Q1 2021 FLEX LNG Ltd Earnings Call
Okay.
Welcome to the flags G Sasquatch of 2021.
Presentation at this time.
Participants.
After the speaker's presentation that would be a question and answer.
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I would now like time to conference how 'bout D. S. P. Here today.
Thank you and.
When it comes to that today.
The webcast I'm glad you could make it time I think I'd like to have the C. O R. Flex LNG management I will be joined today by on U C. F O K, a total halt who will walk you through the number as well as providing a financial update a bit late though.
Today, we will be put something that first of all though the source of all trying to trying to 1 and this is a consultation we have been looking forward to share with you.
But it's also not without the replay off this web cast will be available at <unk> Dot Com and also Netflix LNG.
You tube channel.
So I was like 2 disclaimer before we start the presentation I will remind you off there disclaimer with like also among all those forward looking statements non-GAAP myself ankle fitness of detail Sunday.
This family is available and the presentation and we recommend that the bus and fish and that's what got together with the earliest that both we also released today.
So let's kick off honestly <unk> the highlights.
The LNG market has been looking machiavelli's long. This yeah, we started off with a boom at the start of the air with both LNG Pollock biases and stereotypes going Sky high.
Oh I have a it's fair to say that these right at high levels reflected mark it more or less solo for both cargos and ships. So only a few of course and spot voyage voyages were able to catch these levels.
And this is also basic economics, when something is gas it tends to be expensive if in high demand with limited past elastic disappear and substitution.
So the market cooled off my mishap, along are driven by warmer winter in Asia, I floated off new building and they'll ever used to have to start off the air as well as the disruptions in U S. Due to the big fees and travel all that.
The market. However quickly bounded by end of March and a quick turn around also encased appetite by charter full-term deals.
Nobody really wants to be sure chipping after they experience from last winter, particularly given the low gas in menthol, if which increases the odds for winter volatility. This next season.
We have your life, a strong market to execute almost like the <unk> of the killing a higher degree of employment visibility and that's D. Risking the companies for ethics Balshaw with about 22 years of minimum fixed higher employment sick since lots of poor thing and discharged us all.
Dawn at attractive levels and I already cover this in more detail shortly.
In 2019, I'm trying to try and we had a multitude they'll contact us playing against this strategy being the trade all between U as in China.
To like go through our winters in a row adversely impacting gas demand and then finally, the COVID-19 pandemic damaging their wall economy, and that's also the energy demand. This also included LNG the man, even though LNG and Comcast nearly all other energy sources like all.
A small increase in the man of about 1% and trying to transfer, but this fell well below expectations of about 7%.
However, this yeah, we will catch up a lot of this coat with 7% to 8% golf expected as we do not expect cargo cancellation. This summer given the strong demand golf.
With the World economy set to go has did this yet and a cold wind throw which has dragged on gas in Minto is the LNG market has the balance and fed sites have does strongly bounced back during the cold brought up with just the labor day of 2 small shapes being flex feed them and flexible on that and we will.
Have completed all 2.5 billion dollar investment program with flecks vigilant set for delivery by end of May.
So by the end of the me we will have to in the state of the art LNG carriers on the water.
Despite the challenges imposed by COVID-19, when it comes to accrue changes inspections and services. We have continued to operate all shapes with excellent safety and operational performance Y a N T I.
Lost time injury was to see it will see you don't see it all in 28th and 2019 and 2020.
There is actually a high perhaps we recently had a small injury soda N T. I C Quincy, which is enjoy it a million hour walk lost well most it's currently Seattle Seattle 9 all all this is way below the end is this standup we intend to bring this back to Seattle again.
I'm also pleased to say that only 2% of all truth is currently overdue on the contacts which compares very painful to the rest of the industry.
So once again I get things still see found us and onshore personnel for making the poor parallel Iran.
All technical team has more than 2 homes or the answer for experience. So that kind of news to shipping or top management, consisting of knute band modest and myself.
I have also walked in shipping and the LNG for most of all kind of have.
Jamie and Smile actually made me aware today that flex LNG is the only shipping company and his his research cold, which with a straight 8 or anything for management.
In terms of financial I'm pleased that within the level of avenues of 81.3 million in line with guidance of 80 to 90 million when we reported on February 17th.
At the time of the ball thing, we had 13% of commanding days to be booked as well as P ships on valuable higher contacts linked to the spot market place.
The market took on those type from the middle of February until the end of March for reasons. All added describes and this is why we ended up in the lower than off the guy in French.
Nevertheless, where they live about T C E O of 75401st quarter slightly I had of 73704th quarter.
This was assaulted in and just the net income for the first quarter of 34.2 million or 64 cents per share.
As long term interest rates rebounded in 2021, they haven't by improved economic outlook way too early in the mail in gain on all the interest rate swaps utilized for hedging and no official net income was the therefore 47.2 million for the quote.
Translating into 88 cents per se.
As you might think all all official earning number last yeah, well dragged down by and realized losses on such did you ever this due to plummeting longterm intervet, but we see a reversal of this no after all all they called wing.
Casually from the pandemic.
And it's also off reminding you all that we have secured longterm effective financing fall on ships, including flex vigilant set for they liberated by end of the month and we also have a simple song liquidity position with hamburger than 39 million of cash a pan at the end of first quarter.
This has their financial situation carpel with this phone contact called less gives us ample room to pay attractive dividend and also potentially my back more of our stock.
And 3 all therefore pleased to announce an interest in the dividend from 30 cents or.
Fourth quarter 240 cents per share for the first quarter.
Well with the cousins stockpiles of around $30.
I believe it's a bit up today this translate into an annualized yield of about 12%, which should be effective in the current low interfaith environment.
I'll stop state of trading below book value of about $16 by sure Albert Oh balance sheet consist of brand new shapes on the water acquire that attractive prices compare to today's new billing prices, which are going up. Additionally, all all shapes effectively finance and today.
The ships comes with them attack the backlog as well.
Thus, we still find it attractive to buy back stock.
During the first quarter without for both back 593000 chefs have the same thing about 10 cents.
Oh sure.
Bringing the total to 8 times a thousand shares postbacc.
The board of sample decided to in case it under the buyback program from $12.214 per share, which is still approximately 12% this gone to book value.
5.4.
So and flex LNG, we don't execute reflects the cute.
As mentioned in the highlights section the LNG market halfway covered and rebalance.
The Asian, and European spot LNG or gas prices, Jake am in TTS, which panel below 2 and 1 dollar after not being off the COVID-19 pandemic on all at around 10 and $9.
It is 5 to 9 times higher than last year at this time off there and Thong also in historical perspective for this time of their.
With better Mark it down or so.
Further opportunities Foster Kennedy all are intended strategy of fixing on modern shapes on longer term contracts.
Why do we expand out of it than 28, then from 6 to 30 ships were also took the decision to recruit and build up are top notch.
In House Technical management Flex LNG face management.
Let's see if this but I have a license or documents of compliance as it's called in shipping about a year later in October 2019.
And doing band of 29th in in into trying to try and stay we could add your last took over the management of all shapes and outs.
I mean, the ships and all this means we all more in control of how we operate though shapes and this should and all of you as we have said before hit us in a better position to attack longer them context as major LNG inside of tend to prefer owners within our organization given the mission critical nature of LNG ships.
In the LNG value chain.
However, long term contracts Dawson just arrive at the doorstep chart us and want to see the organization actually delivering J performance and this we have certainly evidence through this last test imposed by COVID-19.
We also took a prudent decision to finance the company with ample equity and flexible longterm financing fall shapes to be able to pay those shapes spot in Nevada picked the right moment to execute on our strategy.
When the time was ripe and trying to transfer well certainly unauthorized yes defeat ships on long term face higher contacts given the upheaval in the market.
So during the last month or so we have fixed 6.
Possibly a 7 of all shapes on attractive term employment on April 14th and all of a sudden I gave you meant with Chechnya to fix spaceships in 2021 with them and 1 or possibly 2 shapes and 2022.
Flex vigilant wait a minute I live up to China are on a pay a contract X out.
End of the month flex and they have those has all of that a command such auto which on air as we agreed earlier deliver there of this vessel with the charter.
Ah Ah Ah Chaucer duration, thus expanding to about $3.75, yes minimum duration. We also plan to deliver flex lanzo on a fee and a half year contract to churn out until it's brought up.
<unk> I will take 1 or 2 of all shapes. This also on paper 5 yes time chopped us.
This this will be nominated ahead of delivery. So it's still not sure which vessel will be there to shun air and all arguments. The Charlie also have the option to extend the all vessels bye.
2 additional yes.
Then on 17 of May we again I'll tell Ya time charter for flex scant consolation with major heading out.
The time charter was basis pumps delivery. So flex constellation has all of the comments this John up under this like they meant the charter schools us the option to exit then the charter by up to.
Additionally, S and lastly last night on May transit.
Vaguely is a fixed flex Vietnam on all 5 year time charter with a portfolio path with commencement of this contract in direct condemnation offer existing time charter lapsing and first or early part of second quarter of 2022.
We will be notified in.
Whether it will be a 5 year minimum film.
Got it and such notification is due in third quarter this year.
The charter will also have the option to extend the contract by 2 additional yes.
This time charter the main subject final documentation on customer of the closing conditions.
So.
<unk> fled composition.
So let's have a look at the fleet composition also the recent flurry of flex effusion.
And thoughtless and supporting in fact, we have added 23 is a film backlog to our fleet with after an additional 25 years of optional backlog.
Hence all earnings Miscibility has been transformed as a consequence of these fixtures.
Today, we are clear ships linked to the spot market to a valuable higher contacts.
These are flex enterprise switches on the 30th of valuable higher contact with firm contract covers until the end of first quarter next year Bedwetter to also have the option to extend up by an older 2 years phlegethon bogus on a similar contract into cheerful, but a charter can also extend by 2 Additionally is lost.
Let alone that apply a contract this flex Artemis, which we secure that minimum 5 year contract with gun bold at the end of 2019 with commencement of charter in connection with the labor off this ship in August last year.
Gunboat has the option to extend this phone type up to 5. Additionally.
Well no also have substantial part of it on long term fixed higher complex as mentioned Lex van It's currently fixed on a 10 months' time, Charles maturing in and of Q1 next step with.
Pay off 5 year time charter indirect confirmation with our portfolio up there.
Flex consolation once we had an effect on us.
<unk> sure, though with a major petting House, then we have flex endeavor, which has all of it a comment style <unk> 75 years charter with Geniere reflects vigilant set to join US on may 31st and flexed Rangel doing third quarter.
Then Jenny I will take 1 or possibly 2 ships on 3 and our sales time, Charbagh and thirdquarter nectar, hence we can pick and choose from our existing ships best for simplicity. We have included Flex go ages and flex O Y as optional and flex out who has the option of Zip for that Geniere copay.
<unk> is currently on 911 months fixed higher time charter and will be there at a level to us at the end of Q1 next year flexor, who is also a fixed on on it.
Style Timeslot, where the charter has the option to extend the ship for an additional 6 months taking her into Q1 next year.
Flex it absolutely is also on a similar contract rather 3 months extension option was recently the clouds, but rather charlock an extended by another tables in any case. These 2 physicians are very effective so we would be perfectly fine planning. These 2 ships in the spot market in case, they on all extern.
It then.
We have like Rainbow, which is fixed on a treadmill time charter in queue on this year with really delivery and few 1 next year about a charter has the option to extend by an older.
Yes into Q1, 2023, and lastly, we have 1 ship demanding in the spot market today flex all their wishes fixed into.
Given a positive outlook, we are very happy it's heading out in the spot market.
So I'll slide number sex that backlog.
So let's talk about the visibility as we have secure substantial backlog doing that last month or so I'll forward. The earnings visibility has also increased substantially with a minimum of 88% of the remaining days in queue to Q3 and Q4 covered.
As mentioned on last slide we only have 1 ship flexible Intel setting in the spot market with the possibility of having or so flexor who are on fixed resolute. He really really cute failed queue for this year, but again as I mentioned this all right a good position, we would be happy letting spot.
Ask these barriers also coincides with the winter market.
We also have fish shapes linked to the spot market through the variable higher contact. So we are exposed to the spot market through this fourth possibly up to 6 ships, while the rest of the fifth are on fixed higher contracts.
This means we can fairly accurately predictor avenues for the company for the rest of the year under normal operations.
As we have been an investment phase transition to second quarter. This year, we have incrementally gone a fleet of ships on the water during this parrot.
We started off 2019 with 4 ships on the water and clothes there with 6.6 ships on the water during transit try in theory added in order for ships on the water. While we are adding that I mean inferior shapes through all fit in 2021 and it should not come as a surprise adult Avenue saw going.
This also means that finally, all the equity invested in the company is being employed in productive assets as in the past a substantial part of our equity has been tied up in vessels under construction, which of those terms of Seattle.
Second quarter is normally the weakest quota in the air and we also expect to be the case this year.
With around 65 million of Austrian revenues for this quarter.
The quarter is fully booked so the unknown factor is the earnings we will be making under their feet valuable higher contacts in our portfolio.
And thoroughly quota we have also a high booking so have I.
Hasn't had as Mosley linked to spot earnings for volunteers and their earnings under the valuable higher context.
But we expect revenues to bounce back to the level of Q1.
As you can see from the golf.
4 fourth quarter, which tends to be the strongest quota all out this year few 1 was slightly stronger than fearful.
We also have.
A high degree of days cover this medicine, but we expect governors through all to go.
Because of their homes a million dollars for this quarter.
As we have had pay ships for delivery and the first half of the air with flecks vigilant set for delivery by end of May. We also have no more cafes commitment in the second half of staff, hence cash flow available for the solution to shareholders with it will therefore also be higher.
So.
Next slide number.
7.
So just to give us some hives before.
Handing over took notes.
As I mentioned in the past we have the end is that low cashback even of around $45000. As you can see from what type of disguise, we have substantial backlog not only in 2021, but also for trying to turn to to try and city and 24.
This gives us a apolune to pay our dividends as mentioned no earnings adjusted earnings per Se.
<unk> first quarter was 64 cents.
We are paying US 40 cents as dividend, we have both back sales polo around 5 and half million dollars being in the distribution to 10 cents per se.
And then we also had.
2 ships for they live there so kind of that Payment's duty on hand was alone 12 cents.
For those 2 ships, but given given the cold with that and are we have added some extra pass through the ship's usually when you take delivery of shape you are.
Using around $2 million for staff space in stores, where mark I've been more like.
$3 million each of the ship. So so these are kind of Ah capex, which are invested in space for the ships because it can be hard to get past. These days. So so we have.
<unk> sure.
Off the free cash flow have off and excess 100%.
But you know this is already covered with hundred and 39 million of hail equated there no depth macho. This before second half of 2024 and.
The strong balance sheet I mentioned, so then maybe close to kind of go through the financials.
Thank you I style.
Let's turn to slide eighth in the income statement.
Revenues for the quarter came in at 81.3 million in line with our guidance for the quarter of $80 million to $90 million.
This is up from 67.4 million in the previous quarter.
The increase is due to the delivery of the new buildings flex freedom and flexible in there in January and a slightly improved market with the fleet delivering TCE rates for the quarter of 75.
Thousand 400 per day.
From 73700 per day in the previous quarter.
Operating expenses, where 14.3 million in the first quarter compared to 14.5 million in the fourth quarter. Despite that we had a larger fleet.
This quarter.
This resulted in an opex per day or.
12.9.
10900 per day versus 15300 per day in the last quarter.
The difference is explained by higher Covid related expenses in queue for.
And despite the positive reduction in the opera operating expenses, we continue to phase higher Covid related expenses course by challenging career changes in quarantine.
Increase liveaboard prices, an additional cost of transporting space and serves as to our vessels.
These costs can be a bit bumpy as illustrated in queue for because we are no back to a normalized level and Q1, and we expect smoother opex once the restrictions gradually lifted.
Adjusted EBITDA for the quarter was 64 million up from 50, $50.2 million in the previous quarter.
Interest expenses were up in Q1 due to a full quarter of interest on the depth related to diversity deliberate during the fourth quarter and necessarily quarter of interest related to flex freedom and volunteer delivered in January.
Nothing come for the quarter was 47.2 million or 88 cents per share up from about 28 million or 48.
The fourth at 7 per share in the previous quarter.
Adjusted not income was $34 million or 64 cents per share up from 24 million or 45 cents per share in the previous quarter.
The difference between earnings per share and adjusted earnings per share is as I used unexplained.
Related to our interest rates touching wherever they record.
Gain of certain million-dollar in Q1.
I do too long term interest rates bouncing back.
But we used to adjusted numbers to smooth out this mark to Mark change of the interest rate instruments.
Then moving to slide 9 an hour balance sheets.
31st of March we had trouble vessels, an operation and book does versus an equipment. During the quarter. We took delivery of 2 new buildings and added 372.5 million from the vessel prepayments 2 vessels and equipment.
Increases increasing in aggregate book value of of the vessels 2.2.2 billion.
We have 54 million as remaining vessels prepayments relating to our last new building flex vigilant.
She is scheduled to be delivered on the 31st of May to our fleet.
As mentioned previously once all ships are delivered balance sheets, where it'll be about 2.5 billion comprising of certain shapes as well as our substantial cash holdings.
Total interest paying that stood at 1.4 billion at a quarter and reflecting 20 million increase of the Rcs under the original 100 million dollar range of facility.
And adding drawdown of 125 million in connection with the delivery of flex volunteer and offsets bye.
20 million and scheduled repayments.
At a quarter and we had a strong cash position at $139 million.
Total book equity was 861 million, giving a solid equity ratio of 35% compared to our 25% requirement under some of our notes.
Turning to slide Tan and looking at.
Cash flow for the first quarter.
And the first quarter, we had a positive cash flow of 10 million.
This comes from cash flow from operations of 48.4 million.
And we had negative working capital adjustment of 4.5 million compared to a positive working capital adjustment of $14.4 million in the fourth quarter.
The adjustment is mainly related to hire people charter higher due to a stronger market.
And of the fourth quarter compared with the first quarter.
Well not <unk> working capital balances tend to even out but that's weird operating on.
Only time charter basis.
There's a charter higher in advance which is advantageous from the working capital perspective.
Schedule, Lone installments, where 20 million and until 220.7 million, including this scheduled reduction of the amateur amortizing Ranger Rcs.
Not new building Capex was 11.9 million.
And as mentioned previously we increase the Rcs under the original 100 million dollar range of facility with a 20 million dollar non amortizing traunch.
Additional liquidity and flexibility.
In November we announced the share buyback program of about of up to 4.1 million chess and during the first quarter, we purchase an additional 597000 shares for $5.3 million or $8.
And 80 cents per share on average.
This together with the 30th.
30 cents per share dividends for the fourth quarter or $16.1 million was paid out.
During the first quarter.
In conclusion.
We had a.
Positive cash flow of 10 million, which leaves us with a robust total cash balance of $139 million at the end of the quarter.
Turning to slide.
This is a familiar slide to a free controllers.
We have over the last year has secured a total of 1.7 billion of attractive financing for the fleet of certain vessels.
At the same time, we have diversified all funding base with the mix of bank financing least financing and esca financing.
As communicated at the fourth quarter presentation, we had secured commitment for the 20 million increase under the.
100 million ratio facility.
And the amendment was signed in March and done the amount thus.
Fully available thereafter.
We have hatched the interest rate risk with interest rate swaps for a nominal amount of 674 million at quarter around.
During the quarter Vid Terminator, 2 swaps and use the positive value to enter a new swap, but the lower fixed rates.
The average fixed rate fixed interest rates for swaps is.
1%, 115%.
Together with the leases on fixed rates, we have had tried show of about 66%.
All in all we have a very comfortable depth maturity.
Maturity profile with the first maturity due in July of 2024.
And.
This is.
Is provided by a pool of 15 different financial institutions.
And over the years, we have demonstrated the ability to raise attractive funding also during challenging times, both in the physical and the financial markets as we have a very strong support from a wide banking group.
And with that high hand, the word back to Iceland was given update on the market.
Thank you for the financial review plain sailing for Ya.
And really pick the right job.
So.
Hi number 12.
We start off the market section with a snapshot of LNG exports and imports in the first quarter and the first quarter of 2021 exports, we're close to handle than 2 million pounds.
101 million tonnes. According to capital data this was slightly.
In line with last year. Despite their last call goes due to the big feast in Texas, Julian Pampel on it as well as some other supply disruptions during the quarter keep in mind volume called in first quarter of 2020, there was very high at this was pyre do the COVID-19 pandemic going viral.
On a global scale.
What is different from last year is that we saw considerably more pill form Asia, and particularly China in the winter weather in Asia at the start of the air was very cold with snow that goes in Japan, and the coldest winter in Beijing since 1966.
So strong demand form Asia also just salted and interest sailing distances and this coupled with Panama congestion spot on unprecedented alley in both great and product prices at the start of their.
As we expand both in a Juicy report in November and our queue for a report in February we have been very bullish on volume growth in 2021.
With estimated export growth of about 25 million times in 2021.
Product prices started to Halle last autumn and this have an all started to become the consensus view. So as you can see it from the glass through the heightened side, we expect 7% to 8% export growth in 2021, which will be supportive of the fresh market, which we will cover all the next 2 slides.
Turning to slide third in the spot market for friends.
As mentioned and highlights the boom at the end of 2020 continued into 2021 before softening by the Middle of February when we have rounded up all thing our fourth quarter. However, the downtown will show up with the market bouncing back by the end of April Aspheres sure. We saw the first saw this first with the balance on this.
Conditions going from furlough on that basis in January 2.1 way economic spanned the federal way before we started see green shoots in March with balanced bonus conditions stoning back to the funeral 1 tip again by the middle of April and thus brushing up at that time charter equivalent earnings and his bulk market.
By end of April going into me. The first market was unseasonably strong with spot red for modern tall niche I Lodge, Megan staff ships approaching hundred thousand dollars per day in the Atlantic with somewhat lower rates in the Pacific as new building deliveries kept the vessel available.
Well ability higher in this space.
As you can see from the golf on the right hand side of the slide availability of ships in Atlantic have been very low except for during the big feast in February in the US Rednecks part of U S was for a short period curtailed and more vessel became available in the Atlantic.
My favorite time, however effect of the relapse into the market and we have seen the market softening during the last 2 weeks due to slightly more vessel availability and rates for modern tonnage.
Earning at around $8000 per day in both the Atlantic and Pacific Basin, but these are where is solid numbers for me as you can see on leg off to the left however, the relax in the market are typically only available for shorter durations as to pay this and portfolio players typically.
The ships back before winter season approaching and this does not affecting the term market significantly as I will illustrate on the next slide so market slide 40 and.
Let's have a look at the total market for faith in this cough, we show the termites 413, and 5 years over the last year following the COVID-19 anemic.
As you can see that Mimea PSA assessment Flatlined during most of the last year. As there was also limited interest for such periods by charged us which could fix vessels cheap in the spot market or for short term business.
The <unk> last year were around 55 to 57.5 homeless before before turning sharply up from the beginning of April and now hovering close to $100000 per day.
<unk> right, which is less liquid down the trail most <unk> followed the trail months' disclosed months TCA read closely before also picking up from April now being at around $80000 per day.
So given that Unattractiveness of term business during the last approximately trail months.
Until restarted the sea green shoots at the end of March reelected to the water playing this both market.
At the start of the year.
First of all 30 and ships were either planting spot on valuable higher contacts.
Plus we also had our last new building open.
Despite pursuing this strategy, we managed to saline $60000 and time charter like favorite earnings for trying to transit, while keeping all options open which was much more attractive than fixing ships on foreheads for longer durations of course, we are in the fortunate position that we had financial ships in advance and sat with a big chunk of.
Cash so we could afford to take their wasteful better times approach, which was not the case fall on us.
With termites picking up recently, we have utilize the momentum to fix a large part of it on term contracts as much more effective than what was achievable last year and in 2019 for that mother. So there is definitely some truth to patients being Albert Ya.
So our guests biases on slide.
15.
As previously highlighted gas prices dollars to recover over the summer last year as we highlighted in our queue to report last August there was already at that time alone Anyhow left for the winter 2020, 2021, which normally means that when winter.
Whether will be cold and longer in the major gas importing nations.
We therefore elected to keep substantial spot exposure over this period and made a healthy it's heading yourself for both the queue for in Q1 has recently explained.
The winter came a bit late but when it is it was freezing cold and it also lasted for a very long time, especially had in Europe last autumn. We also experienced the most active hurricane season on Echo then U S, which cost supply disruption in the short term this silicify disruption while negative.
Due to lost cargos, but the supply of disruption also fueled the project prices with Asian, LNG benchmark decem going from a low of 1.8 dollars. During the early part of the summer last year to a high of 30 to $5 early 2021.
The average bias of the tabloids AKM contract was $18.10 times the pirates during last summer as you can see from the glass the big fish in the U S. Also led to a spike in the U S. Gas prices has represented by the handle there have been thanks.
Given the bill run.
In oil prices you ashamed railing had become increasingly profitable so natural gas prices have a daughter onto subsidy dollars level with forward prices also at this level.
Jacob biases are today close to $10, while European DTF guys gas prices is slightly below $9.
Driven up by Incase demand significantly higher carbon prices, increasing the switching banned from coal to gas.
As well as do it through a significant restocking demand due to very low gas inventories. After this cold winter, which I really wasn't onto our next slide So lost point to make is forward prices for gas all at M. A pilot different level this year than last year.
And this gifts no incentive to cancel cargos and U S or for that matter, Egypt, which has become the new swing producer and that's why we are also confidence on big volume increases this year.
So slide 16 gas inventories.
<unk> inventory as we started to highlight in December 2020 presentation. The strong demand form Asia at the end of 2020 was pooling call goes away from the Atlantic Basin and away from European bias with rapid depletion of gas inventories in Europe as a consequence.
The Asian demand <unk> continue into trying to transit Walnut Si illustrated earlier salting in severe congestion in the Panama Canal and booming face us at the start of their with therefore continued to highlight in January and February presentation that European bias were being starved off from gas deliveries and.
Therefore had to continue to run down their inventories quickly.
This was further aggregated by a cold a long winter in Europe with record snowfall in moderate and the high carbon price in Europe with you <unk> 2 prices hitting about 50 years.
Which meant that gas become increasingly competitive towards cold despite higher gas prices and so we have been arguing for song restocking and demand over the summer minimizing the chance of a repeat of the summer cargo cancellations.
Thus became increasingly comfortable with the market situation for transit 21, and the legs do keep our high proportion of Ah fleet exposed to the spot market at the start of the F. As mention until we have no acted on term opportunities.
The European inventories today's standard only 33.5%.
It further which is less than half the levels last year.
European inventories are about.
70 million torn equivalent of LNG. So the shortfall in European inventories are almost twice the volumes of us call where cancellation last year.
And it is almost unconceivable that European buyers will be able to fill up inventories ahead of next winter and this can spiro gas prices and volatility, particularly if economic recovery is tong handle if the winter is not not even cold, but just normal.
So slide 17 that fleet composition.
Last quarter presentation, I had a very low section about the new the carbonization rules for all shapes or E X I have it's called.
We expect the new rules to be aggravated by I'm more in June and Israel's will take headaches for particular for the owners of all of them tarnish, but opportunities bonus of state of tall ships.
I am not going to repeat the lecture from last presentation, but it's available on a web page for those who missed it what I would like to point out is the the order book, which some analysts taught was to make this year.
To make for a conductor faced market is tailing off and a number of available uncommitted vessels have calmed down a lot with a recent increase in term interest.
That makes of.
Few available Mega extent ships E X siders generally higher new billing prices and the fact that a lot of all the time is coming off longterm contract, who would assert ourselves and more opportunities falls to fix ships on attractive film charters.
Hello, focusing on our 2022 positions given a high covers for trying to 21 and the reason for what's Fitzgerald Flex freedom illustrates this point and opportunity.
So that's my last slide before semi thing.
Asthma medicine revenues in line with guidance, we have substantial backlog for 2021 already booked dividend. We are in kissing. This now 240 cents. In addition to the buyback.
All shapes will be on water by end of the month.
I've covered and Casey Pal, we have positive market outlook with some restocking and we are in a very good financial position with.
Or shapes finance superstorm balance sheet and lots of liquidity so.
For me.
I'm happy to take some questions if the Albany.
Thank you I need to.
Hill H I L.
Higgins.
Yeah.
Okay.
Okay.
Okay. Once again everything is radically seems like telephone is going out of old. So maybe we should try to focus more on the chat function for questions next time, but.
Until then I wish you are.
Very good that weekend.
A good spring, we will be back in August with our.
Second quarter results, probably somewhere in the middle of August.
I think market will be very healthy at that time.
Don't rule out fast that's going into 6 digit by that time, we will probably see contango structure revello developing in that the gas prices because of.
<unk> of Panama congestion and so so I think.
I'm really looking forward to the second quarter Roswell, So with that I wish you a good day.
Okay.
Thank God.
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