Q4 2020 FLEX LNG Ltd Earnings Call
[music].
Ladies and gentlemen, and thank you for standing by and welcome to the Flex LNG fourth quarter 'twenty 'twenty earnings presentation. At this time, all participants on listen only mode. After the speaker presentation. There will be a question and answer session. That's a good question. During the session you will need to press star and one on your telephone keypad.
Market adviser that this conference is being recorded today on the 17th of February 2021.
I would now like to hand, the conference over to your speaker today always staying paluch left please go ahead.
Thank you and I will come to today's flex LNG webcast my way up for something in the fourth quarter 2020, and truly trying to translate myself. My name is I think on the Kevin I'm, the CEO of Flex LNG management.
I will be joined today by our CFO.
Who will go through the numbers as well as for adding a financial update.
Hudson facing today is a bit longer than usual as we are reporting not only for the quarter, but also theyre trying to strengthen number. So we thought it would be appropriate to touch on some topics in total deferred today's presentation will be lost with all in all I'd say it will step down from his position on all joined Flex LNG as CFO on January 1st 2019 NAV.
Fantastic job force securing attractive long term financing for all our ships and successfully listing the company on New York Stock exchange on.
And for all related company SF added about its been since 2006, serving as the CFO independent hits on strength. It ran up until they joined flex. We have recently recruited senior bank notes all to take over the CFO all doing second quarter net this on vessels on shipping banker with experienced on both swedbank and they've been on.
And he will be in the fortunate position to inhabit a super strong balance sheet them on a purely finance company for them all and on the case always stay on an advisory capacity to ensure a smooth transition.
Also note that Oh, he passed the webcast available be available at flex LNG.
The last point. So then we have to the disclaimer before we start I will just make you aware of all disclaimer with regards to among all of those forward looking statement and non-GAAP net sales and completeness of details and the for this guy moving its available in the presentation and we recommend that the presentation is wrapped together with earnings set for so long.
Let's kick off with slide number three the highlights.
Trying to frankly have been lost all day about going for them overhang just gas a day about new laws, the new highs and displaying JK M. Gaspar associates on your historic low of $1 $8 per million Btu at this time Tcf's, the Dutch gas hub for northern Europe fell below $1 for the first time. However in general it is day on LNG.
All growth in Asia, but being sold close to $40 per million Btu, a staggering 20 times same case.
We are also seeing similar movements in phases with the Baltic LNG, which is a fair assessment, which take into accounts for long term economics, I balance conditioner and this index fell below $20000 per <unk> during the summer, but then reached an all time high of about $200000 per day, and John All day for the rest between U S Gulf Coast.
Hence we have been through a classic gloom and doom stall at which the annals of commodity in the shipping industry is filled with.
During the fourth quarter, we successfully took delivery of flex Amber in October given the strong sentiment in the freight market. During the final months of 2020. We also made preparations for early deliveries of flex feed them and flex volunteer. So we could act quickly on market opportunities with all of the travel restrictions. This is summed.
We have to plan well in advance as it takes a lot of time to mobilize a ship today given the visa policy Joseph travel limitations as well as our two week well on 10 of the clue as arrival as the freight market became increasingly tight though we are based on we were able to secure attractive spot charters for both flex for them and.
Flexible on tests and these ships rather levered on first of all it and 20th of channel they're respectively. These.
These ships will then deliver strength to our chart, though from the op.
So following these free deliveries our fleet has no other onto 12 ships on the water.
Last year building flex vigilant is scheduled for delivery in the second quarter and once she is delivered we have completed all new building program with all ships on time and budget in terms of financial I am pleased that we did in fourth quarter total daily time charter equivalent earnings for the fleet of $74000 per day in line with our guidance.
In the last quarterly presentation off on average TCE of 70 to $75000 per day.
This is below the 94 and $95000 per day, we made in Q for the last two yes that reflects the fact that the market didn't really throw them up before the end of October.
However, we have had a significantly stronger market and into Q1 this year than the previous yes, which our guidance illustrate despite the difficult market during the spring and summer are planning on a sales force yet were fairly stable with quarterly patting ourselves of 67000 in first quarter 47000.
Dollars per day on average.
During both second and third quarter, which marked another year of the COVID-19 crisis, and then earnings finally bounce back to $74000 per day in fourth quarter.
So on average our fleet deliver on TCE for the $60000 per day, which is well above our cash cash break even levels and as well we are reasonably satisfied with given the challenging market with improved sales. Our income also rebounded with net income and adjusted net income of $25 eight and $24.
$2 million respectively.
As mentioned, we have one more ships for their every day, we have secured I'd like the long term financing for our entire fleet, including this last new building. Additionally, we have I'll walk solid appreciation I'll try 129 million cash at hand at the other and less on new <unk> million revolving credit facility on which we are.
Isn't there I get it.
As we communicated during our third quarter results presentation in mid November to a third of first quarter well well then all of that Ebix due to our strong demand for shipping at year end.
With all therefore guiding Q on revenues of $80 million to $90 million, which is significantly higher than the $67 million of revenues in Q4.
Net this latest move for the expected revenue interest is delivery of two ships drilling down on the bedroom.
But we are also expecting higher average TCE for the first quarter.
It is for magic that Youll see us longer patting ourselves in Q1 than Q4. So we are off to a good start of the year and the market outlook is much sounder.
Then last year, given the drawdowns of gas inventories, which will spur restocking the Mount gay.
Given our recent strong patting ourselves on very sound financial position and healthy bookings for Q1. The board has decided to hike the dividend from <unk> 10 per share to.
Two other cents per share for the fourth quarter, which provide on that's active yield of about 13% on an annualized basis.
Given the improved outlook and positive share price development recently the board has also decided to increase the cash under the share buyback program. We initiated in November from $10 $2 $12 is still only 80% of the book value of the stock and on book consists entirely of.
New modern LNG carriers poorly financed so we think it is in the interest of our shareholders that we utilized some of our financial resources to invest in buybacks as our ships all standard much cheaper than new buildings at yacht, which comes through it all it's financing and which cannot be delivered before 2023, while all ships.
On the water generating cash flow today.
So slide four provides an overview of our fleet composition to repeat we are expecting revenues of $80 million to $90 million for first quarter, which is strong numbers. We still have open positions as currently about 13% of our available days are main open and we also have created vessels on the valuable higher where we do not.
No the realized earnings before the end of the quarter. Therefore, the range in our estimates.
As of today, we have for ships on fixed <unk>. This is flex ranger, which have been trading for NL and its subsidiary Endesa for about 20 months. We have recently been notified that the charter has elected to utilize its three months earlier re delivery option, hence she will be redelivered to us by end of February.
However, we have however, fixed flex rainbow on a 12 month fixed higher charter with a large trading house on charter that commenced and AV channel it.
In July and September last year, we took delivery of flex and flex passengers on both these two ships for a fixed on fixed higher time charter with a major utility.
Today, we also have in total three ships currently operating on the valuable <unk> Flex enterprise, we recently extended by another year under its valuable higher contract where their charter is a super major.
This will be the third year on the other this valuable higher contact for flex enterprise and she is booked until March next year Flex optimism was the level of day in August and immediately commenced a long term valuable time charter with Gunvor. Lastly, we took deliver of flex Ambry on October and Chief comments available higher time charter with a super.
Major once arriving in load fault end of October.
With our spot market on file during the end of <unk> early 'twenty 'twenty. One we have benefit this fall I'm, having substantial spot exposure with additions of debt to meet new buildings flex fit them in flex volume, there, which we have employed on the spot market on.
The last day of billing will be flex vigilant and is scheduled for delivery in may.
So if I look at slide five just a you know how we plan for how we have allocated all earnings in 2020, we generated on an adjusted earnings per share of <unk> 17 cents in the first quarter with the Atlas had sales of $67000 per dollars per day in.
I'm curious to accuracy, we achieved a <unk> of $47000 in both quarters due to our challenging market. Following the COVID-19 pandemic, but still we managed to generate one of adjusted earnings in these two difficult quarters as margin. They covered in Q4, we generated 45, and adjusted earnings which summed up too.
460, <unk> per share for the yeah.
So how did we spend this earnings as we had for ships for delivery on second half for 2020 with spend about strength in mail and related to remaining capex for these new buildings, which equates to <unk> 40 per share then we paid a dividend of <unk> <unk> in Q4 and margin on all the 10 cents for Q3, which was payable in there.
Simple.
In total 20 cents per share. We also started to buyback our share at the end of day add on booked 200000 shares back in 2020 at a cost of about $1 $7 million on <unk> per share. Hence there some sneakily up to 63, <unk>, which is also adjusted EPS for <unk>.
Slide number six Covid update.
Oh Boy I think on ships through trying to trend they have been made much more difficult due to the out there.
Due to COVID-19.
A lot of Congress have picked up a lot of time on legislation and impediments for crude changes and Red hat version of seafarers have become more difficult shipping as a global business and its function is the lifeline of day call on EMEA with its integrated supply supplier channel and just in time management.
And if he does know manager island and good things come to those who wait but this has not been through for <unk>, who we think the serve the pulp recognition for their valuable contribution making the won't go on.
We have recently seen some improvements and public awareness have been raised with initiatives like the net Gen declaration on seafarer, well being and who change which reads together with all of them.
Affiliated companies frontline Golden Ocean SFA, let in advance as well as about <unk> maritime companies signed up for recently.
However through rotation on site inspections are still difficult to carry out.
And we once again.
Mobile community does it get its act together on this issue.
As explained in the Q3 presentation, we exited quick to fit the new routines and safeguards to ensure the safety of <unk> and cargo while being able to keep our propel is running well.
We have closely collaborated with our child us to coordinate crew changes even though this from time to time have resulted in a higher level of deviation as we havent had to take some day. It's also get too often on our ship.
Since may we when most of the Lockdowns took effect, we have still managed to carry out on the impressive 67 crude changes. This means we have been able to keep the number of overdue CFL up to a minimum but it's not possible to get the number <unk>. One we reported in November 93% of our group was on time.
They were not overdue on the context, we have since then manage the interest is 296%, which puts us in world class category based on the numbers, we are seeing in the industry.
At the same time, we have been able to reduce overdue time for those seafarers, which are walking over time, we now have no two being more than 30 day as all Roger Furthermore of the 12% of <unk>, which is on water half is less than 14 days, while the remaining two percentage overdue by less than 30 days.
On your building team have also faced logistical challenges challenges when planning for the deliveries and mobilization of our new billing and Thats been on many of those recently with six ships being delivered during the six month period stretching from July two channel Ali.
Despite the obstacles on ships have been crude mobilized on level. According to budget and plan half of our new billing had been pushed for award compared to contact drill schedule, while <unk> been slightly delayed for flex and flex on but this was done to fit them into employment contracts, while we delayed flex fade on biomass.
On to have 2021 vintage so once again I would like to extend a special thanks to our seafarers and new billing team for their fantastic efforts. So.
Slide number seven which is a business lineup and.
And before handing over to al for a financial review I just want to highlight the rapid transformation of the business landscape, which has occurred since we took delivery of our first new buildings flex that Neville on flex and the bias in January of 2018. So I have picked a selection of some of the cover page of economist during this period for LSI at this point.
Let's start off with trade, how the peso on pump and she initially the initial flotation failed trade talks pellet path and the Brinkman ships started with escalating tariffs. This included on our 25% import tariff on off on U S. LNG into China and those are listed in U S. LNG is being passed on.
Of China.
If you are on going to stall they'll play a role in LNG, you Couldnt really pick and it was comprehensive <unk> USA the upstart in LNG with boundless of project in need of security markets and financing, while China is by far the fastest growing market on paper. This makes them a perfect fit U S had what China needs.
And in case, Ted would also balance the trade balance between the two superpowers.
So this half at least so far really been on Mr. Opportune, Dan We do hope to see an improvement there beyond the phase one per the agreement.
Connected to this as well as a general slowdown in globalization. This is evidenced on both Ted and cross border investments in the past sales typically glu about twice as fast as GDP as the wall became increasingly more integrated drilling the Pax Americana period.
<unk> been not been the case lately to some extent this is due to affluent consumer on moving clients to buy services like health care hospitality travel and education instead of pay at the goods.
But we are also seeing on Blackstone and global cooperation on pain, as particularly the west have shown on page fatigue and fighting for encased globalization had become political suicide, hence the royalty the organization with deal have not been able to conclude a global pay other agreement since the Uruguay on was completed back in 1994.
For the duo zone have been stacked for more than <unk> with no end in sight plans agreements have thus lately become mortgage enel and scope while other than multilateral today, we do see that develop encompass other ones pushing for trade liberalisation, while <unk>, having a weighted.
Luckily for shipping developing content on all represent our highest share of global GDP and are generally more inclined to consume goods like energy.
While we have seen the globalization and pad, we have OFC and globalization of the COVID-19 pandemic and is at a staggering pace device.
Which most experts towards would be a minor flu outbreak in China went viral on a global scale and the rest is history. However, the nvidia sort of items have been achieved for a global corporation and the manufacturing and distribution of the vaccine would not be feasible without global supply chain with the COVID-19 outbreak on lots of folks.
We're expecting that I am on environmental concerns would be overshadowed by COVID-19, and that the public purse would prioritize employment other than the environment, but this has not been the case the political will to reduce carbon emissions have been remarkably strong despite the biggest economic contraction.
The Great Depression and U S is now also joining other global commune down to the Paris agreement just from a purely economic rationale it makes sense to push ahead with the energy transition with a lot of fiscal stimulus. It makes sense to spend these public fence on end of day for the future, which is low carbon gas coupled with the renewables to avoid locking in.
Emission by opening for coal so coal will be the will be facing tougher times ahead is also illustrated by one of the calls.
It's not only the public sector, who have become more conscious about sustainability. This is also a big investor 10 people, who are making more on them on their available for corporations want to see other capital contributing to the good of the society 15 years ago economist, which is on the Progressive magazine inland and I'll cover with the title the <unk>.
Good company, a skeptical look at corporate social responsibility today.
On the CSL acronym has been on our base by ESG, environmental social and governance and this is rapidly becoming a license to operate this was made very clear by the recent letter by also by I think the head of Black Hawk, which is the world's largest asset manager.
<unk> with a staggering eight seven trillion under management in the letter for Mist of Inc. A palm has some big shakeout and how they manage their assets and combination companies, which are not taking his issues sets areas is being excluded and this will also apply to passive in the expense and exchange.
And the defense, which I have now become the most popular investment choice.
So we and flex denko activity is well aligned with the public on ships times, both Chicago, which primarily on <unk> call with 50% reduced <unk> emissions.
At the same time this period of cleans up the local air quality. A recent study from Harvard Vista worldwide premature deaths from poor air quality due to particular matter from fossil fuels to $10 2 million, whether that's in China and India represent.
We're staggering total of three 9% and two 5 million per annum.
While you might say that LNG is still a positive which is true, but LNG or natural gas is the cleanest burning hydrocarbon reducing the harm for particular matter pollution compared to coal by nearly 100% at the same time on new ships have <unk> footprint of less than half of the older steam turbines. We have also adopted.
Stain ability accounting standards, and we were able to report on total annual ESG report in April.
We will publish a lot of non financial figures related to emission as well as social and governance issues and lastly, as mentioned the Madison against COVID-19 is not only newly developed messenger RNA.
On a vaccines, but all keynesians fiscal and monetary stimulus on the unprecedented scale. We are living in the age of the greatest ever fiscal and monetary experiment will ease him on and huge budget deficit at the time when baby boomers are retiring leading to will it lead to a higher inflation always seeing the lost melt up into debt.
Super cycle, which has no and Joel since Paul Walter on Furlough Central Bank guests managed through day in and faced on about 40 years ago. When this step super cycle be it a base by a new commodity Super cycle ESR questioners on the top of the mind for most investors. These days in any case, we are not afraid of inflation and firstly I'll commodity super cycle.
All balance sheet consists of real physical assets being held for modern LNG carriers, which transport LNG, which is rapidly becoming a commodity dealing for margin in times of inflation commodity stocks tend to outperform the general market and shipping as part of the commodity value change if our customers are selling the cargoes at higher price.
Generally it more money on the table to pay a high right so with that economic and political backdrop I think we all have there for the financial hub.
Thank you your strength.
Looking at the income statement on slide eight revenues for the quarter came in at $67 4 million up from $33 1 million in the previous quarter.
The increase is due to improved markets with time charter crude on rate for the quarter of approximately 74000 per day up from 47000 in the previous quarter and also the increase in the fleet following deliver on three vessels in the third quarter on flex on bringing October which also impacted vessel operating expense.
Adjusted EBITDA for the quarter was $50 2 million up from $21 9 million in the previous quarter.
Interest expenses were up due to a full quarter of interest on the debt related to the three vessels delivered during the third quarter and the execution of per 150 to $6 4 million flex number sale and leaseback upon delivery of the vessel in October.
Net income for the quarter was $25 8 million or 48 cents per share for a three 8 million on <unk> per share in the previous quarter with adjusted net income of $24 $2 45 per share up from $1 2 million or <unk> <unk> per share in the previous growth.
Looking at the full year 2020 reported net income of $8 1 million or <unk> 15 per share.
As I mentioned, we took delivery of our first vessel three years ago and generated 2000, Indeed, and this is our third year in a row delivering black numbers.
Adjusted net income for the year was 34 million or <unk> <unk> per share.
Then moving onto our balance sheet for us for December 31st on slide nine.
We had a solid liquidity position of 129 million at year end, an increase of $53 1 million during the quarter, which we refer back to on the next slide.
During the year, we took delivery of for total of four vessels of which one was delivered in the fourth quarter increase.
Increasing the operating fleet to 10 vessels of year ads with an aggregate book value of one point a $6 million.
In addition, we have booked vessel purchase prepayments of 219 million relating to the three new building sales have you delivered at year end.
The first of the new buildings fixed freedom was delivered on first generated on the increase in vessel purchase prepayments issues of repositioning of firms and on December in connection with the delivery offset by the delivery of flex number in October.
Total interest bearing debt stood at $1 4 billion at year end.
During the fourth quarter, we executed the $156 4 million sale on leaseback transaction from November <unk>.
In addition, $125 8 million was drawn on the <unk> on our $209 million <unk> on December in connection with the delivery of thanks for your day Motors for January.
Total equity Asbury quadrant on year end was 835 million, giving a strong equity ratio of 36%.
Looking at our cash flow for the fourth quarter on Slide 10, we had a positive net cash flow of $63 1 million.
Cash flow from operations was $51 6 million, which includes positive working capital adjustment of $14 4 million, mainly due to an increase in prepaid higher due to the strong market.
Scheduled loan installments for $9 4 million. In addition, we had a financing cost of $5 million relate.
Relating to upfront fee is guaranteed premiums and commitment fees on our long term debt, which we can get back to on the next slide.
Net new building Capex made a positive contribution of $23 2 million in the quarter relating to the new billing flex amber.
As mentioned.
Due to the $156 4 million sale and leaseback transaction upon delivery.
Compared to total capex, including change order on pre delivery expenses over $133 2 million.
In November we announced the share buyback program of up to $4 1 million shares during the quarter, we repurchased a total of 203000 shares for $1 7 million or $8 <unk> per share on average.
In addition, the terms on dividend for the third quarter of $5 4 million was paid in December.
Looking at our cash flow for the full year on slide 11, we started and ended the year other $129 million in cash.
Cash flow from operations was $89 3 million during the Red one scheduled loan Assortments were therapeutics for a $3 million.
During the year, we arrange for the 900 million in new attractive financing securing.
On the name for all seven new billing still under construction at the beginning of 2020.
The associated financing costs totaled $17 5 million always for $9 9 million, where upfront fees to define those years.
In addition, we paid the guaranteed premium to it kicks him totaling $3 2 million under our $602 9 million ECA facility, where part of the loan is guaranteed by zone.
This is an effect prepayment of interest expense as a guarantee of tranche and other facility has a significant lower margin due to the guarantee.
Commitment for us prior to drawdown total to three 8 million, while we incurred legal expenses of six hours.
Net new billings GAAP base for the for new Billings has delivered year on year was $28.
$201 8 million.
And as mentioned, we purchased share totaling $1 $7 million for fourth quarter, while total dividends paid during the year was $10 8 million.
<unk> or <unk> 20 per share representing 10, where each of the fourth quarter 2019 on third quarter 2020.
We have over the last year secured a total of $1 7 billion of attractive financing for the 13 vessels industries.
At the same time, we are diversifying our funding base with a mix of bank financing lease financing and ECA financing.
Post quarter end, we also agreed to eliminate increase on the 100 million facility for the financing on Flex Ranger.
The 20 million increase will be non advertising on available on a revolving basis.
We have a very comfortable debt maturity profile with the first maturity due in July two and it's been a floor on.
Our diversified sources of funding also gave a staggered debt maturity profile at mitigating any refinancing risk.
We are not only diversified our financing sources, but also our pool of lenders, which now include 15 different financial institution, demonstrating our ability to raise attractive funding and a challenging capital market.
Flex LNG is a clean setup with a fleet consisting entirely of latest generation LNG carriers with attractive financing attached.
This also gives a very comfortable cash breakeven level for the fleet, which is estimated at around $45000 per day on average per vessel was fully delivered in the second quarter.
If we look at the breakdown both G&A on Marine operating expenses are competitive other around 1500.
On $31000 per day, respectively.
The remaining two thirds is financing costs, where interest expense is estimated at 31300 orders per day.
Our balance is 2% of our debt is either fixed rate or hedged with interest rate swaps, giving predictability on interest expense.
The remaining 17 and a half thousand per day is repayment of debt.
All our loans are amortizing with an average for repayment profile of less than 20 years to zero compared to depreciation profile for vessels a third for over 35 years, which means we are paying down debt. Therefore rapidly then the us is depreciated.
The competitive cash breakeven level on all vessels on the water generating income from the second quarter means we are very well positioned to generate substantial cash flow cash flow is going forward as illustrated on the graph on the right.
And with that I have.
On the right word back to other statement, who will give an update on the market.
Thank you all.
For the financial review and again I have to say you don't catch on Ben you are leaving the company with enviable financial position.
As mentioned in the introduction.
The COVID-19, pandemic fact havoc with the energy market when shutdown and Lockdowns took effect oil price collapsed on with West, Texas intermediate oil falling as low as minus $37 per day, which is still hard to fathom natural gas prices on LNG, whilst also affected with record low gas prices during the.
We did however have always negative biases that European gas for some time traded below $1 per million Btu, which equates to our oil at the on $6 per barrel.
Well below the low of around $25 for Brent oil, which is not landlocked like the west Texas intermediate crude.
Asian spot LNG biased also hit the all time low of $1 $8, one landed on a bit on 'twenty, one Elo and June at $1 40. As previously mentioned this resulted in a flurry of constellation of flexible U S. LNG cargoes, but notwithstanding this LNG exports managed to grow by about 1%.
2020, which makes it an outlier in the energy space. This is well below.
7% growth, we expected, but still much better than other energy sources, the closest substitution to LNG.
Pipeline gas fell by about 12% and as LNG is rapidly gabbing market share on pipeline gas by 2025, we do expect that more gas when cross borders as LNG on ships down through pipeline as LNG on chips are more flexible.
As a more flexible mode of transportation given the ship more options, we'll have to monetize that gas.
Oil output fell by about 8% driven by OPEC, plus glushak cash of $9 7 million barrels.
As well as less shale output in the U S coal, which is facing existential threat.
The on cross by 7% and 20 translate while nuclear power was down by four 5%.
Only although energy source that crude whilst renewables.
Now all different ways domestic renewables, whether its installed capacity of electricity or power outfits. According to IEA electricity output grew by six 6% in 2020, hence as we have talked about before.
Sources of energy that will keep on going and this is renewables and natural gas and renewable cell intermittent wind gas is flexible and can be turned on and off quickly. So they fit well together as we have pointed out in the past.
Okay on slide 15, let's do a quick recap on the review of the spot market.
On the golf to the left hand side, 10% the headline rates for large modern LNG carriers with <unk> propulsion.
Keep in mind, what I've said before that the headline last student all truly take into account balance bonus conditions. So actual spot rates can significantly differ from headline rates, both on the upside and downside depending on the film this off the market.
Despite COVID-19 trended trends they have for the most part follow the usual seasonal pattern.
With much weaker edge during the spring and summer compared to previous years due to lost faith demand caused by the wave of cancellations.
However, as we said in our second quarter presentation. In August we were starting to see improvements with cargo cancellations tailing off with July and August marking the peak cancellation months the comeback of U S. LNG and whilst however was somewhat delayed by the most highly active hurricane season on record, which disrupted LNG export.
Out of U S Gulf Coast.
Vance during August September and October, but this supplier outages did however spot on as early in the product market, which I will cover shortly.
During the August presentation, we will we also assessed the probability of a third consecutive warm winters to below as London elsewhere, then all of that day being sent out as reported pointed out last time, we saw a cold winter in 2017 2018. This bulk market held up well in Q1, we therefore.
Kate cash substantial spot exposure during the winter either by trading in the spot market or fixing our ships on variable higher time charter, which are linked to the general freight market as we haven't always seen the thesis of a cold winter played out well for US first northeast Asia was hit by extremely cold weather in December and January.
With by Jean experiencing the coldest rather than five that gets Y while Japan experienced record snowfall in several regions, which together with new shut.
Shutdowns resulted in the power market going haywire at the start of debt.
Northern Europe have however, been unusual coal in January and February <unk> of gas demand and inventories zone and recently, we have seen the Arctic weather also hitting Middle America with Texas, averaging similar time for just as Alaska, resulting in all time high power demand and cost.
Hello, Rolling blackouts, and one of the most energy rich basis on on the Atlantis.
While the market was on fire at the end of the add on into John on it with record Hyatt place <unk>.
Have normalized at the cold spell in Asia have subdued.
Cold weather has however continue in northern Europe with firm gas demand and a big drop in gas inventory consequently, the spread than gas prices between Asian and European markets have narrowed which is also evident from the next slides when we are talking about product prices less arbitrage and gas biases on returning it to me.
<unk> fundamental values have desk pushed more Atlantic cargoes to Europe, instead of the longer routes to Asia During December and John on a lot of ships had to take the loan growth via Suez Cape of good hope and this can add up to 50% through the sailing distance shorter sailing distances have thus feed up more ships and this call.
Filled with less arbitrage have cooled on the France market.
As you can see if on the golf on the right hand side vessel availability day was very low at the end of the outgoing into 'twenty to 'twenty one.
This was particularly the case in the Atlantic or the dark blue collar here. So the ships coming open all are mostly based in Asia, where demand was strong at the beginning of debt. While we are now seeing more of the Atlantic cargo staying in this basin, which means some ships they will need to reposition fed rates have returned to seasonal normal.
Levels.
Able to monetize the strong market by fixing both on your billings on an attractive charters as mentioned, while also getting a boost on our variable higher complex drilling down on all day.
Next slide.
He has led the development of the spot market with spot LNG volumes going to 37% of volumes. In 2020 that is also more demand for spot rate and with high availability of ships and low debt in the summer it was easier for charters to opt for spot fixtures, particularly given the high level of uncertainty.
A lot of folks were working from home probably also affected decision, making however, we do expect the spot market to mature so it's positive to see spot or short term fixed sales growing by about 50%, which makes this market more liquid.
So and gas by assess zone.
Gas prices started to recover over some money into a cold winter the average APM front month contract for fab wallet share whilst about 18, but it hit the high of $32 $5 before rolling over on January <unk> to March contract.
And this was due to buy us and Asia being short on volumes given the current spend.
This is a remarkable turnaround however, such prices on all sustainable in the long term given the oil price.
At one time LNG prices with heading at about $200 per barrel of oil equivalent. So LNG prices have now normalized as oil prices have been on a build one.
LNG linked to oil price at the slope of 13%, which equates to about 25% discount the oil have therefore strengthen and is now back above spot LNG prices.
The takeaway from this slide is however that future prices for gas in Europe, and Asia on a well above U S prices, which reduced the risk of cancellation significantly and work hardware economics are at the level, but charters can pay substantially higher fade over the summer then what was the case last year.
Notwithstanding the recent cold spell in U S with associated high gas prices, which is expected to subside.
Slide eight in inventories.
So all we're doing this on all of the folks with monitoring day European inventories levels closely as European customers, who are buying a lot of cheap gas for storage given the lost bullish on import capacity in Europe with 100 million.
Billion cubic meter storage capacity day, this equates to about 70 million tons of LNG.
<unk> can effectively by all of the U S LNG capacity and put it on storage.
Reality, LNG will be competing with pipeline gas for such <unk> injection.
<unk> European bias became exhausted as we were approaching tank tops.
With the current formation during the winter and the cold winter in particular, northern Europe, the flow of cargos to Europe have slow down considerably and this has resulted in a higher level of inventory draw downs with European gas <unk> going from tank tops to Noah level, well below the previous two season and also below the five year.
Average, hence this will be supportive of the market and European bias will be required to restock in order to make sure. They have sufficient gas on storage. Once we are approaching winter again with therefore zinc we will see a contango curve in the market began during the early autumn, which might rather well incentivize floating storage, which.
Our ships are ideally equipped for.
So at the Randall Slide number 99, I'm not going to spend too much time on this as most materials probably read newspapers, we have highlighted repeatedly during our presentations that where the peso huge oil and LNG market and why on the winter has been mild the two previous seasons, it's back with a vengeance.
Season.
First in Asia, then Europe and now in the U S.
It's only illustrate the fact that it's not possible to just electrify everything we need flexible gas as part of the future energy system as the gas system can transport ample energy on short notice to consumer, particularly on the peak conditions.
In Germany.
And you're able to have our highest share.
It's been a lot of talk about <unk> flour danced don't deal flow day, it's a world, where we combine dunkel height, meaning of darkness, which is not good for solar energy with the award of in Florida, which means a little wind I think recent experiences have demonstrated that don't fulfill debt combined with cold spells evidenced the need for flexible gas and.
It's deaf on not surprising that energy may just like shell BP in total on building the future business.
<unk> is on low carbon and clean gas together with renewables.
Sorry.
<unk>.
So our U S export slide 20, while OPEC and Russia balance the oil markets, we feel that the LNG industry sorted out the needs of the rebalancing to the market as there was no sign that the big producer like Qatar and Australia, we are willing to cash capacity and this was needed to be expected since both countries have offtake.
Agreements and the pending in net production in both countries have very low cash cost of producing the LNG handset was up to us to rebalance the market and this was done by offtake is used I think the contractual right to cancel cargoes, usually three months in other box with these cancellations, which counted for about 190 in total.
About 13 to 14 million tonnes, whereas removed from the market some supply disruptions in places like Australia on Norway, <unk> on thin it up and tobacco took care of the rest of the rebalancing and this actually led to a shortage of LNG at the end of day.
As mentioned.
Demand picks up.
However, with thermal demand U S production is up again at full capacity and EIA expected production. This year to be around $8 5 billion cubic feet per day, which equates to around 66 million tons, all at or around 88% utilization. So the non.
Work on shelf stinks debt that will be a much less cargo cancellations this year.
U S is however rapidly ramping up capacity and it's destined to takeover. The tone is the largest export on at least for a short while.
<unk> consolidated expansion.
So let's review the development than imports and exports with an overview of the 10 largest exporters and importers in 2020 compared to debt levels in 2019.
And so.
The 10 biggest ex bolt on.
I think for center on the 87% of all the ex Boston.
The important other 10 biggest imports I think on the 81% of the world's imports, while so while Europe absorbed nearly all of the 35 million tonnes of LNG coming on stream in 2019, and also focused on below the volume sand. The first half of <unk> Asia started to protocol growth in the second half of debt this was particularly.
<unk> is driven by interest in both by China, which grew its impart by more than 6 million tonnes and thereby come in close to jump off we do expect China to surpass Jack on any import volumes by end of 2021, possibly trying to trying to two depending on economic growth and the scheduled restart of nuclear plants in Tampa.
In downtime on also grew steadily in 2020, while Turkey was the main growth market in Europe on the export side, Qatar in Australia are on economic and transit oriented with slightly higher <unk> in Australia. According to capital.
We expect Australia to surplus we expected Australia to surpass Qatar, but they fell short due to outages of Gorgon and prelude U S recorded the highest growth with about 11 million tons, but this also fell short of expectation due to the accounts for this medicine.
So on slide 22 illustrates some of the bonds are all LMA after on a wave of cancellation during the spring and summer months the market picked up with Wolfcamp visually balers play at that as a vehicle for HAE and the import share of Asia.
<unk> bias with export cargoes destined for Asia going from a low of 58% in may to 77% in January 2021, So high impulse to Asia mean that Atlantic cargoes will have to be transported Toyota and this underpinned really this ends up being really in both product biases.
As well as fast as I will.
On next slide so with the Buda formation, Panama became congested due to its limited capacity.
Going toward Panama is the shortest fluids to Asian markets for U S. Cargoes interest outfits from U S. Combined with two information means a lot of ships has to take the longer route <unk> and Cape of good hope this can add 50% time and distance through all of that day.
Joe on <unk> typically around 10000 nautical mile versus the average selling distance for the cargoes of on 4000 nautical miles.
There were also on lot of ships waiting in queue.
With interest rates waiting time of up to 14 days. This adds to on time similar to the longer sailing distances. So this also drove shipping demand and Panama can get congestion is not a fluke. This will happen again as you as we'll continue introducing at southwest Asia will continue to go on with LNG demand.
While the capacity in Panama is finite.
So.
On slide.
Slide 24, so it's been on wireless since we have included a slide on new LNG export projects.
Last time, we included a slide with this was in connection with our Q1 presentation in May where we picked up a list of all the projects covered by a box where were just delayed.
For all the projects, except for Qatar, which we said would most likely go ahead, regardless of the developments in the energy and financial markets, given the cheap feed gas and the deep pockets of the catalysis.
Despite this one project was sanctioned at the end of day and this was maybe not too surprisingly Costar suite, which is located northwest in Mexico close to the U S. Border. This projects had already secured offtake for most of its volumes is able to source gas from the shale place, while also offering allocation not dependent on the Panama Canal.
Which certainly would be on advantage this season.
The highly anticipated expansion by Qatar petroleum from 77 million tons to 110 million tons have also recently b given the formal gain line.
Now he has a couple of things worth mentioning about this project. The project has a breakeven cost of around $4 million for dollar per million Btu and this is equivalent oil is around $25 per barrel and highly competitive.
It also includes the world's largest carbon capture plant and up to 4000 megawatts of solar power in order to electrify the plant and thus reduce emission and the liquefaction process our system.
As our system to reducing carbon emissions and the weighted to tank process.
Have now become crucial in order to entice bias.
Nox emissions also reduced by 40% through application of enhanced dialogue Nox technology. The project will concern with $10 7 million cubic meter cubic meters of water.
By recovering.
A whopping 75% of the plants on water and lastly, Qatar petroleum all of that they have the options to expand the plant by two more tie in is bringing the capacity if on 110 million tons to 126 million tons and they are signaling that this will happen with the big expansion in Qatar will then be room for more projects.
We do expect a small wood fiber plant on the West coast of Canada. The sanction this year.
Total recently signed on agreements with the government of pump on again for the Papua LNG project and signaled the intention to build this 5 million ton project.
On the Exxon led PNG LNG project in the same country is facing more on more uncertain outcome.
Exxon is also leading a big project in Mozambique called <unk> LNG.
It's now been reported that Exxon is in talk with total which sanction them Mozambique LNG project in 2019 about teaming up on the gas extraction as they share some of the same resource base with therefore, I expect a decision about going ahead with this project will be related to <unk> as they have also recently.
I have also been recently on their concerns and Mozambique, Woodside, the which are planned for Bristow field has recently secured offtake for 2 million tonnes. So it wouldn't be too surprising. If this project is geared also given the green light and then finally as you asked we would expect to see some more project going ahead, given the vast channel.
Resources available for us to Gulf of Mexico, and we have picked up some of the hot content, thus, adding on the box to the right hand side of the slide.
ESD on OLED.
Touch a bit on this but that's mentioned in the past.
<unk> is not something we just report because it's expect they will force.
<unk> is an integrated part of our strategy on strategy is to move LNG to market. So it cannot replace coal and this is the quickest and cheapest way of not only reducing global warming, but also impact on debt in order to solve the amp for pollution problems, which are running rampant, particularly in Asia.
Furthermore, we have ships, which are much more efficient than older generation of ships. So first we have a call growth reducing emissions substantially and then we have ships, which are doing this much more environmental friendly on ships are also being fuelled by the cargo transport LNG, which is also the most environmentally friendly fuel available.
So we implemented the ESG reporting in line with sustainable accounting Standard Board guidelines for Maritime Transportation with a first report published in.
28 for 2018, while total annual report will be published in April and we will have continued the balls on the scope on the what we are providing of non financial measures. So that investors can assess how we are running our business not only in terms of the environment.
Interest, but also in relation to social and governance issues.
So <unk> emissions on the compensation of shipping, which is becoming a big thing.
As I've mentioned earlier, the Carbonization is taking center stage in the industry Imo's Maritime Marine Environmental Protection Committee <unk> added 75th session in November 2020, where they discussed and approved the first off the amendment to mothball on X six day.
The aim is to implement a short term measures for greenhouse gas emission.
Based on mandatory gold based technical and operational methods to reduce carbon intensity of international shipping with a view.
To adopt at <unk> 76 scheduled for mid June 'twenty 'twenty one.
So this is probably the biggest regulatory change in shipping since the introduction of double hull tankers and its much bigger than I am on 2020, if adopted them as we believe will happen. These amendments would enter into force on first of channel are trying to transitory amendments representing short term measures for HD.
Emissions reduction utilize on Tupac opposed to other that's both technical and operational aspects of limiting gain on our submissions.
The two most important changes to our implementation of energy efficiency a requirement for all existing ships and not only new ships. This is for all three call E X XI and this will take effect from transit transitory.
A bit similar to fuel efficiency standards for cost only that it will also include all existing ships.
As well as the new ships, the measuring stick cash will be carbon emissions per tonne mined.
For the second part is implementation of annual operation on carbon intensity indicator.
In practice this means Egypt will get a report card each year, which is like NRG, marking you find on everything from dishwashers refrigerators or even houses the fourth card goes from eight three and <unk> and on all of our E. Then you need to take corrective action.
Immediately.
A lot of uncertainty about how this will play out we can read in the newspaper, but somewhere around 50% to 80% of the ships today will not be able to.
I will not complying with these rules and.
And there is the defense, whether youre hitting shipping washout headwinds.
But what is clear however is that LNG is a bit more complicated than most shifting segments keep in mind LNG ships have historically been extremely inefficient as the term most keeping the LNG cold have until recently on not being efficient.
This means boil off gas and until about 10 years ago. Most chips used steam turbines to bill on this boil off two credit for work propulsion.
As I pointed out earlier simple version is not very efficient. Additionally, these ships have much less cargo capacity than the newer ships affecting that hey show of carbon emissions to ton mile.
These ships therefore scope for layer on carbon emissions as sales led to the earlier wireless solution and most other shipping segment will be through June on the engines or what we will call engine power limitation, resulting in slow steaming. This option is not flat for within LNG shipping.
You can stop the boil off on the tanks. If you turned on the engines. So you either have to retrofit re liquefaction will improve installation, but this is costly and probably are not what while for the inefficient ships. Additionally, these shapes out one that had a fairly slow on boiler speed. So doing this will further the keys the speed.
Making them commercially on attractive and homeowners with tonnage on the context will maybe not be able to meet the operational requirements. Under these charters is pursuing this strategy.
On the other hot topic is <unk> emissions, which is on LNG specific issue and which have therefore not received much attention.
<unk> is a potent greenhouse gas with about 28 times higher FX debt.
We think it's fast to include this as well if so the carbon footprint of the force stock diesel electric ships will go up a lot asked on carbon emission taking this into account as similar to steam ships has.
Hence with ink attrition of older ships due to this new legislation will go up on lots and this will be more of the case in the event of even our carbon taxation.
As this will further aggravate the problems for the less efficient ships. We are however, well positioned to meet the required 40% reduction in carbon intensity by transitory as all fleet consists entirely of new ships efficient usual two stroke engines and a relatively low boil off rate. So we view this rules as on.
Unity of auto than outlets.
So to fit the new regulation into context, we have added a fleet list on slide 27, which shows the composition of the fleet with different classes of ships with a home to almost steam ships in operation. These ships are at most risk of new regulation on.
The other two under the <unk> ships, all fueled by forced on diesel electric engines, and our more efficient due to size on engines, but amidst a significant level of unbilled methane or CAH for as mentioned.
We also have signed the largest ships in the industry at the current marks on the Q flex, which are about 265000 cubic into on on 16000 cubic meters respectively. On a 45 of these ultra large ships. The ships are a bit off on the oddity as they do not run on LNG. These ships to electrify all day boil off which is <unk>, which is <unk>.
Energy consuming and there are other bill on the very low sulfur oil on marine diesel as they can't fill on that Linda hence they will also be on our disadvantage in terms of emissions.
One of the <unk> ships had been converted to a Meg at a couple of years back, but this is our complex procedure and costly.
And it will and retrofitting all the ships will take them out of service for some time.
In this category.
And this category also have tried this <unk> hybrid steam ships, which are not particularly efficient given the inherently lower thermal efficiency of steam propulsion.
The LNG sales segment consist of Meg Nx staff ships as well as ice spiking arc seven ships. So this is the place to be and all of you.
The Oxford seven ships are not particularly efficient as they are also for stock. This led.
<unk> engines as they need to generate sufficient electricity to run the test dose in order to breakthrough ice, but we expect them to get on the ice allowance for this particular state.
So slide 28 on.
Thats been a recent uptick in terms in term contracts. So on the order book today, mostly consist of ships, which are committed under term contracts. We have seen some of the speculative owners opting for term context, and this makes sense as putting up by in House management takes a lot of time as we have spent considerable time and resources going through.
That process.
And you also need a certain scale of your business for this to be a worldwide.
Cladding ships spot is also much more challenging than basically outsourcing the commercial activities due to charters and other film channel.
Hey, Al you also need to our scale in order to get the elephant in for flow in order to not be put on a disadvantage and having more ships also gave you a bad <unk> opt in to index. As you can have shifts in different basins chasing several opportunities at the same time.
Lastly, LNG shipping is extremely capital incentive getting the capital structure that we have in place is not easy we have managed to do so based on our tactical limitation and the fact that 800 and for $40 million of our capital structure consists of common equity, which is not easy to raise these days.
Some owners of speculative on this have also seen it will be hard to raise financing unless day secured term contracts and have therefore opted for this.
This contracting activity, however, it'll lead to long term rates and we have therefore elected to remain relatively high exposed to the spot market as we have assessed expected future profits to be more attractive than terminates and we can also have for to do so nevertheless, we do aim to put a larger portion of our fleet on long term context, when the time is.
And we do think there will be ample opportunities in the future due to a lot of older ships coming off charter and we expect charters to fulfill the new type of ships due to the reasons described earlier.
So finally at last slide before summary, slide 29 is just an update of the golf represented in our Q3 report and the numbers are fairly similar.
EIA expects you asked for export to eight five Bcf per day as mentioned.
6 million tons.
16 million tonnes higher than last year due to less cancellation as well as some new capacity coming on sleep at this level export will be at 88% of capacity payload is back in operation after being closed 11 months last debt compared to non staff. We have not included the growth for Gorgon as two times will be on spec.
To them on a pad in 2020, FX and capacity, we have with Egypt as a dark horse in November and this materialized with its group back in operation and Damietta expected to return all of that in Q1 after being closed zone for nine years. However, Egyptian exports are price sensitive. So we expect total utilization has.
Only 6% to 8% in line with the projection for.
Energy aspect and then finally, we have new production.
Coming on same in Malaysia, with a new LNG unit as well as in Russia, with Yamana and Paul on <unk>.
Medicare in Norway, we expect to be close until Q4 on tagging on exports to around 27 million tons for 'twenty 'twenty. One that is however, some uncertainty but also some upside if product prices are firm then.
On U S can produce on order about 6 million tons.
That's it.
Then at the summary.
We're going to spend too much time summarizing it SaaS mentioned, we they leveled.
<unk> numbers in line with the guidance, we expect to make higher revenues in Q1 compared to Q4 based on.
Ill for market.
The board has decided to increase the dividend.
10 to 30 cents for Q4, which gets on the effective yield of 13%.
We have several ships on the water and losses for delivery in Q2.
The market is looking better we will.
Have restocking demand and then <unk>.
As Ray mentioned also and the prospect for refinance we have Fox solid cash position.
And that's it for me for OXXO than I think we can open up for questions on I would like to thank you all for listening in.
Ladies and gentlemen, we will now begin the question and answer session.
If you wish to ask a question over the phone Please press star and one for Keith.
The first question comes from the line of Greg Mueller from J.
Please ask your question.
Yeah, Hi, Thank you good afternoon.
Harold Congratulations award or we're going to Miss you.
Hum.
I think a little bit of questions are around the dividend.
Obviously, we like to move higher in the dividend.
We talk about it being mill.
Well related to Q4.
But as we.
Guidance clearly that's exceptional guidance.
I guess I'm just curious.
How we should think about dividends going forward now that we're going to have the final bill that will be delivered in may and really what I'm getting bad as if Q1 is.
Is going to be a nice strong quarter, but as we move it towards you.
The April may period, and we see seasonal weakness.
And any way, we should be thinking about.
How we should be thinking about kind of bracketing.
Dividends, just given that there is still some cyclicality or seasonality around LNG ship pricing.
Net thanks, K I don't know have you got married because usually before and at least in 2020, you on named Greg Lewis So.
It's a new year I go each day.
Two things I guess.
Okay.
Okay.
Okay.
Yes, the dividend.
Our dividend this always on.
And all that.
I think some companies they tend to have more like call. It a structured approach to NAV and our EBITDA.
Like I mean, the minimum dividend and then they pay out 70% above that level or something like that though they say, we're going to pay out 70% of earnings for us.
I think on baseball common sense about this we don't want to manage the dividend too much we wanted to reflect how much money, we are earning and how much money we have in surplus so.
Hi, ethanol with the legacy of Harley financing, we have who are they.
A good financial position, we are more ammonia that we need in the company.
And that at least the short term outlook is good so it's natural for us to to increase the dividend. So it's more a question at what level should you.
<unk>.
I think.
I held his presentation at September on the plateau contract because we get a lot of questions about the dividends on and our people have been waiting for dividend because we have been in investment mode novel about PFS.
And now with kind of the investment on <unk>.
Spend more than $20 million on Capex last day as I.
And despite having the ships finance so.
How to think about the dividend so we have $840 million of.
Of equity.
This is all common equity so theres no fancy equity had with am best sense on dividends.
So in order to give people a fair return and you could say debt.
You should have maybe let's say a 12% return on your equity.
Pick a number of analyst uplifting and at least so that means we should be generating $100 million that we had.
And on.
And then.
And is that based relative it's 45000 of cash breakeven level. We certainly think that we have to generate in the mid sixties in order to be generating $100 million of cash and then how is our financial situation is very good we have $130 million of cash on your revolver on operating that's up to 150 there.
First of course, the cash flow regionalized in Q1, and we don't really have any maturities of debt we have to walk into bolt on <unk> bonds and so so we are able to on.
On aim to pay out.
All of our earnings over the cycle, but of course shipping is cyclical so.
It's not like the numbers are.
Yes.
Stable net this of course depends on the business risk we have elected to take.
Capex bushel, so all earnings will be more volatile.
As a consequence of that so kind of our thinking but if we're going to pay out $100 million, which I think is on it's a pad and then the dividend needs to go up to also the more like 45.
But of course, we are dependent on the market. So we are starting out with third and.
Which should have flex around 67% of their adjusted that's because we also have a buyback program and we think the stock is as cheap we're paying our dividend. We hope people are reinvesting the dividends, but we can't.
And on force people to have to spend the dividends on buybacks. So we are buying some back but.
We also are mindful that we have.
Dominant share holders, so with with a big stake in the company. So it's not like we can buy all the stocks back. So so we're doing a bit of both I hope that on.
Of course, the App so the cash flow for generation in Q1 will be substantially higher.
But then.
At this stage we are in May we will have a bit more view on how the summer market will be developing.
How are we going into more contango structure always seeing food and pharma Asia is the fiscal stimulus in the vaccines being on <unk>, and where we see higher economic all with economic growth for this year is expected to be like 4%. So so all these things will well at least become more evident than and then.
And if we become more bullish on on on.
On short term outlook I think the long term outlook.
We're very bullish on so.
If that becomes more evident than we always have the room to increase the dividend, but I think this is our dividend which is.
And our weighted sustainable at least in the short run. So we're trying to do a bit of balls, we don't want to manage it too much but but we are we like the dividend not to be just a.
A factor of what Youre, making in one quarter, because when we're making our dividend decision, we're not only looking into one quarter, but I've been thrilled if that makes sense.
No that's great that's great to hear actually.
And then just you know obviously you mentioned the balance sheet you are wrapping up the.
The initial Duke will maybe that was the second phase of the Newbuild program, we're taking delivery of our last Newbuild next quarter.
Obviously, new builds are always an opportunity, but you know on that one of those on the slide in the back where you talk about.
Obviously, the committed vessels in the uncommitted vessels I think there was around 30 uncommitted vessels.
Maybe they were ordered on spec maybe not.
Is there going to be do we think there'll be a potential for some of those uncommitted vessels to kind of end up being re sales over the next 12 months.
That might well be.
<unk>.
By that.
And if you look at all.
We will have to compare all stock through our stock is basically on ownership stake in <unk>.
And our ship a brand new ship and some cash solve to other and shipped $130 million on cash flow. If you buy a stock you're buying and all.
On slide <unk> SaaS, and then you've got $10 million of cash attached to that chip. We also get financing attached to it than debt financing is it's not very easy to replicate the process, we have done on that facing debt financing.
Banks are im a bit more hesitant lately about the permitting financing unless you have long term charters.
So we think that.
And on a slice of all ships should be more work than on shape on my on while you don't have that financing attached and why you don't have that cash debt and why you don't have a set of for managing the ship because mailing INR ship management time management system do take time.
Both the technical and also the commercial so so as in force to kind of go buying some of those on lease and there has to be more effective than buying the stock in Idaho and lately that has certainly not been the case.
Okay, Hey, thank you very much for the time, great great presentation.
Thanks, Greg.
Thank you.
Once again, if you wish to ask a question over the phone. Please press Star then one.
Yeah.
If we have some questions from the web we can always take a couple of those.
Okay.
Okay.
Checking.
I think we were talking for like on all will have I guess everything is radically.
<unk>.
Evidence hopefully if not we are back with presentation in May we will have more clarity as I mentioned to Greg about economic development. How do you think hopefully they will pay it out.
Hopefully we will then.
I'll talk for Labor, we are very confident we would and we will deliver fantastic results for Q1 and provide more guidance on the future. So thanks, a lot again for joining in.
I wish you a good day.
Yes.
That does conclude our conference for today. Thank you for participating on or disconnect have a 90 day efficacy.
Hi.
Yes.
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