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 limited and Gaslog.
The song Partners 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 Limited.
And Gaslog partners.
And I can lay out kind of CLO Chief financial Officer.
And the Alexandria fly of General Counsel.
Joseph Nelson head of Investor Relations will begin your conference.
Good morning, or good afternoon, and thank you for joining the Gaslog limited and Gaslog partners fourth quarter 2000.
And earnings 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.
20 of many of our remarks contain forward looking statements for factors that could cause actual results to differ materially from these forward looking statements. Please refer to our 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.
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 following which Akalaitis will then walk you through Gaslog fourth quarter financials.
Paul will then review the partnerships fourth quarter and results and outlook and accolades and will present its financial position.
<unk> 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 limited.
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% of our common shares.
All of the hours outstanding common shares.
Of note held by CIT and wholly owned affiliates of the low vol, and his family and the and Astra's Foundation.
People the referred to as the rolling shareholders.
The rolling shareholders will continue to hold approximately 55% of our outstanding.
Richard and common shares.
The highlights of the transaction are as follows.
Blackrock has agreed to pay $5 80 for common share.
Or a 17% premium to friday's closing price and.
And 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 and non rolling shareholders vote in favor of the transaction.
Closing is expected in the second quarter of 'twenty.
And Q1 subject to the approval of the transaction by Gaslog shareholders at a special meeting.
Including by a 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.
And teach 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.
And 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.
Limited's 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 for a day, they view of Gaslog Icd's fourth quarter and he's from here.
And he can see from the table on the slide.
For the fall.
We 100% uptime during 'twenty and 'twenty. Despite the challenges presented by COVID-19.
The revenues and adjusted EBITDA for the fourth quarter, excluding those attributable to Gaslog partners the vessels, while approximately one and $8 million and $78 million respectively for.
For the full year revenues.
The EBITDA again, excluding the litigation from the path and the fish that says well the bushnell.
Hey.
And the young and to have the 75 million respectively.
Adjusted earnings for the standard for the first quarter with 74 cents per share taking the total for.
The 40 cents for the fifth.
I'll leave and then.
And that that was maintained at five cents per share for the fourth quarter and for the full year with it and that's the cents per share as a cash dividend.
Operating expenses were $14975 per vessel per day in line with our guidance for 'twenty and 'twenty.
Slide eight presents and consolidated.
And the bylaws.
We ended the year with.
67 million of costs, which includes approximately 48 million related to the drill down with all of them.
Building Newbuild ECA facility I can't do the they leave any of the Gaslog partners.
And the Virginia.
I'll limit it as measured by net.
Every day for trailing 12 months adjusted EBITDA was seven seven times at the end of 'twenty and 'twenty, while our net debt to capital of 62%.
I will turn towards the fall through the use of partnership strategy and Turkey.
Thank you Lasse.
On slide.
Slide 10, and I'll discuss Gaslog partners fourth quarter highlights.
It's been an active several months since our last call and during that time the <unk>.
Strategic review was completed and the board concluded the the partnership's existing corporate structure and strategy is and the best interest of unit holders.
Net debt, we concluded a new two year charter for the methane, Alison Victoria, which and yeah, increasing our 'twenty 'twenty, one charter coverage to approximately 80%.
We repaid $19 million of debt, bringing our total debt repayments in 'twenty and 'twenty two 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 over time.
Turning to slide 11.
Following a thorough review of the partnerships.
And corporate structure assets financial position competitive environment, and current and expected LNG shipping market. The board with the assistance of and independent financial adviser determines that maintaining our existing corporate structure and strategy it and the best interest of the unit.
Of the unit holders.
The LNG market is commoditizing as it matures.
As a result of the trading of LNG on the spot and short term basis is growing much faster than the overall demand for LNG.
The top right hand graph.
And it shows up more than 20% of all LNG movements last year would trade at all the vessels with the charter duration of less than three years.
Similarly, the number of spot and short term fixtures for LNG carriers and has grown by over 130% since 2015.
19% compound annual growth rate.
We expect continued growth and the short term activity in the years ahead.
With a leading commercial and operational platform through our relationship with Gaslog limited along with our scale fleet of <unk> LNG carriers.
And we believe the partnership can become a leading operator and the spot and short term transportation of LNG.
For example, last year, the partnership and 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 our financial stability of.
Operational and commercial.
And a growing market for our services presents a compelling investment proposition.
Turning to slide 12, and a 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. These results were adversely impacted by the conclusion of the initial multi year charters for our steam vessels.
Whilst we have successfully re chartered.
And vessels as they ended their initial shell charters and some for multiple years the.
These have generally been at lower rates.
Looking ahead, we have five vessels available for re charter this year tomb steam vessels and one PSD vessels currently trading and the short term market.
As well as two <unk> vessels, the Gaslog, Seattle, and the Solaris that will and 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.
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 and representing nearly 80% charter coverage for the year.
This is of significant improvement over the same period last year and the result of free multiyear 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 and.
And 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.
Adjusted earnings per unit growth.
The eight cents per unit.
The theme and 17.
17% declines and respectively from Beth with the fourth quarter of 2019.
And as a result for the fourth quarter of 2020 compared with the fourth quarter of 2019 were impacted by the expiration of the initial multiyear charters of fall of the partnership's steam turbine vessels.
However, the revenues.
Adjusted EBITDA and adjusted the Bu, so increases of 16% and 26% and 27 per unit respectively.
<unk> for the third quarter of 2020, primarily used by the company in the LNG carriers and spot rates as Paul will discuss later.
Looking forward the partnership.
Fifth and five vessels scheduled for dry dock in 2021, one of fleets, we anticipate and we take 40 days as of.
And as Kevin the ballast water treatment system installed and regulatory requirement.
He and the appendix of this presentation for the an estimated drydocking scheduled for this year.
Slide 16, so the.
Of the partnership's credit profile continues to be resilient with net debt to capital at 51% at.
It is important to note. The Gaslog partners has no committed growth capex by the way, we have five scheduled dry dockings and <unk>.
And as I previously mentioned.
We expect to continue strengthening our balance.
At the beginning with the retirement of approximately one kind of $10 million of debt and credit and doing.
And reducing debt balances with the use of partnerships cash flow breakeven levels over time, improving the competitiveness of our fleet.
With that ill turn it over.
And Paul to discuss the LNG commodity and the LNG shipping markets.
Thank you.
Yes.
Turning to slide 18.
Poten reported of 113 spot fixtures and the fourth quarter and a total of 450 for 2020 and 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 and 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 to 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 and.
In particular, we expect many less U S cargoes to be shut in during the upcoming summer months.
European gas storage levels of presently.
And out of the 40% compared to a five year average of 46%.
And 64.5% 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 round caution that the order book for LNG carriers remains high with deliveries, peaking this year, which may offset and increase in LNG demand of ton mile growth.
Slide 19 shows LNG demand during 2020 and early 2021.
And despite the Covid.
And we must be 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 for much of the second half of 2020, as Covid restrictions and not region began to ease.
However, the European demand declined sharply, particularly in the fourth quarter.
When cold weather in Asia, and gas prices to record levels. The diverting much of the available LNG supply towards Asia.
Consequently, Europe has been drawing down inventories, which.
Covid now below the five year average as I recently mentioned.
For 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 exports per.
And 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.
Approximately two ships when needed for every 1 million.
For quarter of LNG exported nearly twice the global average debt.
And 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.
As I noted earlier cold weather and northern Asia rapidly increased LNG prices.
In particular, the differential between export prices and North America, and input prices and Asia hit a record earlier this year.
And similarly, LNG shipping spot rates hit record highs.
Tons entre of salt any available vessel to capture these arbitrage trades.
The futures market presently implies a steady steady and widening differential between Europe and U S gas prices and Asian import prices, which is a positive for shipping demand and this should.
Of cheap liquefaction terminals.
<unk> and high levels of utilization.
Slide 22 shows wood Mackenzie forecast LNG demand growth over the next five years.
And I expect LNG demand to grow by 88 million tonnes between 2021.
<unk> and 2026 of 4% per annum.
Nearly 75% of this demand growth comes from outside China, demonstrating lng's broad based appeal and versatility and meeting the world's energy needs.
Slide 23 illustrates.
Right the scale of the infrastructure currently under construction, both to consume and produce LNG.
And port 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 additions for both.
And the instruction and Regasification and we expect these numbers to continue to increase.
Following the sanctioning of new liquefaction trains and Qatar earlier this year.
Presently 133 million tons per annum of LNG production on the construction.
56 million tonnes of which isn't.
For director.
On the right you'll note, there's 126 million tonnes per annum of Regasification capacity being built today, two thirds of each and in Asia.
We therefore believe that much of this new production will be shipping intensive of positive for our business.
And North America, Slide 24 and in summary.
With the strategic review completed we are wholly focused on delivering on our strategy of becoming a preeminent player and the rapidly increasing short term LNG shipping market.
Our large fleet of vessels and our leading operating and commercial.
For positions us well to deliver on the strategic objective.
The partnership's financial position is solid and we expect to further strengthen the this year as we plan to retire and it's for $110 million of debt.
This will continue to improve our competitiveness through lower.
The plot break evens and over time increase our free cash flow 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, we.
Net cash Janet the operating under the backdrop of continued demand for LNG as a complement to renewables and the decades to come as the world transitions to of carbon free future.
Yeah.
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 have a photo of quarter only we will not be addressing any questions related to Gaslog limited 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, this would be like to ask a question. Please press Star then one.
If your question is the answer and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Greg Lewis with Bank of <unk>. Your line is open.
Yes, thank you and and good afternoon, and good morning, everybody.
Paul.
You know I.
And it's one of my questions might be related the gaslog. So.
I guess I apologize for that and advance.
And you touched on it.
And clearly the Gaslog fleet.
And we'll call of the law of us.
And eventually there will be times to renew it.
And so as we think about that.
Amit and knowing that and yes.
Yes, I believe gas the.
Eric will still own.
Shares.
Hi.
And the distribution ownership part of GL Okay.
How should we think about 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 limited and Gaslog partners for.
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.
For the purchase of <unk>.
The second hand vessels opportunities through Gaslog partners for consolidation and of course, I wouldn't rule out because it's open to it.
And he could place the orders itself for new buildings.
And 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.
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 and we'd be very focused.
And the potential life for those new buildings right.
Historically, writing down ships over 30 35 years I think.
If you order a ship in 2025 25 years later, we're at the ammo.
<unk> thousand 50 regulation, so well so I think the partnership would definitely look at new buildings I think we would have.
At the B, one right and 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 and the future.
Okay, and then and then a question on the market.
Thank you for the slide deck I'll always very helpful.
And clearly there was an uptick and spot activity this year.
I guess, what I'm wondering is where the cancellations.
And that were widespread and the middle of the year.
Did that.
Over and over and slate the actual percentage of the market that is going spot and 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.
And how we should thinking about realizing that the spot market.
Kind of gaining and that February a breadth and depth of every year, how should we what's the share a little bit of an anomaly or the or do we think this is kind of the new normal.
Yes.
The good question and Greg We took a look at that and the commercial team and the originally we felt it may have been due to the fact that we were seeing some.
The patients shut ins and the U S. But we kind of came out to the end of it thinking actually no I don't we don't think that was and.
Necessarily of major factor that we just are seeing with the.
And the growing.
Reduction in both Australia, and the U S more.
Cargoes, which are not contracted.
And and which are open to be fixed and more true.
Greater activity coming in buying and cargoes and then trading those cargo so I think the the sort of.
The depth of liquidity. We saw this year. We don't think is a one off of an anomaly. We think it continues and and in fact, we think the increases.
Cancel okay, okay, great and Thats all for me. Thank you very much everybody have a great day right.
Our next question comes 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.
And Monopolise time, but the the one thing and again apologizing I don't want to.
Oh overstep into the Gaslog Ltd territory, but as you do think about let's say things about a lot like our fsrus projects for instance, the Alexandra Atlas or whatever.
And where let's say conversion vessels are appropriate and the does this transaction at all or does the the public versus private or whatever does it change.
How that process works and in terms of what vessels go where.
And I don't believe it does because of thought from the.
The transaction, we talked about Gaslog, the the relationship between Gaslog and Gaslog partners remains the same so and if you like we've had those.
Those.
The issues around which ships et cetera get get allocated.
Previously you know you're keeping the same management team and place them, who I think of focused on doing the best.
No.
<unk>.
Service for both companies and it's very rare that you have a situation where you have one vessel you have two vessels, we certainly got to the site positioning of exactly.
The price and the same.
<unk> to do a cargo or to do a conversion and Theres 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 and the correct way so I don't.
The the transaction that we've announced today would change that and any meaningful way.
Okay. That's helpful and I appreciate you answering that.
And now I guess I Gotta, maybe all the math two into one here as well.
Well first of all let's do it this way.
Don't see knowing that you don't usually give much color around specific rates with the methane Jane Elizabeth where the two year contract and any at least and rough context, just because we don't see a lot of steam to your steam contracts.
And.
And and again the completely separate question what will emerge.
And here and really look into.
The summer months and last year, and Greg was talking about you know.
And the downtime, but this.
Your per day.
And 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.
And I'm just sort of.
And what you would envision that that ratio of number of ships for cargo to look like over the course of.
Of this summer assuming that we don't have massive shut ins or whatever out of the U S liquefaction and and whether ships through the Panama Canal rapid for whatever so and of course.
There's a lot.
For.
And maybe shed some light on all most of the thing.
Yeah.
I think first of all the terms of the steam vessels in Gaslog.
Gaslog partners.
We even we can't really talk about commercial terms, because we do it privately with the charterers.
Well, what I would say is that what we have been focused on without shifts as we look at the kind of a portfolio of for Gaslog partners is is making.
And making sure that we cover all of our kind of costs.
Opex.
And financing cost on those vessels and and then leave a couple of open that we are open to the market where we can.
And hopefully do quite well as we did with a couple of ships and the quarter. So that's as we focus on it if you think about.
And making sure that we're about breakeven on on those vessels for 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 Asian.
And demand and Panama, but to be honest.
And 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.
And that's really part of it because in the sense of the Panama Canal contributed.
The two the strength and the market and there were points and.
The winter when there were 10 and 12 days delay for LNG ships going through.
The LNG ships going through Panama is still and you know.
Double the average.
<unk> distance and then for.
Ships generally and the LNG trade and so what I wouldn't like to do is for the <unk>.
Problems and 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 well.
Functioning Panama Canal for LNG is is really quite important for the long term and.
We have been I think are heartened by the fact that the Panama Canal and are looking to make these changes to increase capacity through that because I think having it.
And the ability to be.
Well <unk> I think will be helpful to our to the flow of cargos to the far east and the longer term.
Alright, great well I'll I'll turn it over here, but I appreciate all of them all and those answers.
Thank you Ben.
Our next question comes from Randy Gibbons.
More rent Jefferies. Your line is open.
Oh, the gentlemen, how's it going.
Hi, Randy good so Greg good doing lots of them and well see I guess quickly on that follow up for the Jane Elizabeth is that a fixed or floating rate charter.
The fixed rate.
Thanks.
And 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 and MLP, even with the relatively.
Okay small distribution payout.
And first on the first question Ron day, Unfortunately kind of talk about the the deal of what was discussed and what wasn't on that part of it but in terms of Gaslog partners remaining and MLP at the moment I think the intention is that the.
We will maintain.
Relatively healthy we already do our tax filings and such a way that is not the disadvantageous.
Tax filings as M. A.
A C Corp, and we still.
Believe that.
That is.
Could be opportunities and the MLP market and the future as a way to.
Changes in the money so to keep that Optionality I think is fine we have brought down the costs that are for the for Gaslog partners quite considerably and also we've.
<unk> taken out of the idea of so all of those things I think you know at the moment.
And is believed to maintaining as an MLP is the.
The rise and nothing to do for for Gaslog partners.
Got it alright.
Alright.
Is there going to be a call on the the Blackrock deal and Gaslog to ask questions on that.
And we don't plan for that at the moment around it.
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 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 this transaction. So and 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 for Gaslog partners and sort of why it sort of ended and are in a sort of you know kind of a.
Alright, and with without progress I guess, what kind of just trying to understand what the difference is work here and we understand the ownership differences, but outside of the outage or something we should be thinking about between the two companies.
Yeah I think.
In terms of the progress Chris I would say I think jello appears to be making quite a lot of progress over the last.
And he has it been deleveraging and bring down costs, putting yourself into a position where it can be competitive and and what we see is an interesting spot market going forward.
The strategic review.
<unk> was pretty complete we took the board.
Couple of Yolked with the independent.
The advisors to look at that and.
And determined that given.
The nature of the fleet and the AR and the.
The structure of the business that actually there was a very good future for for Gaslog partners as the.
And the Standalone.
Would the T taking advantage of.
And what we think in the longer run will be a stronger market and for the for.
For the spot fleet slightly different in the sense of the two companies.
And have changed position the a lot more fixed rate business and.
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 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 which will continue the sort of move that net leverage number down.
Where do you think you need to get to before it makes.
And at the start you know sort of maybe pivoting more to a more of an offensive position whether it would be sort.
The acquisitions, either and the secondhand market or potentially new builds like you talked about of a little bit earlier, but sort of what's that trigger point for you work for 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. It is about kind of a 50.
$50 million from.
And the onto the city these are significant.
The amount of debt being paid down debt.
The net debt.
EBITDA of.
Both.
So it depends on the fall of the spot market.
Hello.
Income.
As we move on and we.
And we implement our plan we deliver.
You sort of breakeven as we become a very competitive and that will be able to and this all debt and I think one of the market and the nature of these opportunities.
And we wouldn't be able to them and you know it's a lot.
And take that one.
And I the accelerating the.
And the deleverage even further all of their you know.
Taking.
And opportunities on the golf side. So the math can be seen I think all of the spot market will develop.
And I look as we examine all of us.
Options going forward.
Okay. Okay. That's helpful and one last quick one obviously of Gaslog owns a large chunk of of Gaslog partners that there and expectation of what that the ownership might look.
It looked like going forward and something that they're going to continue the owner should we expect that the come from the market at some point.
The.
No I think we're very happy with our ownership and Gaslog partners right now.
Okay. Thanks for the time.
Thank you.
As a reminder, task of question. Please press Star then one of.
Our next question comes from Omar and Naphtha with Clarkson Plateau. Your line is open.
Thank you Hi, Paul and I'll, Oh, I'll stick with with Gaslog partners.
And you did talk about this quite a bit.
Comments, and obviously and the Q&A.
The strategy is I think very key and one of the options that you've discussed or one of the items is kind of.
The idea of entertaining all of value enhancing options for the MLP and 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 and LNG shipping company or does it potentially.
Change into other sectors and other assets.
Yes, Thanks, and my other question I think for right now, where we see our core competencies around the movement of of.
Of LNG.
So I think and for the.
Foreseeable future, we see that but I also think.
The we have of core competence within gaslog as the whole 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 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.
The et cetera. This b that too you know.
And second hand opportunities for consolidation opportunities and just re modernizing the fleet at the right time.
With the potential sale of some of our existing chips. So that's where the focus will be but I think we have a very good platform.
For on which to continue to develop the Gaslog partners.
And in the future.
Thanks, Paul and 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 other residual value of of the <unk>.
Steam vessels or in general whether it's for.
And how long ago for the industry.
And then the steamship still make up of pretty significant piece of the overall fleet and.
And my question is the based off of what we saw this past winter and the.
The spikes that we saw and have.
Have you seen any new developments with potentially what the residual value could look like for.
For gasoline or over or the segment of the vessel.
Pi debt.
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.
And that's a really good question of I mean, what's interesting of course as you know, we you and you see reports.
For the second.
Steam ships.
Earning in excess of $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.
Finite life for those vessels as well so I think we have probably over some of the.
And have the most modern steam ships out there we've shown that we have the ability to for those ships away on the longer term contracts and unsecured the utilization of them, but I think you know I think the strengthening market.
<unk> 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 where we feel very comfortable with them at the moment, but.
It is going to be dependent I think on us making sure that all.
We will of spot market developing and the way that we believe it will.
Got it thanks, Paul appreciate that and I'll leave it there.
Thank you.
Our next question comes from Mike Webber with Webber Research Your line is open.
Yeah.
Or a mix of telephones me that please and yep.
Hey, good morning, guys how are you.
And Mike.
Hey, So just a couple of quick ones first of all 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.
None of 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.
And do you think about that market specific.
Specifically.
And the potential opportunity set there.
Is there any indication at all and whether that work would continue with the parent or whether that would be something you could potentially look at with I.
And at least with the within the within the public and the public sphere.
I think we have it.
It will remain.
Of course that the commercial and operational technical Ah.
Service for Gaslog partners will remain a.
With Gaslog limited, but I think most interesting of course is the you know you look at the fleet of vessels with Gaslog partners have a you know as we.
We look at those infrastructures.
Remainder of type projects.
That's a very interesting.
The the the assets, which Gaslog partners have and 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 and the example.
Ample of couple of the steamships. We've got now are really not operating in the and the LNG carrier market as such but operating at and LNG carriers and the operating as mother ships and Offloading and things like that those types of projects of really well suited to the gaslog ships of Gaslog partners ships and those will continue to be.
Restructuring and a big focus for us as we look to maximize the return and so no big changes there Mike.
Okay fair enough and just one more and then the nuts and bolts of the transactions and the equity rollover.
And if it is.
And is it fair to say the the existing holdings of the band.
And he was listed in the deck the it.
For the entirety of those existing holdings or is it just a portion of the existing holdings and are going to be rolling over.
So the.
We've put in the press release, what it would be is 55% will be rolled over and 45% will be of it can be taken out by black book.
Oh, Okay and my.
I apologize I missed the alright, alright, guys. Thanks, a lot appreciate it.
Thank you.
Yeah.
There are no further questions I'll 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 and Gaslog limited and Gaslog partners.
We certainly appreciate it and we look forward to speaking to you in 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.
And us.
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Yes.
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