably itself will men that then you are being asked begin to store just for commercial reasons multiple capacity reasons.
Oh.
Right. Okay <unk> that's helpful. I think what you're you're Lucky equities is you.
They're trading off on ambiguity international rolling over so putting a bit of a fine going on it.
But I can.
It's all up.
One I will I'll turns over texture targets.
<unk>. Thank you my neck and please do hold on a Hindu.
Go ahead.
Our next question comes from Greg Lewis from T.I.D., Yeah, how what's your question.
Yes, Thank you Ain't going to extend it and everybody you know either just falling off a little bit differently on likes question.
I think the confusion is around the tango and the fact that I guess, what you're saying there's a lot of the storage is going to be related more to logistical bottlenecks, which is what we saw earlier. This year I guess the way I would like to ask it is it you know clearly this won't be driven by traders it'll be driven by.
Big oil companies have you dominated indications from them that this is happening and and and asking with another way <unk>. If I'm, a major oil company and I'm going to take a ship and I might not necessarily had any place to put the oil do I even have to communicate that that is a storage contract there could I just simply charge.
Her that's all.
Lay it out on the area and then just kind a weight.
<unk> would you because of course, when when you negotiate a rate.
It's between <unk> in a discharge pooled and then you negotiate a the wolves kid around ads and you you used to the race that are being published once a year as you know and you do get negotiator premier discount that's what we called a will skills, which is above 100 times and it'll be do 100.
<unk>.
So it's very difficult play a game, where you see I'm going to ask you to load the oil in D.A.G. and then I will pretend to go to China, but I won't deliver dealing in China. So what they do is usually the <unk> for an option.
To <unk> and then if we go into the option then it's a it's a raid the day and very quickly the contract is being turned into a time taught a contract where.
We are being paid in advance rather than data at the end of the voyage. It is true that some people don't I'd I have no doubt that they didn't designed that if ended up having shapes that were arriving at the discharge pooled and have to wait weeks <unk>.
<unk>.
And of course, they had to read being paid to do <unk> now you have to know the marriage raise is usually very close to dying and shot equivalent that we can lead off to a agreeing to free trees. So unless you'll sheep is waiting at a at a pool frame <unk>.
She was a another good.
You are relatively happy about that rate as well.
So I don't think there's a there's any design. So when you asked me to question do we see a difference between the would be cool to for this phase and the second phase, yes seem to first phase pretty much older people asking for a storage option where traders.
And I think that we have to accept that those guys also have some limits on the vending machine because that's something into those guys are not only trading onto a training all kinds of product and it's not pretty up there. So the amount of bad and she'd commitments. He can do a thing has reached the dumping which we seem to be easy or.
I went to the conventional or people, who are looking for space, indeed, but they will be relatively straightforward about it and we'll rent the sheep under a T.C. come truck being you would daily rates that he's agreed between them and us.
Okay, great. Thank you for that you know and then just walk you know like it's like bowell will be around here.
The the the fleet Pamela on the website you know I guess based on your comments right, 20% <unk> is sex, but as I look at these you know the new type charter.
Vessels on this AD it based on your comments, it's safe to <unk> should I be thinking that the incremental ones that I've shown on our our one year I'm charters nah nah six months or that kind of the right way to think about that no we have.
Yeah.
You're right that we.
<unk>, whether we should treat six months time trying to contract does spots, where he threw it into the suburbs and does certainly would we noted for those of you nor mine and therefore, what do we do all that on the website.
So we're not trying to be cute abilities were just trying to to be well transfer onto if we maybe and and try to extract more value out of the market, but what we have done is a very much tree contracts.
<unk> one of three years option one.
And on the shoe is bags I believe that we just.
One for for most and then two for AIDS Oh nine months.
Okay perfect. Thank you very much <unk>.
Perfect. Thank you sure. Thank you.
Our next question comes from Joe Morris from trim click or how what's your question.
Hi, Thanks for taking my question and they say long term, you're at a shareholder and listen or at least calls.
It's interesting nobody brings up a you're a scrubbing decision today, but I just wanting to say I think you showed a lot of wisdom.
And how you approach that issue and resisted a lot of short term pressure so as a lot long-term shareholder I. Appreciate it long term outlook. My my question. If if if we can discussing a bit more detail there have been a lot of headlines about.
You know coping 19, an impact on particular.
Yards, or you know quarantines or bringing things in and out of ports et cetera, and I'm wondering how that is impacted basically in a special surveys et cetera, because it seems as though it that's one of the thing besides rates, which probably the way the ability of people to go back into special survey.
And you know if you can discuss that from an operational and and how that's played out perspective. If you have to go in for a survey now kind of what do you do.
Well <unk> first of all the thank you. Thank you very much for being a a long time shoulder and thank you very much for your for your remarks, it's a wheel wheel. So happy about the decision that we used to.
As far as a coffee night he's concerned in in fact, you've seen three phases, you've seen the agencies that room, it's dominated or at least and use a line by China.
Then it's a hit Europe, and then into to the U.S. as most of the ship Y'all, It's where are we doing a repair and maintenance <unk> suspicions serve as a concern they are in in China, and sort of Singapore region, China is completely reopened for a little she pills, but he's food and it has created a a bit of a.
Lag be choose for approximately.
Six to eight weeks.
<unk>.
We took at that time once she'd been Singapore, and then Singapore decide to close down we were fortunate enough to have finished to serve and to be able to leave the chip tell but we also know that some other she pulled us a had their ships just.
Stuck there and with no were being conducted the same thing happened to some people soon retrofitting scrubbers and so some some ships were affected their today. If you want to teach your sheep and do a special survey you can't really can do that mostly.
China, Singapore's alluded to restrict to those who are closed at the moment, but there are plenty of yours in China that that will do it for the size of should as we have.
It's too emitted into a into S.S.D. in fact for the construction <unk> building a new buildings.
<unk>, what we heard from Korea, whose sole sing a lot of things from China is that because China hadn't closed down from six to each week they were having delays.
But it seems that the the the Korean also efficient that the of being able to recall for these disease and so there will be in a position to deliver the ships that the the channel one to deliver.
Than lasted the lease and that's a rumor which is unconfirmed, but we had that some new release older has been cancelled in China.
During the covered period as the Chinese yards. They didn't know how long it would teach to recover India, where facing a specific losing their contracts, which allowed the the order to stop the <unk> before the start of the construction. So I don't know if it's true.
With Brian If you home you know thing and we heard that about six or vessels from the mistaken.
Oh yeah.
Yeah.
So I mean to be confirmed a would be again, a very good news for an order book, which already look very very light.
Right. Thank you.
<unk>.
Well.
Are are.
<unk>.
Aren't I question comes from John <unk>, you'll have with your question.
[noise] I could not getting that.
Part you go first question.
Johnny for you Hi, how are Ya <unk> squeezing it here first question on.
Okay, So well times disposal of no uncorked on it well probably purchases isn't I mean, they were carnage.
Without asking exactly what the plans are next as you see the market lay out with a different possible scenarios pick it out.
And looking at the asset values today are you more of a buyer or seller that that's been an exercise.
I would tell you a and that's not going to surprise you. We are more of a <unk> buyer and seller.
I think that that's a little bit, which we've tried to demonstrate on the slide but quite frankly.
Maybe tell him to praise the people who are looking after it's in P. a during because they they do a fantastic job really trying to find the the the good opportunities.
Beat on the sending saw being on the buying side. So I think that the what you see on the index. You you are probably a little bit more of a of a center, but again, we not unless it treated I mean, we like to.
Continue to operate a fairly not feet I think that's what where we're good at it but we also like to take care of our assets and that means rejuvenation nothing's going full on it's going to be very important to make sure that we have very very economical sheep. So swapping older I said to chart typically consuming.
More formal modern assets certainly not a bad thing, especially when you can sell ahead of the index at the time of setting and Billotti index of time of a of buying so if we find more opportunities. There we're going to continue as far as group because this is more rejuvenation exist.
As far as growth is concerned I think the juror no. We'll continue to be opportunistic will continue to be did try to to to further <unk> platform.
We have a platform, which demonstrated its working fairly well very strong balance sheet, but that doesn't mean or operational level, which is not good seats. In fact, <unk> last quarter and hopefully next one phenomenal operational bridge and at the same.
<unk> very very solid company in case, though some weakness and we know we are I'm building off.
To never predict what's the next quarter will be we can exchange views as I said earlier everything that we <unk> is through as far as this is concerned.
But but to more maybe very different so.
No I've seen a a big consolidation of big feet acquisition to the extent, it's possible will more like you teach please in the downfall of cycle, but as far as speaking up has its here in there it will depend on what we can fine and whether we see that there is value into.
<unk>.
Okay. Thanks for your Garden second order or for Griner for your <unk>, Yeah and.
Presentation <unk>.
Gender figure out why discourage number keeps rising all the all the good things are not in your class I'm contour to put those two together or the producers were going on you know full bore in April 19th Dippers.
Originally to kind of gates, the actual <unk> and the different that that's having <unk> <unk> America's card.
Well, maybe not particular question too bright.
Yeah go ahead, so what Jonathan Yeah, no I mean, <unk>, a little bit groping around in a talk a little bit or in a in across meetings on on a situation, where where no difference I think we feel there's.
Industry birds they'll go to another like Little school, where it's probably to come short some from what we say from some of their plans on what we see from some of them well before cargo items, but in terms of the the demand sort of thing yeah.
Exactly <unk> I wish that <unk>.
I don't think we have to remember the roughly 15% to 55% of oil and demanding uses in in transportation. So I'll be would be it's going to be more sluggish is a recovery, but I'm <unk> I remember abusing them you can vary.
Forthright in the public this week in terms of the sentiment is obviously very important as well <unk>. We've seen this week with you will prosper willing I don't read the last week was I, rather they were plus schooling I'm, a contango coming down.
Provided a level of support we had for contango.
Alright was dropped materially I think it's just we have to get does he go said <unk> a lot of the smell it looks cool.
Send it to something which where we used to on the school and people than for the smokes, but even you know someone was experiences during the space. It's been incredibly bullets <unk> on on another level of the last three months I think it's just going to be a movie theater dynamic on a on it wouldn't surprise just to see <unk>. It is just.
Just until we get some now so we get some tangible song group of looked down finishing I don't think there's a there's a there's a model out there in Europe, we're seeing Germany next week's making stopped making moves but we're gonna have other economies lot spying on the U.K., what you're going to take longer. So it's gonna be I think the case by case my system hopefully.
Oh, alright, thank you, but I think yeah okay.
Like.
Our next question <unk>.
Our next question costs are of course weatherby from any place Guy with your question.
Yeah, Hey, thanks for taking the question Yeah, maybe a short term one and then maybe a longer term. One you know first in terms of he covers eight security shoot cutest Guy curious how much of that spills over into the third quarter. If you could talk a little bit about how that yes, or short term as well as your term obviously, we only know what sort of though.
The longer term charter to get signed up but in terms of the shorter terms that how much spills over three q.
[noise] very little I think that we have boots less than 5% of the third quarter of this morning.
Okay. That's helpful. Appreciate that and then.
You know I I guess the bigger picture question, then I think it's probably important here is understanding how this or dynamic play down we all can try to get at it different ways, you're talking about storage that maybe sort of on line of this process, but I think you bring up a very good point about the longer term.
Uncertainty, which prevents any workbook from you know being added to managerial away. So I guess.
<unk> beyond sort of the the but then that the next in fact of storage draw it out.
And maybe how the fleet develop looks beyond sort of that I don't know if it's a 12 month period here that we're talking about.
How do you think that that plays out what would the market look like in like 21 or 22 with this scenario. We is you know significantly depleted order book I don't like we've seen that over the course of the last many decades, yeah, I guess I'm just curious how how that plays out.
You think that's sort of the the ownership structure of the industry.
In terms of consolidation, we all hope before that is is a potential yeah catlin for that.
Many many very good points that you are mentioning to ask increase again I'm I'm not sure. It's very straightforward for us to to see where it's going to find out but something's gotta give.
At the moment people are not buying shapes on ordering ships I believe for two reasons. The first reason is because there is some sort of uncertainty and you will remember that most orders are usually placed at the end of a of a sort of a downturn you know or.
Industry or the very beginning of a of a <unk> and then people order of shapes and they hope to get them before the next cycle before the uptick cycle is over.
We haven't seen that we've had him Jude queue for a good chew on we're going to get a good you to and yet the order book is very flat.
So that should still do something and <unk>. What it tells you is dead.
We have said that many times or this the school there's too much uncertainty there's too much with the T.V.T. I think he's also explains a policy where lie or share price or not performing and here I'm talking productivity.
Better even the amount of money, we are we or creating the sickens a link to that is probably even more important it's about the technology. So are you going to order a conventional sheep or unit water, a dual fuel and N.G. sheep or you're going to wage for yet another technology to emerge which.
Nobody knows what it's going to be in but a lot of people talking about I don't <unk> be carried on <unk> you name it.
And I think that that technology will not be ready before 2023. So people may start ordering it's in maybe 22 and that's very very early stage. So <unk>.
Tried to draw the picture of what's Gonna happen I think that's any market week. This can be quickly resolved by a number of she's be old enough to hit the the the scrap yards a recycling yawns.
Continue to see a relatively low older because even if the prices go down.
For dual fuel and N.G. It is not yet demonstrated this is a few chew proof shape because the the technology may not be the right one compared to older technology, which was supposed to emerge.
And so I think that's as far as our market is concerned.
18 in growth in terms of overconsumption whoring decline in terms of consumption.
We will manage in any <unk> any period a week. This should not be lost team too long and says he shoots it must shorter than what we've seen in the past.
So that's that's the reason why we are relatively optimistic about it we have normal who's in you guys about the future, but we knew that we have a couple of recipes to fix whatever problem we may face.
So let's watch oldies indicate is in in the future and let's make sure that not too many orders all being based in the last thing I would like to add there is is obviously the yard so for the ours is going to be a very difficult period of time and I have no, though the the yards at some point whew.
Make special offers.
A a beat unconventional ships on a on a jewel show view <unk> and I think it at the time it would be normal that you see a comfortable bulldoze, but it's not sustainable to do too many of those old was a discounted price obesity, so let's not be panicking alarming, if we see a cost of rules.
Oh overdosing, please that's not going to change to the market as in the in a big way.
Okay, alright, but the the helpful answer appreciate the time thank you.
Thank you had our next question comes from then on from people plays Guy with your question.
Yeah. Thanks.
<unk> thing man, but <unk> I I wanted to ask about something that you know haven't been asked yeah, but thinking through the decision of.
Holding back on consuming the fuel that you are currently storing on your own ship.
<unk>, maybe walk you through the idea of doing that rather than consuming it and it's specifically maybe they're thinking around you know the possibility of generating cash flow from that asset by storing for third parties.
Usually you have and then you can actually generates revenue on it.
That way into the calculation of using versus nine.
Yeah been thank you. Thank you very much for the the question. It's a very important for people to understand so we have two you will see she's we have the Europe and we have the Oceania into Europe is indeed being marketed for a storage purposes.
It's it's it's always trading in storage purposes endorse sheep's are moving.
But it's true that they tend to to stay in location longer than a conventional <unk>.
Because they're not conventional size over the over all of a conventional inside.
They don't fit just the same rate and that's that is a explain relatively easy d. by the fact that.
You wouldn't need to to play a market with the way the market as structure. The market is structured for 1 million barrels loved to meetings are a lot. So whatever you have a sheep and you can offer the space, which is 3.2, it's a bit of an odd cargo size and so you need to combine it it's all that easy.
You need to discharge, it's also not easy because you wouldn't need to sell it in one tool tree, sorry, two or three not so more.
And when you look at <unk>, if performed with <unk>, yes today, the Europe is under a contract for 50000.
The charter had an option to extend its lost most for another six months that <unk> doesn't we're expecting to do that and he did it.
And so we have rented the ship to someone else at the up slightly lower rate. So, let's let's make sure that we don't we are not being confused with the lost opportunity audio shania and comparing with a V.L.C.C. because <unk>.
Secondly, why haven't we consumed one if we stop consuming d. futile that that is indeed, a buck on <unk>.
Simply because we we want to see whether the market was very vote on time, yeah. The was whether you own fries and a few log price was going down.
Down very very quickly and we would rebound very quickly up.
And obviously, that's not what we have seen so now what we're doing is we continue to consume a little bit from <unk>. So we have a mix of Ah procurement from the market from D. Oceania.
We're buying wholesale in large quantities, we benefit from a discount and then we distribute from the ocean into our feet in most of it is coming from the market, but some I mean, just coming from <unk> trying to blend it down.
And obviously the figure that Lita showed you to 50 56 million now was at the end of the quarter and when you look at the price of gas on on the price of it as if it's obvious be higher than that to the so I think that we were already lives in a way not to consume me directly but to to wait until.
<unk> bounces back which is the keys to the will it bounced back to deliver which we we acquired it probably not but let's not forget that the game plan was read through a show the quality to assure that we <unk> smoothing out the <unk>.
A new market, we did dead so even if we consume it at a at a prize is slightly above the market I don't think that it's a that people will notice it.
Very strong <unk>.
And and again I don't think that it's the end of that story, we have learned a lot of things about few procurement and touch would we have not had.
And any bad stems on both the vessels, whereas we've heard a lot of horror stories of <unk> be obviously, complying, but creating a lot of problems in the engine room, we haven't had that because we have been able to test all the material. So.
Again, let's not it's not for use too much on on the on the money that he's lost on paper and the moods.
You can count on us to to try to create value or at least limits.
The loss and again.
Very very happy not to spend 350 million on <unk>.
Yeah, I I, certainly [laughter] would be to the my my next question and this is just really a clarification boy I. It might have been a mets question, but you're talking to reassure the thinking.
David and pay out and I just wanted to make sure that I understood clearly so as it relates to the second quarter and the earnings on the second quarter specifically.
<unk> Investor should expect for that 80% of the net income to be paid out it is that.
Correct, yes.
The so the the the bully she's actually relatively simple the bully sees that we we if we if we targeted 80% of the net income to be read distribute to shoulders and you have two ways to read just read the two shoulders your dividends and your share buyback earlier in the school.
Oh.
As I mentioned I said, we are we not entirely happy with the share price and and I know it seems is no one should be on this cool.
Or even today.
It's a it's still a discount through any v. and the reason why we haven't done any buyback in the first squatters because it was very volatile and at times. It was a D.V.D. and at times. It wasn't a D.V. and we're not going to constantly intervene like if we wanted to support a show prize on any any a weakness.
If the weakness is for loans and we can <unk> very big discount compared to any V.. Then I think that we will use that tune into toolbox, who do they I cannot tell you would the level of dividends will be compared to the the the the P.N.L. because some of its some of those returns me.
Them with a share buyback, which I think it will increase long lasting values for shoulders.
But again, it's not going to be.
Oh, Oh, nothing right I mean dividends are important we understand that in today's world very few companies are capable of distributing <unk> distributing as much students as a as we are doing.
We had a new guidance in January we thought it was very important to committed to each and and ensure that we a sears even in the current circumstances. We are very soon just rude 80% of on net income.
Off to capital gains of cools off dividend.
Showing you that this is a reality.
And we hope to the market will take you to as the reality and if the adults and the show for the remains weekend, we may use all the tools.
Okay, Alright, that's that helps a lot appreciate that.
And and I guess I don't know if there well at this point I'll I'll turn over although I do it's been upon market, but I I'm looking forward to seeing some more traffic lights at some point their price so things like.
[laughter].
We didn't we didn't do the traffic light because we feel that it would confuse people are are in the five different segments. Some of it would've been green and some of it would've been read at the same time and he'd called the amber because it was two distinct.
A a causes for being read <unk> being a green, but we we like the idea was suddenly come back to his when times are a little bit more certain policies for that.
Thanks Bye.
<unk>.
Our last question comes from Omar knocked out from Clarkson. Please go with your question.
Yeah, Hi, there I know, it's quite late Mccall, but just had a couple of quick follow ups, maybe just as we think about the you know the 95000 a day number for for the T.I. pull average still are for two Q. I know you know Brian discuss the the the lag effect and and rates relative to the index since we're seeing.
C funko price, having come off as playing a role when we think about also the the time charters that you've entered into what are those done in the T.I. pool that maybe a.
Kind of maybe it is factored into the 95000 and making it look or appear lower.
No no.
Not a little staunch all those words on in the T.I. pool.
And that's that's the reason and.
Yeah, but but it's a it's a very good question because we were surprised when we saw most of the <unk>. So you'll you'll certainly not the only one oh, there thinking that the market was not higher.
Than than what it was in and the only thing where you could say at the time is.
The market is always volatile in every single fixture is is a mini ocean in itself, but what we saw also during this quarter and that's usually use the kid is that the market was.
Very fragmented in the sense that if you were doing a an A.G. far east voyage. It would certainly be you weigh more than a you'd go <unk>, which traditionally always lost 10, yeah. Two years has been a opinion of more so.
When the U.S. says the market as being okay. It must be $120 a day in fact, it was 80000 on one side and hundred and 50 on the other side, but obviously the two voices not being the same lane. The average was not one twin you do you average was probably a much longer than that.
So that that is certainly one of the reason the second thing that I would like to mention here is.
We live in the world, where the void choose on average on taking longer because into voyages you also need to take into account the delays in bold.
And what it means is that very often you're going to have the voiced and lost more than a quarter.
So you really need to combine.
Q1 would choose to chew too with Q3 to treat it with you for and so on to have a better average picture of what the market is I mean, we are all sitting here dividing the year in for.
But does it make sense in the V.L.C.C. market, probably not so let's take a a sort of a deeper view I think that we were much stronger than what the market. All dnase had predicted into one we very please but we don't cool that's not performance I think that you have to makes you want you to to our life.
Two a sort of a average performance for the fees.
And and you know it's the same when you compare our results with the index or the index that you're using all when you compare <unk> results with auto companies I've seen that you have to take more than one quarter.
To differentiate between companies.
No that's fair and that's a good point ego and then just finally, you an apology answered this to an extent, but <unk> and storage and you're like kind of staying away from it for some time here. One is there any issue that that degrading and then and then too deep.
I think there's an opportunity to maybe offloaded sell it into the market and maybe make that that's all available for a a floating storage contract yeah for a commercial basis.
Yeah, So I I bought into the question with with Ben earlier and.
It's difficult to off load and sell it to someone you would crystalize your losses, whereas what we've done so far is a is quite frankly.
Not crystallising Dulles and then I'll schools, you has to look at the opportunity costs and the opportunity costs as like stand for this particular <unk> is not is not that great. So we're not losing a potential you know 80 or 90 $100000 a day or contract if that was the case.
We would have done in on the other vessels, the euro and and we have and we haven't done that.
And then all schools, we would have tried to get rid of that product as quickly as possible.
We we will continue to to look at ways to create value in what they see create value said he tried to decrease.
The the paper lost it we have at the moment.
Market is helping us everything from or to own products is going up. So it's it's it's okay. I would say it's okay. I can I can I just add something on your previous question.
Because I forgot to say it at one of the reason why the indexes are probably a has all of the physical market when it comes to Don charter coolant.
He's also be choose [noise].
<unk>.
In the last three months as being a <unk> an abuse.
The subjects that are being put when you fix service and so the subject is a concept that was invented to make sure that the the <unk> <unk> acceptable to perform the contract and certainly not to be treated as an option to keep the vessels full two or three days.
Ingles fees and then if a if you seem to if you see the monkeys going up your T.V.C. to monkeys going down Yeah, you, let it go and there's been an abuse a clear abusing the in the market too because of that and I've seen that the indexes.
Much more geared towards the ships on subs rather than 40 fees.
So what you see on subs has been there's been a lot of failure and on average more failure with any unusual time simply because there's been a lot of volatility.
And that might be also distortion that that has created this false expectation for race to be even higher.
Yeah that thinks he got that that's actually a very important point then I guess, it's something that you know really showed it.
So, but six months ago after the costs with thanks, <unk> and we've been hearing more about that that's something that has really been developed here over the past year or is just something that long term has always existed then it's just become much more visible now.
Oh, Yeah, certainly developed far more into more for the T.T. you will have you know a market and he I'm thinking <unk> speaking daily or weekly volatility.
The more you will see this this abuse continuing and there's very little thing that we can do obviously, we larger service or customers, but the you know that there's a little bit of a given data we not seen the movie.
Initially as I said the subjects were only B.Q.s besso could not be inspected physically the the certificates. The oh came so the venting weibos could not be a a dumb at the time of negotiation the negotiating the rates the terminals need to accept the vessels. So you need to check a number of.
Things, but <unk>.
Absolutely No reason why you should be field you have agreed rates in that range would be ones that if you'll paper are in order should be wants that that you fees and unfortunately at the moment, that's not how the <unk> explained this subject. So I think the as an industry to see.
Something that we we we should address.
<unk>.
But it certainly something that has increased recently because to mark has been more phone a thought and so it's so easy to drop the.
<unk> going down the down and to seem to be so when the markets are going up.
Yep, Yeah, definitely and D.H. teammate those send comments yesterday.
Okay, well appreciate the appreciate that dialogue. Thank you.
And are watching comes from.
Caymans Meyer from value investors that please go ahead with your question.
I get morning, you a good morning, Brian and we got quite the marathon on the call today, but congratulations on an excellent results.
Thank you.
Most of the question and thank you for your patients to <unk> <unk>.
Of course, yeah. Most of the questions that then fantastic I think we covered and most of the points. One question I did have is on a new watches the repurchase I get a lot of questions about that and I know you kinda bounce back and forth between the 10 per cent at at 20% authorization. So just to make things clear windows that kick in officially are you in any sort of blackout or post earnings.
Not repurchase available.
Oh, Yeah, I'm so until the next day, Jim we used to have a authorities Asian to do buybacks.
And those <unk> valid for five years, who last time, we asked was five years ago, and we got a authority to do to 20%.
As we were preparing for D.C.G.M. and and we had <unk> well, it's not an easy Jimmy's an S.G.M. in fact.
We have asked a question because we also need a quorum the I don't want to enter into too many technical details, but you know the words, we've been able to test the waters.
Into all of a surprise most of the proxy agencies recommend to a vote against.
More than 10% share buyback.
So when we asked 20% of was refused without without courtroom.
And we hope to the 10% will be accepted but we believe that it will be accepted because on the one that we just organize which where we didn't have a quorum. It was accepted and so on the next one we don't need to call them and so we hold the d. agencies were born into the same direction.
I personally believe that it's it's very strange that.
You guys you guys being old invest is out there.
Are being confident that the agencies represents through the what's you want us to do a and p. any we have no said that if we do share buyback, we won't who's dividends, we've demonstrated that pretty much every other years, where we did booth.
And I've seen that show buyback saw there to to create long term value for shoulders with great tool into toolbox.
And I'm not sure I understand why those voting <unk> are recommending it toward against more than 10% hopefully we will get that 10% biting of me and that will be valid for the next five years any for you run out of a of that because we have boat already 10% and we can ask at the next day.
G.M. et cetera, et cetera, So I don't think it's a big subject, but but it's true that I'm a bit frustrated with with the recommendation from the proxy agencies.
Excellent. Thank you hear go Yeah, you know they say don't look a gift horse in the mouth, but it looks like most investors are taking a horse out behind the bar and so you can get that repurchase activated I think it'll do good things for you last time, we talked we looked at your leverage and Luckier book collaboration you mentioned on the slides is 42% book after the Devin and after the large David and of course.
Your book is very conservative because if you're an appreciation policy right that goes to 20 years to zero instead of maybe 20 or 25 to scrap so if anything your life or just lower last time, we talk to you mentioned that you agree that you're leverage is quite low and you said, there's actually room. If you want it to to expand out leverage maybe up to 50 per cent Max you have about a billion and liquidity.
Is that still something you would look into if you wanted to maybe accelerate does your purchases or pick up some distress tonnage or are you comfortable where you're at now with leverage.
But you are absolutely riding your analysis that <unk>.
<unk> you have to take into account all those elements at the same time. He noted to decide what you do with dividends, what you do with share buyback.
And potentially you what you do with their positions, but we already come to do earlier on the school that.
We feel that the values, so I'll, probably a little bit too high unless we see you know.
Sort of distress opportunity on an interesting opportunities.
Last year, we did share buyback end to go with the division that we distribute was indeed more than or targets each person's.
This is a conversation we are constantly having among solar cells, but also with or bowls.
And until the time when you saw it I'm I'm afraid I'm not going to be able to tell you much more about it. So you will you will hear about it off to the events, but it's true that's with the kind of balance sheets liquidities. So buttons you can leverage end to the community that we have with the kind of odd to get we have four Q2, and let's see what what.
How to market position to do three we have a lot of flexibility to do a lot of things.
N.D.I.D. is not to rush ourselves in in one thing.
But to see and analyze it it'd be <unk> things all developing a thing that we shouldn't be ashamed well, what we've done so far.
Fact that we are under level is also be choose the market has developed very very strongly and so keeping 20% is indeed quite a lot.
More of the market is generous with you, but it also builds up some reserves in order to continue to consolidation game when the market will be week, or so one way or another the shoulders will benefit from it.
Excellent I think that makes sense you got well. Thank you very much for your good leadership at your an Avenue, we look forward to the next results.
Thank you. Thank you very much four year olds.
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