Q4 2020 GasLog Ltd and GasLog Partners LP Earnings Call
Good morning, My name is Michelle and I'll be your conference operator today.
At this time I would like to welcome everyone to the Gaslog Ltd, and Gaslog partners.
The fourth quarter 2020 results conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.
As a reminder, this conference is being recorded.
On today's call are Paul Wogan, Chief Executive Officer of Gaslog Ltd.
There's a lot of partners.
Actually the layoffs that CLO Chief Financial Officer.
And Alexandra fly of General Counsel Joe.
Joseph Nelson head of Investor Relations will begin your conference.
Good morning, or good afternoon, and thank you for joining the Gaslog Ltd, and Gaslog partners fourth quarter 2020.
And gas conference call for your convenience. This webcast and presentation are available on the Investor Relations section of our website Www Dot Gaslog L. T D dot com and www Dot Gaslog MLP Dot com, where a replay will also be available.
Please now turn to slide two of the presentation.
Or any of our remarks contain forward looking statements for factors that could cause actual results to differ materially from these forward looking statements. Please refer to our fourth quarter earnings press releases. In addition, some of our remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these measures is included in the appendix to this presentation.
Many of the agenda for today's call is shown on slide three.
Paul will begin with a brief discussion of todays transaction with Blackrock Global energy and power infrastructure fund the following which Akalaitis will then walk you through Gaslog fourth quarter financials.
Paul will then review the partnerships fourth quarter of results and outlook and ACA Lance will present its financial position.
The call will conclude with Paul providing an update on the LNG shipping and LNG commodity markets.
There will be no question and answer session. Following Gaslog Limited's presentation. Today. However, we will take questions on the partnership's fourth quarter. Following the prepared remarks with that I will now turn it over to Paul Wogan CEO of Gaslog Ltd.
Thank you, Joe and welcome to everyone on the call.
Turning to slide five.
We announced today the Gaslog has entered into a private transaction with Blackrock Global energy and power infrastructure Fund.
They will acquire approximately 45 per cent of all common shares.
Presenting all of the hours outstanding common shares.
Not held by certain wholly owned affiliates of the Novartis family and the Astros Foundation.
People the referred to as the rolling shareholders.
The rolling shareholders will continue to hold approximately 55% of our outstanding.
Revenue in common shares.
The highlights of the transaction are as follows.
Blackrock has agreed to pay $5 80 per common share.
Or a 17% premium to friday's closing price end.
The 22% premium to the 30 day volume weighted average share price.
Standing acting on the recommendation of the special Committee comprised solely of independent and Disinterested Board members Gaslog Board of directors unanimously approved the merger agreement and the transaction and recommended non rolling shareholders vote in favor of the transaction.
Closing is expected in the second quarter of 'twenty.
Thank you one subject to the approval of the transaction by Gaslog shareholders at a special meeting.
Including by the majority of the shares held by the non rolling shareholders present at that meeting and the satisfaction or waiver of certain customary closing conditions.
From.
Each with the completion of the transaction Gaslog common shares will be delisted from the New York stock exchange.
Gaslog preference shares are expected to remain outstanding and the continued to trade on the New York Stock Exchange immediately following the completion of the transaction.
Gaslog partners common and preference units.
We'll remain listed on the New York Stock Exchange.
For additional details on todays announcement I refer you to this morning's press release, which is available on our website.
Given the nature of this morning's announcement, we will not be taking questions on today's call with respect to this transaction of Gaslog.
Ltd fourth quarter.
With that I'll turn it over to Oculus to discuss Gaslog fourth quarter financial performance.
Thank you Paul.
Turning to slide seven four day, the view of Gaslog Icd's fourth quarter and he's got Ya.
You can see from the day blue on the slide.
The fault.
We 100% uptime during 2020, despite the challenges presented by COVID-19.
The revenues and adjusted EBITDA for the fourth quarter, excluding those attributable to Gaslog partners of vessels, while approximately one 8 million and $78 million respectively for.
For the full year revenues.
The ultimate EBITDA again, excluding contributions from the bottom of page that says well the boats with me.
The New York and to have the 75 million respectively.
Adjusted earnings per share for the first quarter with 74 cents per share.
Taking the total.
The faulty cents per fab.
I'll leave it there.
And that that was maintained at five cents per share for the fourth quarter and for the full year, where the sense. That's the cents per share as the cash dividend.
Operating expenses were $14975 per vessel per day in line with our guidance for 2020.
Slide eight the presents them consolidated.
The balance we ended the year with.
67 million of costs, which includes approximately half of them.
48 million related to the drill down with all of the new building Newbuild ECA facility handles the they leave any of the Gaslog Gladstone in net Virginia.
I'll limit it are the man.
By net.
On the day, the trailing 12 months of adjusted EBITDA was seven seven times at the end of 'twenty to 'twenty, one of our net debt to capital of 62 per cent.
With that I will turn it over to Paul.
Through the use of partnership strategy.
Thank you Lasse.
On slide.
Slide 10, I'll discuss Gaslog partners' fourth quarter highlights.
It's been an active several months since our last call and during that time. The strategic review was completed and the board concluded the the partnership's existing corporate structure and strategy is in the best interest of unit holders.
Net debt, we concluded a new two year charter for the methane Alison Victoria with Shin Yeah, increasing our 'twenty 'twenty, one charter coverage to approximately 80%.
We repaid $19 million of debt, bringing our total debt repayments in 2022 of approximately 107 million.
And finally, we expect our capex allocation this year to focus on debt repayment to reduce our financial leverage and improve our fleet breakeven and cash flow of capacity overtime.
Turning to slide 11.
Following a thorough review of the partnerships.
The corporate structure assets financial position competitive environment and current unexpected LNG shipping market. The board with the assistance of an independent financial adviser determines that the maintaining our existing corporate structure and strategy in the best interest of the unit.
Of the unit holders.
The LNG market is commoditizing as it matures.
As a result, the trading of LNG on the spot and short term basis, it's growing much faster than the overall demand for LNG.
The top right hand graph.
And it shows up more than 20 per cent of all LNG movements last year would trade at on the vessels with the charter duration of less than three years.
Similarly, the number of spot and short term fixtures for LNG carriers has grown by over 130% since 2015.
19% compound annual growth rate.
We expect continued growth in the short term activity in the years ahead.
With the leading commercial and operational platform through our relationship with Gaslog Ltd, along with our scale fleet of <unk> LNG carriers.
We believe the partnership can become a leading operator in the spot and short term transportation of LNG.
For example last year the partnership of parent combined concluded the highest number of spot and short term fixtures of all independent ship owners. According to the data from ship brokers friendly's.
In addition, the partnership has no debt maturities until 2024 and no corporate level debt.
With a focus on debt repayment. This year, we expect to continue to strengthen our financial position.
Taken together, we believe all financial stability of.
Operational and commercial.
In a growing market for our services presents a compelling investment proposition.
Turning to slide 12 in the review of our financial performance in 2020.
2020 revenues were $334 million adjusted.
Adjusted EBITDA.
$230 million and.
And adjusted earnings per unit were $1 29 per unit.
Compared to 2019 of these results were adversely impacted by the conclusion of the initial multi year charters for our steam vessels.
Whilst we have successfully re chartered.
Our debt vessels as they ended their initial shell charters.
All of them for multiple years. These have generally been at lower rates.
Looking ahead, we have five vessels available for re charter this year, two steam vessels and one PSD vessels currently trading in the short term market.
As well as two <unk> vessels, the Gaslog, Seattle and the Solaris that we'll end the initial shell charters later this year.
We will look for longer term employment for these vessels, whilst also aiming to maximize the utilization and the growing spot and short term market.
Yeah.
Slide 13 sets out our charter coverage and operational leverage.
As you can see from the chart on the far left we have approximately $237 million of contracted revenues for 2021, thus far representing nearly 80% charter coverage for the year.
This is of significant improvement over the same period last year and the result of three multi year charters signed over the last 12 months.
While we have taken steps to secure our revenue and cash flow visibility the partnership maintains meaningful explosion exposure to a recovery in.
In the LNG carrier spot market.
Specifically, each $10000 per day increase above our operating and overhead expenses generates approximately $12 million of incremental EBITDA in 2021.
With that I'll hand over to accolades to take you through the partnerships' financials for.
For the fourth quarter.
Thank you Paul.
Turning to slide 15, and the partnership's financial results for the fourth quarter.
Revenues for the fourth quarter were $85 million adjusted EBITDA was 59 million and debt.
Earnings per unit growth.
The eight cents per unit.
The team in 17.
17% declines respectively, compared with the fourth quarter of 2019.
Neither of these us for the fourth quarter of 2020 compared with the fourth quarter of 2019 were impacted by the expiration of the initial multiyear charters of all of the partnerships steam turbine vessels.
However, the revenues.
Adjusted EBITDA and adjusted the Bu, so increases of 16% of 26% and 27 cents per unit respectively.
Both of the third quarter of 2020, primarily usually the company in the LNG carrier spot rates as Paul will discuss later.
Looking forward the partnership.
The Sip is five vessels scheduled for dry dock in 2021, one of which we anticipate will take 40 days as of <unk>.
<unk> is getting the ballast water treatment system installed and regulatory requirement.
In the appendix of this presentation for the an estimated drydocking scheduled for this year.
Slide 16.
So the.
Of the partnership's credit profile convenience, the Brazilian with net debt to capital at 51%.
It is important to note. The Gaslog partners has no committed growth capex by the way we have five scheduled dry dockings.
<unk> as I previously mentioned.
We expect to continue strengthening our balance.
At the beginning of the retirement of approximately one kind of $10 million of debt and put it in the one.
Reducing debt balances with the use of partnerships cash flow breakeven levels over time, improving the competitiveness of our fleet.
With that I would think of it.
Paul will discuss the LNG commodity and LNG shipping markets.
Thank you.
Yes.
Turning to slide 18.
Poten reported of 113 spot fixtures in the fourth quarter and a total of 450 for 2020, an increase of approximately 50% over 2019.
The increased spot market liquidity was underpinned by the increasing.
Creasing volumes of spot LNG aided by the growing participation of traders in this market and by resilient LNG demand.
Rising spot market liquidity should create opportunities for us to maximize the utilization of our fleet, whilst looking to use periods of market strength, the fix our vessels from term charters.
The strategy, we successfully used this winter.
The chart on the right shows the decline in headline spot rates in recent weeks as the northern Hemisphere winter subsides, and we enter the seasonally slow shoulder months.
Further ahead should the global economy continues to recover with the rollout.
COVID-19 vaccines, we expect the LNG carrier spot market to improve in 2021 relative to 2020.
In particular, we expect many less U S cargoes to be shut in during the upcoming summer months.
European gas storage levels are presently.
Out of 40% compared to a five year average of 46%.
64 in the half percent at this time last year.
We expect European restocking to create opportunities for U S LNG and hence for LNG shipping throughout the coming months.
However.
The around caution that the order book for LNG carriers remains high with deliveries, peaking this year, which may offset an increase in LNG demand of ton mile growth.
Slide 19 shows LNG demand during 2020 and the early 2021.
Despite the Covid.
We must be the pandemic LNG demand proved resilient and increased 1% in 2020 according to Poten.
This is in Stark contrast to the absolute demand destruction for oil last year.
Demand in Asia was robust from much of the second half of 2020 as Covid restrictions in that region began to ease.
Uh huh.
However, the European demand declined sharply, particularly in the fourth quarter when cold weather in Asia sent gas prices to record levels of diverting much of the available LNG supply towards Asia.
Consequently, Europe has been drawing down inventories.
Covid, which are now below the five year average as I recently mentioned.
The 2021 wood Mackenzie forecast LNG demand to grow by 4% with growth most pronounced in the second and third quarters.
Slide 20 shows the average monthly U S.
<unk> force per quarter during 2020.
U S exports are among the most shipping intensive as the distance to most major discharged destinations is above the global average.
For example, during the fourth quarter.
<unk> two ships when needed for every.
Ex per million tons of LNG exported nearly twice the global average.
Therefore U S exports growing approximately 20 million tons. This year should be of positive for shipping demand.
Slide 21 shows the gas price differentials between export and import markets.
Every woman.
Notice earlier cold weather in northern edge of rapidly increased LNG prices.
In particular, the differential between export prices in North America and input prices in Asia hate to record earlier this year.
And similarly, LNG shipping spot rates hit record.
Our charterers sort any available vessel to capture these arbitrage trades.
The futures market.
<unk> implies a steady a steady and widening differential between your U S gas prices and Asian import prices, which is a positive for shipping demand.
Hi, this should keep liquefaction terminals of operating at high levels of utilization.
Slide 22 shows wood Mackenzie forecast LNG demand growth over the next five years.
The expect LNG demand to grow by 88 million tonnes between 2000.
As the tier one and 2026 of 4% per annum.
Nearly 75% of this demand.
<unk> comes from outside China, demonstrating LNG is broad based appeal and versatility of meeting the world's energy needs.
Slide 23.
<unk> illustrates the scale of the infrastructure currently under construction, both to consume and produce LNG.
Import terminals can be built much more quickly than production facilities and so the data on the right only goes out to 2024.
There are many more planned.
Illustrations for both production and Regasification and we expect these numbers to continue to increase.
Following the sanctioning of new liquefaction trains in Qatar earlier. This year is presently 133 million tons per annum of LNG production on the construction 50.
<unk> $56 million.
The <unk>, which is in North America.
On the right you'll note, there's 126 million tonnes per annum of Regasification capacity being built today, two thirds of which is in Asia.
We therefore believe that much of this new production will be shipping intensive of positive for our business.
Turning to slide 24 and in summary.
With the strategic review completed we are wholly focused on delivering on our strategy of becoming a preeminent player in the rapidly increasing short term LNG shipping market.
Our large fleet of vessels and our leading operating and commercial.
Tons of platform positions us well to deliver on the strategic objective.
The partnership's financial position is solid and we expect to further strengthen this year as we plan to retire and a true $110 million of debt.
This will continue to improve our competitiveness through.
Emotional cash break evens and over time increase our free cash flow of capacity.
In addition, as our financial position improves we expect to Opportunistically modernize and grow our fleet through the purchase of new assets and the disposal of older assets.
And finally.
The low it fortunate to be operating under the backdrop of continued demand for LNG as a complement to renewables in the decades to come as the world transitions to of carbon free future.
Before I open the call for any questions I'd like to remind our listeners that we ask you to focus your questions on Gaslog partners.
We are in the fourth quarter, only we will not be addressing any questions related to Gaslog Ltd of the merger agreement with Blackrock, We announced earlier today.
With that I'd like to open the call for questions. Please operator.
Ladies and gentlemen, if you'd like to ask a question. Please press Star then one.
Whats your question is the answer and you'd like to remove yourself from the queue, perhaps the talent.
Cool.
Our first question comes from Greg Lewis with Bank of <unk>. Your line is open.
Yes, Thank you and good afternoon, and good morning, everybody.
Paul.
You know I.
And is that all of my questions might be related of the gaslog. So.
I guess I apologize for that in advance, but so yes.
And you touched on it clearly the Gaslog fleet of we'll.
We will call of the losses.
Eventually there will be times to renew it.
<unk>.
So as we think about that.
Amit and knowing that yes.
Yes, I believe gas the.
Eric will still own.
Shares nor of the.
Hi.
The distribution of ownership part of G L. Okay.
How should we think about the the ability.
Or.
The yellow pea to acquire assets.
And just really.
I'm kind of curious about that because like it and just bouncing around here like we expect gaslog partners to be ordering new builds as well I guess that that'd be my first kind of question.
Yeah. Thanks, Greg I think we've been on a somewhat of a divergent strategy between Gaslog Ltd, and Gaslog partners.
For some time now and Gaslog partners I think is more and more standing on its own as the company I think we see opportunities for the purchase of <unk>.
Of the secondhand vessels opportunities through Gaslog partners for consolidation and of course, I wouldn't rule out because it's open to it.
He could place the orders itself for new buildings.
What's interesting I think right now that when we look at the new building spaces.
So two things I think one we're not really seeing the returns that we would like to see the.
We've seen a couple of.
The ship owners being willing to fix out rates, which wouldn't make sense I don't think for the partnership.
And I think for us toward the new buildings, we will be very focused.
And the potential life of those new buildings right.
Historically, writing down ships over 30 35 years I think.
The order shipped in 2025 25 years later, we're at the ammo.
<unk> thousand 50 regulation, so whilst I think the partnership would definitely look at new buildings I think we would have.
At the B, one ranking of the ships down over a reasonable period of time of two making sure that we were making returns on those vessels, which were commensurate with the with our requirements, but certainly that's an option for Gaslog partners in the future.
Okay, and then and then a question on the market.
Thank you for the slide deck I'll always very helpful.
Clearly there was an uptick in spot activity this year.
I guess, what I'm wondering is where the cancellations.
Of that were widespread in the middle of the year.
Did that.
Over over insulate the actual percentage of the market that is going spot and I've been on multiple levels was there the vessel that traditionally move the cargo that did not and then that that that cargo just kind.
How we should thinking about realizing that the spot market.
Kind of gaining in depth.
Breadth and depth of every year, how should what was this year of little bit of an anomaly or the or do we think this is kind of the new normal.
Yes really good question, Greg we took a look at that and the commercial team of and originally we felt it may have been due to the fact that we were seeing some.
Nations shut ins in the U S. But we kind of came out of the end of the thinking actually no I don't we don't think that was.
Necessarily of major factor that we just are seeing with the with the growing.
<unk> in both Australia, and the U S more.
Cargoes, which are not contracted.
And of which are open to be fixed and more of a trader activity coming in buying of cargoes and then trading those cargo. So I think the the sort of the.
The depth of liquidity. We saw this year. We don't think is a one off of an anomaly. We think it continues on and the fact, we think the increases.
Cancel okay. Okay, great. That's all from me. Thank you very much everybody have a great day.
Our next question will come from Ben Nolan with Stifel. Your line is open.
Yeah. Thanks.
The Big day here I wanted to Oh, I've got a few things and I know I don't Wanna.
The Monopolise time, but the the one thing and again apologizing I don't Wanna.
Oh overstep into the Gaslog Ltd territory, but as you do think about let's say things about a lot like the fsrus projects for instance, the Alexandra uplifts or whatever.
And where let's say conversion vessels are appropriate the does this transaction at all or does the the public versus private or whatever does it change.
How that process works in terms of what vessels go where.
I don't believe it does spend because of thought from the.
The transaction, we talked about gaslog, the the relationship between Gaslog and Gaslog partners remains the same so if you like we've had those.
Those.
The issues around which ships et cetera get get allocated to.
Previously you know you're keeping the same management team in place, who I think of focused on doing the best our best the best.
Hum.
Service for both companies and it's very rare that you have a situation where you have one vessel you have two vessels, which are just got to the site positioning of exactly.
The price in the same.
<unk> to do a cargo or to do a conversion. There's always the reason why one is better than the other and so we will do that and of course, the conflicts committee of Gaslog partners will continue to operate and make sure that.
Everything is done in the correct way so I don't.
The the transaction that we've announced today would change that in any meaningful way.
Okay. That's helpful and I appreciate your.
The answering that.
Now I I guess I Gotta, maybe all the math two into one here as well.
Well first of all let's do it this way.
C. Knowing that you don't usually give much color around specific rates with the methane Jane Elizabeth where the two year contract and any of at least the rough contacts just because we don't see a lot of steam to your steam contracts.
And.
And again the completely separate question, but will emerge.
As we look into the summer months in last year of Greg was talking about you know.
The downtime, but if.
Your line.
So it could be a little bit different or at least we saw differences with respect to Asian demand.
And the limitations around the Panama Canal could you maybe talk.
Margin from sort of.
What you would envision that that ratio of number of chips per cargo to look like over the course of.
Of this summer assuming that we don't have mass of shut ins or whatever out of the U S liquefaction and whether ships go through the Panama Canal of Africa or whatever so.
There's a lot.
The fruit.
Maybe shed some light on all of those two things.
Yeah.
I think first of all the terms of the steam vessels in Gaslog partners.
We can't really talk about commercial terms, because we do it privately with the charterers I think.
Well, what I would say is that what we have been focused on without shifts as we look at the kind of a portfolio for Gaslog partners is is making sure that we cover all of our kind of costs.
Opex.
Financing costs on those vessels and then leave a couple of open that we are open to the market where we can.
The hopefully do quite well as we did with a couple of ships in the quarter. So that's as we focus on it if you think about.
Making sure that we're about breakeven on on those vessels that kind of can give you a sort of a view to the the.
The pricing on the last ship that we did.
In terms of Asia.
And demand in Panama, but to be honest.
One of our.
Trying to increase the amount of availability of slots for LNG ships that are also going to be moving to ships going through the night time et cetera.
And I think that's really part of it because in the sense the Panama Canal contribute.
Two the strength in the market you know there were points.
The winter when there were 10 to 12 day delay for LNG ships going through.
The LNG ships going through Panama is still you know.
Double the average day.
Ration distance then for.
Ships generally in the LNG trade and so what I wouldn't like to do is for the problems in the Panama Canal to start to crimp demand in Asia. So yes, if of ship goes via Cape of good hope, it's a lot longer 3000 miles longer takes longer time, but I think having a wealth.
Functioning Panama Canal for LNG is is really quite important for the long term.
We have been I think.
Heartened by the fact that the Panama Canal are looking to make these changes to increase capacity through that because I think having the ability to be.
Well favorable I think will be helpful to our to the flow of cargos to the far east in the longer term.
Alright, great well I'll I'll turn it over here, but I appreciate the color of them on the sensors.
Thank you Ben.
Our next question comes from Randy Gibbons.
More of rent Jefferies. Your line is open.
Oh, the gentlemen, how's it going.
Hi, Randy good so Greg good doing lots of them well see I guess quickly on that follow up for the Jane Elizabeth is that a fixed or floating rate charter.
The fixed rate.
Just confirming that and then and I know it kind of touches on the Gaslog, but was there any kind of bid for G. L. O P as well from Blackrock and then it sounds like there's still some open options for future strategies of G. Lap is it planned to remain an MLP even with the relative.
Okay small distribution payout.
First on the first question Randy the unfortunate I can't talk about the deal of what was discussed of what wasn't on that part of it but in terms of Gaslog partners remaining in the MLP at the moment I think the intention is that the.
We will maintain.
Relatively healthy we already do our tax filings in such a way that is not the disadvantageous.
Tax filings.
A C Corp, and we still.
Believe that.
That is.
Could be opportunities in the MLP market and the future of as a way to.
Turning to the money so to keep that Optionality I think is fine we have brought down the costs that are for the for Gaslog.
Gaslog partners quite considerably.
And also we've taken.
<unk> taken out of the idea of so all of those things I think you know at the moment make us believe that.
Maintaining as an MLP is the.
The raise making to do so for Gaslog partners.
Got it alright.
Alright.
Is there going to be a call on the the Blackrock deal of Gaslog to ask questions on that.
We don't plan for that at the moment Rhonda.
Got it all right well I guess, the I don't have any other questions and thanks so much.
The the right. Thank you.
Yeah.
Our next question comes from Chris Wetherbee with Citi. Your line is open.
Oh, Yeah, Hey, thanks for taking the the question.
Well the kind of I think we kind of need to understand a little bit better sort of the differentiation between the two companies and sort of the strategic process that was.
Ron to the kind of get a clearer picture of why sort of G. L. O. P is on the outside logical Oh Gee is sort of on the inside with the transaction. So maybe you can avoid talking about geology to some degree, but I think it would be really helpful to kind of understand the strategic process for Gaslog partners and sort of why it sort of ended in a in a sort of kind of the.
Alright without progress I guess, what kind of just trying to understand what the differences were here, we understand the ownership differences, but outside of the ads are something we should be thinking about between the two companies.
Yeah I think.
In terms of the progress Chris I would say I think jell O appears to be making quite a lot of progress over the last.
So there is is it being deleveraging, bringing down costs, putting yourself into a position where it can be competitive in and what we see is an interesting spot market going forward.
The strategic review.
<unk> was pretty complete we took the book.
Couple of hooked with the independent company.
The company advisors to look of that and determine that you know given.
The nature of the fleet and the AR and the structure of the business that actually there was a very good future for Gaslog partners as of.
The stand.
Would the T taking advantage of.
What we think in the longer run will be a stronger market and for the sport.
For the spot fleet slightly different in the sense of the two companies.
Have changed position the a lot more fixed rate business and the.
Gaslog Ltd.
The loan and a more open exposure, but a lot less debt et cetera, and Gaslog partners. So.
As I talked about earlier, we've seen the those two companies sort of the diverging, we don't think of that the.
The right thing to do right now with Gaslog partners is to take it out of the capital markets.
Okay.
Okay.
Alright, and I guess in terms of the the progress in terms of deleveraging further I know you have you just north of $100 million of annual amortization over the course of the next three years I think we'll continue to sort of move that net leverage number down.
Where do you think you need to get to before it makes.
At the start you know sort of maybe pivoting more to a more of an offensive position whether it be sort.
And sort of say the acquisitions either in the secondhand market or potentially new builds like you talked about a little bit earlier, but sort of what's that trigger point for you where is the first of all of that you feel more comfortable.
And maybe I'll ask <unk> to answer that.
I think Chris.
And we kind of plan to them at all of our scheduled debt amortization of debt is about that the kind of 30.
That's the million from.
And then the onto the city these are significant.
The amount of net debt pay down debt the good news.
The net debt.
EBITDA of.
Both.
So the depends on all of the spot market.
Hello.
Inc.
As we move on.
We implement our plan we deliver.
So breakeven as we become a very competitive net will be opportunities out there and I think one of the market and the nature of these opportunities.
Both of these.
We wouldn't be able to.
Boston at one of them.
The either accelerated the.
The deleverage even further all of their you know.
Taking.
And opportunities on the golf side. So the managed to be seen I think Paul of the spot market will develop.
As we examine all of us.
The options going forward.
Okay. Okay. That's helpful and one last quick one obviously gaslog owns a large chunk of of Gaslog partners is there an expectation of what that the ownership might look.
It look like going forward is that something that they're going to continue the owner should we expect that the come from the market at some point.
No I think we're very happy with our ownership in Gaslog partners right now.
Okay. Thanks for the time.
Thank you.
As a reminder, task of question. Please press Star then one.
Our next question comes from Omar Naphtha with Clarkson Plateau. Your line is open.
Thank you Hi, Paul I'll I'll stick with Gaslog partners.
And you did talk about this quite a bit.
Comments and obviously in the Q&A.
The strategy is I think you know very key and one of the options that you've discussed or one of the items is kind of.
The idea of entertaining all value enhancing options for the MLP. So obviously the main focus for now of deleveraging, but in terms of strategy. What do you think of the store for the partnership from an asset base perspective.
Do you still view Gaslog partners is being in LNG shipping company or does it potentially.
The change into other sectors of other assets.
Yes. Thanks, all of my question I think for right now, where we see our core competencies around the movement of of.
Of LNG.
So I think of it for the foreseeable future, we see that but I also think.
The we have a core competence within Gaslog is the hole which is around.
Around moving very difficult dangerous cargos.
You know around the world and I think as we we see LNG is a long term complement to renewables, but I think of the world are changes towards potentially hydrogen economy carbon capture.
So I think there will be opportunities for Gaslog partners within that area and I think the operating platform gives us the opportunity.
To look at those but certainly for now the focus is very much on on the LNG. You know I think there are some great opportunities, which will present itself for us to create value for the unit.
Et cetera, there's a b that too you know.
The second hand opportunities you know of consolidation opportunities and just re modernizing the fleet at the right time.
With the potential sale of some of our existing ships. So that's where the focus will be but I think we have a very good platform.
Paul on which to continue to develop the Gaslog partners.
The in the future.
Thanks, Paul I appreciate that and just a follow up you know this is going to a question that you've addressed in the past and I think it came up on the last call, which is the residual value of the <unk>.
Steam vessels or in general whether it's for.
Net how longer for the industry.
The the.
The steamship still make up of pretty significant piece of the overall fleet.
My question is the based off of what we saw this past winter.
Of the spikes that we saw.
Have you seen any new developments with potentially what the residual value could look like for.
The gas sector or the segment of the vessel.
The pie.
Is the residual value you think of improve from here or is it still kind of wishy washy from.
The based off of what you've talked about in the past.
That's a really good question of about I mean, what's interesting of course is.
When you see reports.
The the.
Steam ships.
Earning and the.
Excess of a $100000 of day for two of three months you can do the math and work out very quickly the earnings capacity of those shifts, but certainly on the other side of that.
As we do transition towards the sort of.
The IMO regulations and things.
Oh, Yeah, there is going to be I think of finite life for those vessels as well. So I think we have probably over some of the debt.
We have the most modern steam ships out there we've shown that we have the ability to put those ships away on the longer term contracts in the unsecured the utilization of them, but I think you know I think the strengthening market.
It will be helpful for the.
For the residual value, but of course, we have to be mindful of the you know there will be a finite life for those vessels as well so.
I think balancing those two things up we feel very comfortable with them at the moment, but.
It is going to be dependent I think on us, making sure that oh.
The spot market developing in the way that we believe it will.
Got it thanks, Paul appreciate that I'll leave it there.
Thank you.
Our next question comes from Mike Webber with Webber Research Your line is open.
Yeah.
Our own interest telephones music. Please on the Yep.
Hey, good morning, guys how are you.
Right.
Hey, So just a couple of quick ones first Paul along the lines of of the previous question.
You guys have started doing a little bit more work downstream.
At Gaslog.
Prior to the deal.
Obviously, it's a pretty pretty small market and we've obviously seen from consolidation there already.
I know that work has been incubated thus far at Gaslog partners, so might be a little bit not putting the cart of little bit ahead of the horse here, but I'm just curious.
If you think about that market specific.
Specifically.
And the potential opportunity set there.
Is there any indication at all once the weather that work would continue at the parent or whether that would be something you could potentially look at with at least with the within that.
Within the public and the public sphere.
I think we have it.
It will.
Of course that the commercial operational technical Ah.
Service the Gaslog partners will remain a with Gaslog Ltd, but I think most interesting of course is the you look at the fleet of vessels, which Gaslog partners have a you know as we look at those.
Remainder of type projects.
That's a very interesting.
The the the assets, which Gaslog partners have it makes it a very interesting place. So I think he could we could we continue to see us working on.
On the projects using those Gaslog partners' assets you know in the.
The example.
The structure of them. The steamships, we've got now a I really not operating in the in the LNG carrier market of search, but operating as an LNG carrier and the operating as mother ships and Offloading and things like that those type of projects of really well suited to the gaslog ships of Gaslog partnerships.
We'll continue to be.
<unk>, a big focus for us as we look to maximize the returns so no big changes that Mike.
Okay fair enough and just one more on the notes the nuts and bolts of the transactions of the equity rollover.
Is it.
Is it fair to say the the existing holdings of the band.
These listed in the deck.
The entirety of the existing holdings or is it just a portion of the existing holdings items to be rolling over.
So the.
As we've put in the press release, what it would be us.
The 55% will be rolled over around 45% will be off of to be taken out by black book.
Oh, Okay my.
I apologize I missed the alright, alright, guys. Thanks, a lot appreciate it.
Thank you.
Yeah.
There are no further questions I'd like to turn the call back over to Paul Wogan for any closing remarks.
Thank you Michelle and thank you to everyone today for listening and for your continued interest in Gaslog Ltd, and Gaslog partners.
We certainly appreciate it and we look forward to speaking to you in the.
The next quarter and the in the meantime, if you have any questions. Please contact Joe Nelson. Thank you very much bye bye.
Ladies and gentlemen, this does conclude the program you may all disconnect everyone have a great day.
Day.
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