Q3 2020 FLEX LNG Ltd Earnings Call
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Good afternoon, ladies and gentlemen, thank you for on them by well come from subjects LNG Q3, 2020, the rigging up inpatient clubs and golf I pit stop all participants will be on only been on legal after to pick up back on features on will be a question about the south shore I pitched, obviously, which John the question you're wanting to burst for <unk>.
On the telephone keypad I must advise you that go on friends and family courts today I would now like to on the call Center for Speaker Mr. I think go like whats. Thank you. Please go on it.
Okay. Thank you.
True flex LNG trend to try and fit so it's called the presentation on my name is based on kinda give and I'm. The CEO of Flex LNG management I wouldn't be joined today by on CFO I want to go up and ready to go through the non best friend Us fighting on financing an update on ebay.
On the webcast for it also be I rang the bell flex in India Dot Com. So slide number two is how this came out with regards to among all those forward looking statements non Michelle.
Okay. That's on the states.
This guy must available in the presentation.
I commend up the Baton basin, if that together with their on as well.
Well I saw on the EPS on your Liberal so.
Slide on between the highlights [laughter] surprisingly the spot market stayed weak during the spring and summer due.
Due to the fallout from the call with 19 on them.
It's obviously affected demand for not on gas, let's start thinking that called low prices and thereby incentivizing come from out of the of cancellation of flexibility as Carlos.
Nevertheless, the market starts to improve on good as for the fictions raised on the economic activity picks up.
Improvement in the credit markets was however, somewhat detailed on delayed by the most active how again season on that gold in the U.S. assets.
The thing in temporary shutdowns, so for LNG export plants in the Gulf of Mexico, The tropical storm meal [laughter]. They became the tail the name tropical storm breaking the net gold on 27 names that's on the topic of storms from 2000 on five when Hurricane Katrina devastated New Orleans.
On the supply disruptions in the euro as well as other places like Australia on Norway, together with the seasonal increase cash spilled a big rally in global gas prices during the on them with Vps and Jay again going from some a loss of one dollar on to about $2 per million EBITDA.
For you to about $5, five and $7, respectively two day.
The GAAP Sally as does include economics markedly for the industry. This long box prices for LNG assets out of the debt floating stalling being more or less liquidated at the time when floating storage kit stylish typically tend to build up.
Thats all expectations, we would see out the flow their stores this year due to the thoughts on timing when gas prices during the summer vanished due to this incredibly strong gas by Sallie.
Just on gas prices have also said in cargo cancelations tapering off and this together with significantly more food from Asia.
I have finished phosphates at $500000 again by October.
Im pleased to say that.
Despite the amount of challenges caused by the pandemic. We have continued to operate those ships with hundreds of percent uptime, an excellent safety that GAAP cargoes have been the level without disruption on delays to our customers. We have also taken delivery of for new LNG carriers for Myalept in South Korea on budget as planned drilling.
Hi through October and I would apply a bit more color on the operations shortly.
Interest with 11 average time charter equivalent on EPS.
On T. fee of $47000 per day, Apple juice for presentation in August with guidance that the revenues would be higher income compared to Q2 assets fleet have been going with additional newbuilds.
For news does call from about 26 million to 33 million. We also guided that you see for Q3 was expected to be similar to Q2. Despite the cost associated with mobile I think the tenure buildings with ex delivery in third quarter.
And this estimate was indeed about accurate asphalt CAC in Q3. It was exactly the same S&P this quarter at $47000 per day.
This means that we have been able to NAV navigate through various market conditions caused by the on that make in Q2 and Q3 without depleting on the cash.
In Q3, although adjusted profit was $1.2 million.
Net income was higher at 3.8 million due to favorable changes in the valuation of our portfolio of inflows for Dave at this which is utilized to hedge our interest expenses. This financial instruments fluctuate within for threat level in the U.S. and interest rates have recently picked up a bit.
The overall adjusted profit for Q2, and Q3 last us about $500000 given the fact that we have been through the wall Stone zone since the great Depression. This illustrate how is our best on businesses as we have certainly not received on the financing support on handouts from governments to cope with the economic consequences of the bundle.
Mike.
And for you on PPI on through the violence going vital on a global scale with 11 fairly good trading results with Tc of $68000 with the guidance of 70 to $75000 for Q4, we have this channel I think pretty good results in the two wins that portal this year overall.
Yes, we should add up assets on $60000 per day, which is well above our cash breakeven level off about $47000 per day. Despite the headwinds we faced this year. This also held is that how well we can do in a market where we are enjoying tailwind.
As we have taken delivery of ships in the quarter on remaining Capex have now been reduced to $505 million or reduced to about $280 million following them by delivery on October subsequent to Paul for that we actually have five homes for them $33 million in available for this capex as repaid.
Ultimately $18 million in prepayments for flex time, both as part of an agreement to move. The later labor day offer from end of August in mid October.
This in order to fit into the schedule on the other viable time charter, which we have secured Paul.
Given the factory final specs Mboe on line on within $56.4 million Chinese lease our cash balance of 76 million at quarter end improved by about $26 million in connection with this delivered it and we have a very healthy cash position, which we will continue to build up during Q4 aspects.
Next to generate substantial free cash flow given the guidance provided today we.
We are also pleased that we have been able to utilize our strong for that market to become a significant portion of the first quarter next year.
And first quarter, we expect to add two ships through off late flex freedom in Genoa, which for us on the front page of our presentation and flexible on debt and several items as we have done more ships available, but nevertheless, we have all of that they booked about two thirds of our available days, which includes these two newbuildings.
We have several ships on valuable higher it's too early to guide on TC numbers for Q1 next year, but we will be able to provide more color on this during our Q for presentation in February next debt.
Hence with strong cash position are truly financing with consisting entirely on the next generation ships, coupled with good earnings visibility and the industry's lowest cash breakeven levels as well as light in the tunnel when it comes to call with 19, given the recent targets for when that comes to vaccines.
For all the have therefore decided to reinstate the dividend.
We have suspended the dividend for the last two quarters and given the risk and uncertainty created by the call with 19 pandemic no. We havent demonstrated that we can manage this risk rather well and we are just based on again reinstated the dividend, which the board for Q3 assets at 10 cents per share.
So.
Moving on to slide for which provides an overview of our fleet composition as of today. We have three ships on fixed income. Jason. This is flex ranger risk on mass annuities day with Spanish utility Endesa at end of May in.
In July and September we took delivery of flexible on flex wrestlers and both these two ships were fixed on shorter term tcs of eight and 11 months, respectively. The flexible time charter has recently been extended to 11 months in total similar to flex vessel.
Today, we also have in total face ships currently operating on the valuable higher Pcs. This kind of rely on these provide us with what could the EBIT described for you.
Utilization in showrooms in soft markets, while we maintain exposure to the overall faced market as we have been bearish on net considerably higher rates. In Q4, we are benefiting from increased earnings on these ships now the ship serving such contacts on flex enterprise ex off the Mitch Force Optimist, which was delivered on our long term.
Ratability It seems to go on vote in August as well as flex Amber, which we took delivery off in October subsequent to quarter end.
Improved spot market. We are also pleased to have for ships operating in the spot market. This the ships currently trading spot on flex endeavor Flex landmark effects translation FX hedges for.
For loans for chips, we do try to find the balance between maximizing rates and Paris as we do have additional ships for delivery next year and thus likes to also add earnings visibility, we held US based as we have already begun to Turks off for available days and first quarter next day as mentioned.
We have agreed with they all day to slip flex free them into next year, and thus, making our 21 vintage share was originally scheduled for delivery end of November this EPS by postponing outage on our strength is wrong we.
We are building out all day docs with for ships being 18 vintage two ships nine vintage for Sip strength, the vintage and the remaining phase ships being 21 vintage.
We expect to take delivery of flex based on early channel there.
I'll now actively marketing for potential clients flex voluntary have already credit also see on gas styles and she can also be available early next year, but their scheduled deliveries losses and set all day aloft, new billing will be flex of Agilent, which is scheduled for delivery end of may with flex vigilance.
On the war on Newbuilding program is complete with third in large alamodome LNG carriers on the water by second quarter next year.
Earnings capacity will increase by 30% early next year compared to fourth quarter. This EPS and finally, all on the invested equity it will start generating income in contrast to the trend day to 19 and transit when a very large portion of our like for day have been tied up in new buildings, which EPS, which generates income and.
Thus flagging down all data on on equity numbers for those to pay on a lot of attention to dose.
So slide five before handing over to halt for our financial review I want to touch upon on our way important matter, which is for us on the top of our agenda for the even more so this year due to the COVID-19 situation with all its implications.
With outbreak offtake, all with 19 countries have locked on and picked up a lot of travel deflation and impediments for crew changes and the repatriation of safe.
This has also been in what can only be described as on humanitarian crisis with significant concerns for the safety of CFS.
According to IMS or thoughts on September.
400000 seat for Addus overview on the complex and on more than 400000 seafarers at home unable to join those ships.
For 1000 is one third of the 1.2 million seafarers on staggering and depressing number right.
While domestic employees in the transportation sector as for Ellison International Education have been shielded from the distinctions assets have been deemed essential walk us in order to ensure that the food on the sense on all the goods is flowing this has not been the case for CFS gross.
Mr 90% of goods from being pounds, both ATSI on or about six it wasnt cargo ships, while we are not transporting the last mile to consumers. The last mile transportation can take place unless the goods on ships are being offloaded at ports and by the way for to walk US has also been deemed essential Walker.
On areas, our laws discussions ahead and attempting to use on order the world in this context to categorize these double standards that debt. It's positive to see that more companies are realizing that cfls on essential to shipping and that ship things is makes the world go on.
So.
Headwind flex coped with the situation given this limitations, let's just say we have been rather busy we have implemented slick standard operating procedures for joining and have signing through in order to safeguard our.
Our patience and the society with so this on the operating procedure includes control quality and on PCR testing regime with a minimum of negative test assets can sometimes be on July relative.
On the E loans masks recent Qorvis tests, we have also developed and on Opex management on which we have shared with key clients and the response has been rather positive data.
The Opex management has also been stress tested through third parties involved in all emergency Israel.
These procedures have been critical in avoiding any outbreak on on ships.
As for with 19 have impeded our ability to regularly visit ships. We have cash for regular video conference meeting with CNN officers on both to make sure they receive that pension needed to coordinate through changes and on shore Mall on board. We have been focused on seeking every possible opportunity to carryout.
Through changes to minimize overdue contacts.
I think all of us in this regard our impressive in the six months period during May to October we carried out 32 successful to change operations.
Good day.
Much like to take the opportunity to thank go through and onshore personnel for their dedication passion and hard work in organizing these crews changes, which I can ensure you have not been straightforward.
I'm happy to say that 93% of our COO is on time I download overview on the context.
That leaves us with 7% of our true overdue on the complex. This is unfortunate on something which could be avoided if loans.
This on.
However.
As mentioned, we are very focused on minimizing overdue states and I'm pleased to say that 20% of the 7% is overdue by less than 30 day, while the remaining is less than 60 days. So we have no clue staying.
Staying more than 60 days overdue with some context no easing installation on Cfls, we do hope to bring these numbers down to Seattle as fast as possible.
On the other issue is that by the time for the fiction is conducting regular ship inspection report pogrom.
For what we call Tyler we are required to carry out these inspections regularly at least on a six month, usually in connection with discharge without limitations, it's been extremely difficult to carry out this inspection.
But this has not stopped us from finding new smart ways to walk.
As high as they have made more progress on the mall walking the last year for the last decade, even in a conservative business like shipping so far we have credit to.
Two more sites in order to keep the certificates of today. We have also carried out to as a moat change of management are for ships. During this period as for less to them on with annual cloud service so impressive to see.
That's a technical personnel are able to get worked on despite all the obstacles tall net them.
On your billing team am also faced logistical challenges in relation to deliver then manning off on Newbuildings. Despite obstacles for ships have been trued mobilized on delivered according to budget and plants. So I would like to also extend my gratitude to our new billing team before handing over to halt for our financial review.
Thank you Sir.
Looking at the income statement on slide six revenues for the quarter came in at $33.1 million up from 25.8 billion in the previous quarter.
Time charter equivalent rate for both quarters was 47000 per day on the increase is due to the delivery on three vessels during the quarter, increasing the number of vessel days.
Adjusted EBITDA for the quarter was 21.9 million up from 17.4 in the previous quarter.
The result for the quarter includes a gain on derivatives of 2.1 million relating to our interest rate swaps, which includes on unrealized non cash gain of 3.5 million.
This compares to a loss of $6.6 million in the previous quarter over 6.2 million was on realized.
On a quarter end, we had entered into interest rate swaps totaling seven on 10 million at an average interest rate of approximately 1.2%.
The gain on interest rate swaps was the result of the increase in longer term interest rates during the quarter. Following a significant drop during the first half for 220 due to recover 19 pandemic.
Net income for the quarter was $3.8 million a prominent losses of 6.7 billion in the previous quarter.
Adjusted net income for the quarter was $1.2 million or two cents per share compared to an adjusted net loss of seven on 1000 or one cents per share in the previous quarter.
Then moving on to our balance sheet for September Thirtyth on slide seven.
Following delivery on the three new buildings are assets on a quarter end consisted of nine vessels on the water with an aggregate value of $1.7 billion.
In addition, we are booked vessel purchase for payments of 218 million relating to the for Newbuildings still to be delivered at quarter end.
This represents the advanced payment on these including in the $17.8 million, we prepaid on flex average in July two portfolio delivered through October.
In connection with the vessel deliveries from three tranches totaling 387 million were drawn under six on our 29 millimeter facility we entered into in February income.
Increasing the total debt at quarter end to $1.1 billion overage.
Overage approximately 54 million is drew over the next 12 months on those classified as current liabilities.
Total equity EPS per quarter end was $816 million, giving a stronger for the ratio of 41%.
Looking for a cash flow on slide eight.
Cash flow from operations was closer to $20 million in the third quarter.
This includes positive working capital adjustments of 9.6 million, mainly due to an increase in prepaid fire following the stronger market in the fourth quarter compared to third quarter.
Schedule on Assortments were $9.3 million on in addition, we are financing costs of 6 million, mainly mainly relating to upfront commitment fees on the 609 million easier facility and also the new 125 million facility for flex volunteer.
Total newbuilding capex for the three new buildings delivered during the quarter was $415 million.
This was part financed by drawdown on 307 million under the six for 9 million easier for facilities with the remaining 207 million from the from our liquidity.
In addition, as mentioned, we prepaid 17.8 million under the purchase agreement for Flex MBR in July.
This brings total net payments towards new billings on financing fees during the quarter to $51 million, which is the main reason for the 40 million decrease in cash to 76 million of quarter end.
As mentioned on Flex MBR was delivered early October whereby the 156.4 million sale and leaseback was executed.
The 17.8 million per bed in July was deducted from the final amount payable on delivery Jimmy posted net cash effect from the financing of $25.7 million. Thus boosting the liquidity due to just over 100 million post quarter end.
Moving on to slide nine we have now secured attractive financing for all our vessels, including the for new to billings still to be delivered at quarter end.
Following the delivery for three vessels in the third quarter on the prepayment on flex a number on the remaining capex at quarter end was $512 million compared to secure financing of $533 million, giving a positive net cash contribution of approximately 21 year for the remaining for Newbuildings at quarter end.
We have a very comfortable debt maturity profile with the first maturity to June July 2020 for.
Our diversified sources of funding split between bank loans easier financing Allianz financing also gives a staggered debt maturity profile mitigating refinancing risk.
We are not on a diversified our financing sources, but also for approval of lenders, which now includes 15 different financial institutions, demonstrating our ability to raise attractive from being in a challenging capital market.
And with that I hand over back to Easton, who will give an update on the market.
Thank you Charles So let's start by a quick recap of the force market for LNG shipping on net 10 solid despite COVID-19.
On the trends they have for the most part follow the usual seasonal pattern that with much softer rates during the spring and summer compared to previous EPS due to lost demand caused by the locked loans given the scale of cargo cancellation that have been plenty of ships in the market and this has the best headwind for debt as well as balance bonus.
Conditions on.
However, as we stated in our second quarter presentation in August we were starting.
To enjoy better sentiments in the spot market and particularly when it comes to balance bonus condition in our Q2 presentation with this on arrow on the graph to the right.
Indicating that we were expecting on the bonds in balance boneless condition and this have come to fruition with for poised now being the on on full on Zip economics or even better.
This means that achieved earnings in the spot market on all typically on path for even better than the headline on EPS wide rate. During this on most all of the voyages being done with higher only for the laden leg shaving the achieved Tc rates to about half of that line rates. In addition, while we saw a lot of vessel availability.
During the summer, resulting in idle days, we now have a very strong market with very limited risk of idling as Clarkson was costing only t. available ships worldwide in the market on Friday.
Given the limited vessel availability spot based on all in excess on $1000 per day for modem for niche and similar through the levels seen last year.
So some of your might one day LTC guidance in Q4 is not higher on 70 to 75000 in Q4 when I saw on all in excess of from the thousand. The reason is that the unusual active hurricane season, and use cost supply disruption, which delayed the typical seasonal uptick in fact base spot.
Face didn't really start to evaluate before the end of October which is a bit later than usual keep in mind that ships are often booked more than a month in advance as it takes a ship about this time to sale from Asia to the U.S. So the rates being for both the now in November are typically for Pacific close in December or use low.
Things in late December or early John on next year. This is thus a positive signal for the sort of 20 to 21.
However, with about 50, new billing set for delivery in ex debt. The key drivers influencing the trajectory of spot price will be the winter weather together with the shape of economic recovery as we also mentioned in our presentation in August and dressed to 17 and 18, we experienced on relative cold winter.
And consequently, this for market held up well in Q1 for the last two winters. We have however experienced extremely mild winters and this together with the covert lockdowns in China implemented in February. This EPS have resulted in for Brett plummeting off for new year.
This year, most rather prognosis for new lost out what a warm winter due to La-nina asked we also highlighted in our presentation in August and the signal from the futures market is that the LNG project market will hold up in Q1, something I will explore in more detail on ex line.
On slide 11.
Gas prices.
This year have been asked on layoffs gloom and Doom.
For the call with 19 fund them make we all had the expense very low seasonal gas prices due to the two consecutive warm winters impacting service levels as well as general and the weaker Asian demand due to the general economic slowdown in China. Following the trade war with us the lockdowns on reduced economic activity.
Following the outbreak further amplify these pre existing conditions and resulted in a cash in global biases.
We asked in record low gas biases during this on with European gas for some time actually trading below $1 per million midyear, which is unprecedented one dollar per million BCU equates to oil price of on $6 per our balance.
Asian spot prices have for short periods been trading below $2 and Andrea hit a 21 year low in June at one dollar and for any sense.
As we presented in our Q2 presentation in August gas prices started to recover and they certainly have continued with Asian gas prices now well above peak COVID-19 levels and at higher levels than during arguments losses.
Jack MTF are currently at about seven and $5 respectively.
This is still cheap on an absolute and seasonal historical levels for the price points, which is much more conductive for the phase market Thunder rock bottom prices during the summer.
Following the call on our Salt Lake, we also on oil price cash affecting the price of contractual LNG linked to oil oil.
Oil linked LNG still represents about 70% of the market.
While there have been production cuts in LNG with cargo cancellation data these on minuscule compared to the oil industry with the big 9.7 million Battle cash.
By OPEC, and Russia as for LSW, and lower losses from the share base in the U.S.
The LNG links to our advisors are typically price with about six months' delay. So LNG spot prices are at similar levels to oil price linked LNG today as mentioned earlier on the future markets predicts that GAAP bias will hold up in 2021 with some expense between Tcf and handheld held off about $2.
If gas prices stay at this level that shouldn't really be any economic incentives for a piece of the massive cargo cancellation in the us next year.
Since the Tcs Tcs derivative market is highly liquid play as Ken already hedged position to avoid having to pay a tolling fee of about two and a half dollars for call gross not being lifted next year.
Future prices have on mix like gold of predicting actual future prices. The key determinant of cargo cancellation on less mentioned winter temperatures, which will affect the storage levels and thus available injection capacity during the summer as well.
Shape of the economic recovery impact.
Impacting gas demand.
Slide 12.
Slide Travis our review of the two main import markets for LNG Asia on Europe, which together makes up about 95% of the market. So.
It's definitely the LNG continents.
In the early phase of stucco on archive assets, you walk through with ample enforced installers capacity day came to Heska acting as a buyer of last resort absorbing the gross stuff available LNG in this regard similar to what happened in 29 day now for the ready from 28 to 19, when such costs by the end menu.
As for European locked loans took effect on inventories for piling up using beone bias became exhausted by the summer and this total GAAP passes through new laws. So smelting in our way for fewer scalable constellation, which I also will put us on more details on later on.
However, as we are approaching autumn Asia Asian demand took off driven particularly by the V shaped recovery in China, which quickly on managed to contain the virus channel.
China is also pushing forward with reforms in the gas in this line label pricing third party access and stimulating competition with new International pipeline company.
Furthermore, China continues to rollout city gas heating where penetration softer goal notwithstanding on all those 7 million households, being connected to GAAP setting. This.
As a decision there.
Asian demand for together with Europe, Europe, avoiding tank tops have debt balance the market and its now looks more much sounder than what was the case during the summer on our days when a lot of LNG carriers were tied up in non economic floating storage in order to smoothed out the logistics.
So while European buyout for grabs about 28% up volumes in the first half of 20 trends debt. This fell to only 19% in Q3 as Asia increased its share from about 76% in the first half of the EPS to 74% in Q3 GAAP.
Global exports have just been pending abroad with September on October the export volumes being marginally below last year, mostly due to suppliers assumption in this period and not really due to lack of demand.
Interest Asian demand is also positive for the fed market as this bill Skoglund from the Atlantic Basin into Asia, which should result in a big increase in sailing distances and thus generating more shipping demands.
Slide from interest in so let's review the supply model on all the time.
The model. We this model we introduced in our July Webinars on we have etcetera debt with the recent ex both numbers the.
The model is less the monthly income utility of export growth with associated cargo cancellation in the U.S. Please note that it's important to defend share between import and export numbers export numbers is a better proxy for shipping demand about 3% to 4% of exports are consumed by ships as for enough gas drilling to assets and cargo operations.
Depending on various lengths and whether that involves floating storage, which also drives settlements.
At the beginning of the we were expecting about 25 million tons increased exports in transit traffic and that's our objective for the in first quarter was ahead of the curve June.
During second quarter Asian demand Porter and Europe, initially socks off this volumes by injecting cheap gas for storage as mentioned earlier on.
During June July and August logo, spices, incentivized cargo cancellation and export volumes declined July and August ended up at the peak cancellation months as gas prices have on the call growth cargo cancelations have tailed off.
In total class seconds, <unk> hundred 79 years cargos by counsel and transit transit and we expect the on two on on the AC cargoes to be lost in total compared to the estimates during transit trends day, despite the Doom and gloom LNG market will go this year and we now expect export growth of 5 million thought.
As for trends to translate this is only half of the goals. We expect that can drive higher on we expected 10 million thoughts on growth and the main reason for the 5 million shortfall compared to July have been.
Have not been that cargo cancellation in new assets as we did expect them to continue in their water from the shore fell has sort of been related to supply disruptions in Australia, and Malaysia relate that to Gorgon and intuitive defy on shutdown of service in Norway, and the fact that assumption of ex post from color.
For LNG has been further postponed are the main reasons for the shortfall on top of this the hurricane season in the U.S. has cost cargo cancellation risk not.
Well and from scene and I will provide some more details on that shortly however in sharp contrast to all the hydrocarbons and even gas transported pipelines LNG has managed to grow despite the pandemic and gave index curtailment of cargos this year.
And given that containment of card with the sale of the export potential for next year is considered considerably higher which will also expand a bit further.
So slow.
Slide for Fintech.
Close on look at US exports as we highlighted in our July Webinars used for yourself are inherently more at risk for cargo cancelations due to the cost base and the flex Bill offtake complex, but customers can typically notify our cargo cancelations 60 days per se.
As for loading by paying debt fixed tolling fee, which tend to be around through an off dollars per million with you.
This flexibility enable offtakers to khamsin.
A lot of cargoes during the spring and summer months for economic reasons.
During this period European and Asian gas prices were at similar levels as you as gas prices and it didnt make financial sense to take delivery of these cargos for the although just paying in the tolling fee and avoid lifting them that said not all volumes were cancelled as somebody else can have different incentives as they could either.
We hedged on our selling cargos into regulated markets, where global spices on not the key determinant.
So during August we did as earlier mentioned see that global gas prices were bouncing back and this and move the economic incentive for canceling use cargos bad.
Yes at that time when exports were recovering we were hit by the most active hurricane season on an echo.
And this record goes way back all the way back to eight and 51.
Particularly on these 30 topical or sub Topicals storm Disruptors US ex force and we have pointed them out in the off on the left on side these being lost assets.
Delstar, which had pretty big impact on feed gas delivered to us ex both plants.
Usbs gas levels on all at a record high of around 10.5 billion cubic feet day adjusting for about 15% of free cash utilized for liquefaction. This equates to annualized us exports volumes of about 70 million tons today, which is about nameplate capacity.
Yes.
So on slide 15, we will add on overview of the 10 largest exporters.
And as expected, our booth and trends the trends there.
For those not being too fond of ex sale Ology order study our flag it might be worth mentioning that the largest ex Porter softer after size is as follows Qatar, Venezuela use of our shop, Malaysia, Nigeria, Indonesia printed on Novagold subsidiary and then Oman the.
The multi color flag in a per cent for rest of the world with our EBIT of about $42 million on expectations for Twentytwenty.
USA is the main growth market in terms of exports. Despite downward on 79 cargo Cancelations earlier mentioned at total capacity, we would expect us to be able to produce in excess of 60 million tones and 2020.
Despite soft ex both and as well as play continues to punch below its weight assets export capacity is on $86 million tops. The main reason for the shortfall in Australia is due to the operation of Pelusi for LNG being suspended since February due to cover 91 cents per diluted ads on.
Annual export capacity of 3.7 million tons of LNG.
Furthermore plan through at Gorgon has been suspended since may due to issues with our heat exchanges. This.
This plan has on the export capacity of about $5.2 million and we expected to commence operation again, shortly but needless to say significant volumes have been lost compared to what was planned our plan regular maintenance.
Other notable disruptions other reasons for reported outage of pain warranty and seven assets into loans Lindzey plant in Malaysia due to disruptions in the feed gas supply.
This guidance account for 9.6 million tons off layout tailed off the for sale. This nameplate capacity and the volumes on unless there are also on the soft side.
Yes.
We also see a somewhat lower volume this year from Trinidad and Tobago for three and Oman, while the rest of the world is fail if assets $42 million, while the main deviation as the shut down of America and Norway. Following that higher which has resulted in about 1.5 million tonnes lost in 2020.
These volumes are close to the European markets are they don't matter nearly as much as us cargo income cancellation in term of.
For our freight demand. Despite this shutdown, Norway can maintain its for fast as the world's largest gas exports are buying on Russia, Qatar is on the year as most of ex it's ex post on linked by pipeline to the European continent.
Slide 16, new outlets earnings for US as mentioned on about 30 million tons have been curtailed to cargo cancellation. This year. During 20 trend day, we've seen several times commencing operation and next year, we have fancy at Corpus Christi expecting to start up in first quarter with this 10 us named debt capacity.
Is around 75 million tonnes of which about 20 $71 million will be available next year.
Energy information administration in the U.S. for monthly updates on the oil and gas forecast in other force called short term energy outlook.
In November for the expected exports to grow 31% in Twentytwenty, one from 6.4 Bcf in Twentytwenty two 8.4 Bcf for next year. This equates to 65 million tons of LNG on growth of about 16 to 17 million tons.
While this is a big improvement it still leaves about 6 million tons to be cancelled nextel, representing around 85 cargoes, which is about half the level, we've seen in transit transit.
For shipping less us called translation is crucial, particularly if they are prudent away from that Lansing basin and into Asia.
These mortgages are shipping intensive so we wouldnt expect this year this year as volumes to add about two ships for each ton of about 32 ships, which is about two thirds of the order book for next debt.
As you as volume next year will be cash again, and this will depend on the tightness of the LNG public market on tidal LNG for that market will usually also case, a compound growth curve, which could provide more incentives for floating storage next on them than what has been the case. This year following the gas price Alan by.
By Twentytwenty, two we do expect us to take over the tone as Dick on today with the highest nameplate capacity.
Pacing ahead of both as trailer on Qatar.
That is at least on in Qatar expanded capacity.
On the day 210 million tons by Twentytwenty, five and on to that and trends the 6 million tons by 2027. However at that time US. We'll also have the 15 million tonne Golden pass project up and running and are thus able to also produced more than 100 million tons each year.
So then we are on slide 17, which is some layoffs attractive on projections piezo summarizing todays presentation.
Trent to 21 will be on exciting year for LNG shipping we have as mentioned quite a few ships for delivery next year, but we also have a very big potential for LNG exports. If we avoid too many cargo cancellation if.
If we use the numbers.
Numbers us will add 16 million tons next year.
It's fair to assume that for lose when does assume operations soon given the vast amount of capital employed to this project and the fact that the project is also producing condensate.
In addition to LNG.
The assumption of fluid production will add about three and half million thoughts next year than we have Egypt.
FX for the close to three and a half million tonnes in 2019, which is about half of the nameplate capacity of income.
Given the low gas prices in transit trended exports have been cost 10 best to have no started up again from.
50% production that is good will add about 3 million thoughts go.
Gorgon and Estela I've also mentioned assumption of normal Gorgon operation with at least add 2 million tons bear in mind that these volume sold on long term offtake agreements.
Then we also have been too low in Malaysia as mentioned, where we would expect the feed cost issues to be corrected on production to increase by about 2 million tons next debt.
I am also rainfall is also scheduled to start operation and is expected to add close to a million thought.
We also have.
For Tavi project, which relies on order 1.5 million thoughts, then Riyadh medica, and Norway, which we assume will be close down on till October and thus lagging on volumes by about $3 million.
Adding these two gross up bottom up leaves us at around 26 million tons calls and Twentytwenty while this.
This compares to energy aspects estimates for on 24 million tons in the recent LNG outlook on mobile it's fair to say that some estimates are considerably lower than this that debt that is however upside to these numbers. If the U.S. is running from steam we could add model 6 million phones.
We could also has 3.5 million more standard if it grew in Egypt produce at full capacity.
In Egypt, our resource on auto terminal called dummy EPS.
Which have a capacity of 5 million tons of exports, which has been suspended for a long period due to this agreement in the consortium earlier this year. It seems at par this union for non-GAAP Fenosa on JV between Eni and not to Jay and the Egyptian National Energy company gas on AG FTC Hello.
Moving on agreements and this was repeated in October.
So for our solution has not materialized on the outcome remains uncertain, but our solution seems to be in that rise from that.
Net Egyptian cargoes are closer to end users on us on Russian cargoes. So education cargoes are much less important for the phase the man unless these are thrilled to Asia.
So.
Slide 18, and the summary on.
For the sake, we have managed to navigate well through the difficult conditions created by the core with 19 pandemic. This has been on rail stress test for everyone involved and we have passed with flying Carlos both operationally and financially.
Despite all the obstacles, we have been able to operate with 100% uptime and taken delivery off for new for Newbuildings.
The gas price on Ali we started to see in August have continued and increased biases and demand in kit demand coupled with pulled from Asia has higher up the phase market with spot price for modern tonnage in excess of $100000 per day, resulting in house booking few for expected DC of 70 to $75000 per day.
Which would put us in position to generate substantial cash flow.
While we have been through from test days during the summer when.
When we fix chips on voyages with pretty bad economics, our patients have been awarded and we are now benefiting from this improved market sentiment as we have 70% for fees ex post to the spot market.
And staff for also time to reward our shareholders and we all know reinstating the dividend and declaring 10 cents per share on dividends for the quarter.
With free more ships joining of the fees next day, we are finally fully invested and we have a fleet of 30 instead of thought LNG carriers on the water with premium in earnings capacity compared to the older steam and diesel electric ships.
It's not like that we think Twentytwenty one will be on walk in the park given the high inventory levels and the rather large order book of ships for delivery in ex debt.
We are confident that we are well positioned with that will come on place managed in house and operated as industry low cash breakeven levels.
We have demonstrated that we can operate in challenging market condition and we are on our seeing the debt in the tunnel with demand picking up and more clients favoring the newer more fuel efficient and environmentally friendly ships.
Good luck to you on the fuel saving and environmental credentials are for ships on LNG EPS of fuel for the last couple of EPS. So I think I will conclude today's.
Today's presentation with that and thank you for listening in I am happy to take your questions. So lets open up for some questions from the operator. Thank you.
Thank you ladies and gentlemen, we will now begin the question and losses question and as a reminder, if you Miss you asked a question on when you take credit for and walk on your telephone keypad.
Once again that is for anyone to ask your question.
Yes, or no question from Sam Please continue.
I think on gross Somers chat question sales. So I can maybe take those I've been looking for such a long time now so.
I'm going to try to keep this EBIT shorts.
For the questions we received.
Hey is as follows.
Should we consider the dividend of 10% as fix so.
Add thats certainly not the case and our income may sell valuable and goes up and down.
If you look assets yesterday saw adjusted income on adjusted earnings per share is.
18 cents.
We started paying dividends last year Q3, so we paid 10 cents.
In Q4, we delivered fantastic, you'll see us lost share $94000 Selma Tc basis from.
We did not increase the dividends and the reason was we were in tablet 2020. The locked on had started in China.
And that was on lot of uncertainty.
So we decided just to stay with the dividends of 10 cents for Q4.
And then last advisors than on.
We had on Q1 was a fourth in May we decided to suspend the dividend given and all of that on certain nature of the market developments. So.
We have suspended for Q1 unsecured too.
And now we are delivering Q3 and adjusted EPS for these three quarters our assets in sense. We think it's for basis, just talked with that 10 cents again for this quarter.
When we are delivering on both in Q4 next EPS have all assets of course, we will most likely have on.
Our earnings support with significantly more earnings given that the guidance for the today sales are then we will relate just to assess all debt the outlook the bookings for Q2 and few on to add to define the hope that level of the dividend, but in general we are for.
Most of them for the dividends on line.
Like the all the companies in the case of John Fredrickson group like on plan Golden Ocean on SFL, we do favor dividends on that its saga.
It's not like the management is going on.
Go on I keep on all the cash we have other want to distribute that to shareholders. So the dividend. This as sale plan on fixed in anyway.
And then we have one more question I think we can take and it's been a question about the Tc expectation for Q1.
As I mentioned.
We haven't per.
Provided on our TC number for Q1 next year its too early we have boots.
As I mentioned now on two thirds of the available days.
But keep in mind that we have several of our ships on valuable time charter. So we don't know what.
What's the rate will be on those ships, we in our day will be employed for that but not today. So it's a bit too material for us to provide the RTC guidance, but in general when you have booked two thirds of your.
Our fleet for Q1 next year, we are fairly positive and in on the outlook for that quarter.
So thats a day, so unless the us anymore questions on on the phone I think we are John for the day.
Thanks for question with keen to continue on.
Okay. Thank you for everybody for joining the webcast today.
The dividends.
Maybe for some days on that I think.
Stable 17th of December.
So on AG it won't be in your bank account in the Black Friday for us at least it will be in your bank account that had the effect Christmas season. So.
I hope you can spend as well either on on bank flex stock saw something nice for oil and over two on so thanks. Thanks, a lot again for joining and we'll be back in February.
Thank you. This does conclude your conference for today. Thanks also for.
Thanks for taking you may now disconnect sequence free from the line.
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