Q2 2021 Euronav NV Earnings Call

Good morning and welcome to the euronav second quarter 2021 earnings conference call all participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions to ask a question. You may press star then 1 on your touch-tone phone to withdraw from the question queue, please press star. Then 2, we ask that you limit yourself to one question and one follow-up.

Event is being recorded. I would now like to turn the conference over to Brian Gallagher head of investor relations, please go ahead. Thank you, good morning and afternoon to everyone, and thanks for joining you and ask you to 2021 earnings call. Before I start, I would like to say a few words the information discussed on this call is based on information as of today, Thursday, the 12th of August 20, 21 and may contain forward-looking statements that involve risks and uncertainties, forward-looking statements, reflect current views, with respect to p.

Future events and financial performance and they include statements concerning plans objectives goals strategies. Future events performance, underlying assumptions and other statements, which are not statements of historical facts. All forward-looking statements attributable to the company or two persons acting on his behalf for expressly qualified in their entirety, by reference, to the risks and uncertainties, and other factors companies with the SEC, which were available free of charge. And this is his website at www.sec.gov.

Please website at www.yourmathgal.com. You should not play Sunday Reliance on forward-looking statements. Each forward-looking statements speaks only as of the date of a particular statement and the company undertakes. No obligation to publicly update or revise any forward-looking statements actual results, May differ. Materially from those forward-looking statements. Please take a moment to read our site. Safe Harbor statements on page 2 of the slide presentation. I will now pass over to chief executive, you get a student to start with the agenda slide on.

Slide 3, Hugo.

Thank you, Brian. Welcome to our cold today. As usual. I will first see, run through a tree to highlights and some comments on our current capital allocation strategy. This is to simultaneously rejuvenate or freed and earnings potential but also investing in the latest technology to enable urine have to be at the Forefront of decarbonization of the tanker sector liver, or CFO will then run through a snapshot of our financing before Brian or head of investor relation. Will then look at the current themes.

In the, in the tank, the market, before I return again to discuss more details or investment strategy and outlook for the tank insect. So turning to slide 4 and the Highlight page.

We said in early May the 1st quarter was toughest Freight markets. We have had in recent years, The Frayed to admit that factually to to has proven equally if not more challenging as anticipated recovering, free trade, did not materialize. Put simply during Q2, there was too much tonnage. Chasing too few available Cargoes.

Do the members of OPEC Plus have increased crude production to meet a growing crude demand recovery. However this has not been enough to gain Traction in terms of reducing the oversupply of tonnage in the vlcc but also in the suezmax spot Market, the result has seen a cue to delivering Freight rates to levels not seen in the last decade.

You don't have will nevertheless distribute. The 3 Cent dividend per share to reward. Patient shareholders.

Despite this current headwinds. There are some positive signals, both onshore inventory and offshore levels have been drawn back to pre covid levels.

Wells, OPEC Plus.

Signal output Rises 2 of 2 million dollar today between now and the end of the year.

We're finally the high scrap steel price. They've translated into some recycling in the last three months, especially in the vlcc segment where five vlcc who are demolished and recycle but also in the suezmax segment where three suezmax exited the world filled with that I will pass over towards see if you leave a logger to walk through the financial highlights. Leave it over to you.

Thank you. It has been a challenging quarter as your comments. Highlighted, your own s focus is to maintain our Capital strength, which we illustrate on Slide Five, looking back over. The previous cycle, on flight five. Our leverage has remained below our stated objective of 50% with our liquidity building during stronger, affreightments and 2020.

Open investment in new technology, which who will cover later, has increased leverage and reduced liquidity. But well within our self-imposed limits liquidity is now just over 900 million dollars with our dry docking program..60% complete at the halfway point of the year.

Here I will now pass on to Brian or head of investor relation to run through some Market slides.

It's thank you. We spent some time in particular from Iran exports, as you can see, from slide 6, looks will continue to rise throughout Q2. These are car, guys. Remember, which continues to be a drag on The Wider recovery and the tanker market and moving on to a more detailed look at recycling.

What is pleasing to report that the vlcc we had actually gone to start in Earnest and we seem 12 vlcc. He's exiting open 12 months to the end of July. But only for so is Max. I've also exited over the same period. This is behind where your analysts forecast, were expecting this number to be, and this is surprising given the very high steel prices. We've had throughout 20, 20.21,

What is very clear? Older tonnage, which is, it being resold into the second hand Market, rather than being recycled.

With some encouraging datapoints in our Market Day. Why has the freight pricing background remains? So challenging and we try to give some more insight on this in slide 8.

Line 8, selects three key markets for the vlcc in suezmax sector.

Firstly, the court five OPEC nations based in the Middle East. Secondly, the US Shale sector and lastly Russia. We look at these individually, we can see the production on the left hand side of the slide. You see on slide eight has looked pretty good and we've seen sustained rise in production since February.

How is it?

To the right hand side of the slide Layton's. I date picture is far more mixed exports as a percentage of production, have continued to fool with exports, in a range between 18 and 19 million barrels per day Traction in Freight rates, can only really gain once we see exports follow the same trajectory as production growth. This helps explain the short term picture. There are robust grounds for optimism beyond that. In the we we would expect the export pattern, So eventually followed from that of the

And the increases that we see on this encouraging thing, we look further in more detail on slide nine.

After some initial wrangling OPEC Plus in early, July, outline plans to steadily, increase production by 2 million barrels per day. Overall between August of this year and the end of 2021, as a previous slide indicated, production Rises. Do not always translate into barrel for Barrel increases in exports, but with global on Shore inventory levels back up below five year level averages, then this production should start to translate into higher levels of cargos available indeed.

Ratio is available vlcc to available car goes in early June according to Bloomberg data and has fallen. Since looking further out beyond the end of this year and into the medium term, six million barrels per day of a of additional barrels. We do believe will be required from the four key production areas to get back to pre Kobe levels of output. Remember 1 million barrels per day, roughly translates on an annualized basis to demand for 30 bills TCS overall this

Medium term, picture provides, plenty of scope for improvement and support for the tanker Market over the coming quarters.

Looking beyond that on slide 10.

We look at Ten Mile gross, which is forecast by clarksons. Almost 8 inches to abound further in 2021. And then again in 2022, as an Emerging Market nations, take up a baton of demand and consumption recovery slide..10 shows. Thank our Market is already just Itself by reducing capacity by slowing the speeds. That vessels are transporting cargos at partly as bunker possible. So risen, but also due to the lack of cargos.

Should this discipline thing maintained and tomorrow Christ materializing on his pattern in slide 10, then perhaps consumption grows of a hundred million barrels per day. That we last Saw into, stupor 2019 will not be required to return. The tanker Market to equilibrium, tanker, speeds and Freight rates of a very strong correlation, 62% 2016. So if we were to see the fleet speed up and increase the capacity, it would be in response to a higher level of cargos.

With that, I will now pass it back to choose. Okay, if you get a scoop to highlight our recent Investments for the future and I look for the outlook for the coming few quarters. He do back over to you.

Thanks Brian.

It's all volatize cyclical and normally season 20..20, 20.20 was an extraordinary, the are from many different angles and 2021 has so far. And unfortunately, met our expectations interpret for rate environment. Do you own a platform has been designed to cope with all kinds of markets and our Capital. Allocation approach is dynamic and moves in tune with the 60 kg of our markets. We believe that we need to have a strong balance sheet and a decent amount of liquidity.

Thank you, shipping.

It provides both strength, but also and maybe more importantly, optionality. During the difficult times of the cycle. Such balance sheet is often built during the good times. But looking back over the lot, over the past 18 months. We've been active in, all facets of our Capital allocations as slide. Nine illustrate cash. Dividends has been strong during the upper part of the cycle. With nearly 350 million return, to our shoulders, and nearly hundred twenty million. We turned by a share BuyBacks.

This is the most Progressive return amongst our peer group on a comparable per capita basis yet, over the same period of time. The balance sheet has retained its strength with leverage below, Target threshold, and a third of our funding, no sustainability linked.

The past two quarters. We've been actively securing future Investments to ensure the age of our fees, which is reduced with more modern less consuming assets, which will, therefore improve the earning potential in addition, those assets, provide a degree of flexibility when it comes to Future, prison propulsion and fuel Technologies, but you may wonder why now, and why ammonia and or LNG, so, let's move to slide 12.

We are first and foremost, the service provider and we will always look at what our clients want. Without any addition. Those ships are already the most economical tank is produced or ever produced, but they are also ready to be converted into either LNG or soon into ammonia field vessels and Angie reduces already a lot to CO2 emissions and is the technology that's available now, but it's still expensive. So we need customer support to justify this.

Ammonia is not ready. But the odds engine manufacturers. Classification societies are working, hard to develop this technology, which should be ready by 2025 for both new buildings and retrofits slide..11 shows that ammonia from tank to propel will reduce emissions between 93 and a hundred percent compared to today's bunker Fuel. And therefore, this is the technology, We Believe will be one of the winning fuse in the future.

Being involved in the development of those Technologies, which is unusual for a shipowner. Should provide your own app with a competitive technical. But also strategic advantage and we're not putting all of our eggs into one fuel basket. We don't believe that will be one out right with her, but we will remain flexible going for work. And these ships allows us to remain flexible turning to slide 13. So why invest now at this stage on the side

He strictly euronav investors on the counter cyclical.

Most of you seen 2014.2017. When we took transactions to expand our platform by 50%. In terms of vessel count, both times when Freight rates were at last making levels and consists consensus Outlook was very challenging for the upcoming qualities, over the past year, or so. We've taken delivery of food. You are cool vlcc isn't taken over contracts or field abandoned slot or even order a further three equal vlcc.

And five suezmax due to deliver you to delivery. Sorry, now, over the next two and a half years. So with the latest technology and the capability to add either LNG dual fuel or ammonia provided all piece of the ammonia puzzle fall into the right place.

This is why we signed a joint development program this GDP as we called, it has been signed with our technical partners and he'll die for the next three years. And this should assist the development of the technology itself. Ammonia dual-fuel vessels and all should be achieved within the capacity of our balance sheet leverage, remaining below threshold Target of 50% and supported by the actual or forward sale of over.

Then all the ships in the past 18 months, recycling hundred and fifty million Capital back into the latest technology. Why? Now? Firstly the slide on screen attempts to show the crowd at landscape. We see there's operators yard capacity to construct large. Thank you so much, as vlcc or suezmax is no logical largely constraint until around late 2024. Beginning 2025, even the search in container and

Dry bulk orders over the past six months, but also LNG tires. Secondly, operational regulation will start to buy from 2023 with the exi and carbon intensity regulations, making all the tonnage obsolete or far less preferred as they will hit the bottom 20% of emission League tables. Also. The reason you carbon trading scheme will add further pressure to reduce emissions and reward those with lower imitating, please.

Northeast commercial pressure, We Believe are already starting to grow as Banks investors. And other stakeholders are increasingly vocal and determined to see the abbreviation and emission reduction strategy reflected in affirmative action, being taken by ship orders.

Euronav is comfortable in position, we've taken so far and I'm sure there will be additional question in the Q&A is shortly. So, let's now move on to slide, 14, which is the final slide. This is the usual traffic light system. We have had for a number of years. As we said in our press release today. Q2 as been static, static quarter, following a depressed, you won the immediate part of cycle remains challenging and likely likely to stay. So until

We either see you.

Crude oil demand recovery or shopper reduction of the feet, which would require a decent amount of ships to be recycled. Nevertheless, the demand for oil should improve seasoning on average. Demand increased by 1.7 million, barrels between the summer and the winter of the northern hemisphere. So, as Brian said, the seasonal rate of demand coupled with reduced speed of the world, could already move the rates up by the end of the year of being in the next, on the supply side.

You will have noticed that we have downgrade the vessels Supply called as recycling has simply not occurred on the level. We would have expected given other supporting factors.

The other factors remain unchanged. That concludes. Our remarks. Thank you for your attention, and I'm no, please to pass it back to the operator for q and a session. Thank you.

Please press star. Then 2. We ask that you limit yourself to one question and one follow-up. The first question is from John Capel of evercore, please go ahead.

Thank you. Good afternoon.

Soon.

Hugo, first question for you, I think the timing of the next Evolution that you laid out makes a ton of sense and it relates to a source of funds, you know, if it feels like there's a, been, a disconnect between secondhand asset values of leases are quoted. Maybe there's just not a lot of activity and underlying rates and share prices. I know you've recycled sold disposed a fair amount of your older Fleet, but you still have a handful.

Over 10 years old. Are there any more plans to use this kind of recycling? So, to speak of selling older ships, and do a strong underlying SP Market to fund some more of your next stage of evolution, Fleet growth.

He's very think there's been a lot of exchange vessels in the very old categories. I 18.19, 20 years, and fortunately, we know why and where those vessels have gone. And, and mostly days for the illicit trade, which is at the heart of the problem that we have. And then on the new building or resale of contractor on there has been, also a fair amount of exchange. But in, in the sort of middle aged 10 years, the volume is rather thin.

In. Nevertheless, we looking at

Every opportunity we can find in the market and on the shoes match side. We do have some ladies that are hitting the sweet spot where they could be interest, being developed by other ship owners. Okay, great. Thank you. And Brian my follow-up for you page, 8. Really interesting. And I'm just wondering, you know, those three regions. You've highlighted here. The u.s. Inventory is are not going up. I'm assuming that a lot of the Middle Eastern countries, Saudi is

Especially are using some of their increased output for direct cooling generation during their summer months and I guess Russia is probably not. Maybe as transparent as some of the other Western countries. Do you feel like as it's out that continues to rise either? There's going to be a seasonal component of the Middle East, Texas, the summer or some, you know, something related to US exports where there's going to be this relief valve. Where the, where the production, automatically turns into export and tanker to

And even with potential catch up after lagging a little bit to the last few months. Yes, I think that's a very good point to Jonathan, the Middle East and we deliberately picked those those five middle-aged exporters as the core drivers and they've definitely been using that. It can increase production for their owners. You say domestic uses, but I think there's definitely some of the center or snap within the system. It would anticipate coming through at some point.

Point, obviously, with the sort of data for today from the I8 suggesting that July is sort of move backwards in terms of demand that it's going to be putting a little bit further out. But yes, that's definitely the the same we wanted to get across because I think there has been a disconnect and investors engagement we've had but we've all seen the production numbers but it's not been translated into increase cargos. And I think you're absolutely right that there is the will be a snap back at some point. Of course, you know, when that when that will happen, we would like to

Willie second half of this year into maybe intiki for but yeah I think you've explained it better than I can with a jobs just to illustrate that background, what we think, will change at some point. And of course it did. It is encouraging to have a class at least committing to have regular increases, you know, in those production numbers between now and the year end. Okay. Thank you, Brian. Thanks, you too.

Citigroup, please go ahead.

Ted.

That's a very good question is probably too early to tell, I mean, the vessels that we have booked right now have the capability of being converted into vessels that can burn energy and ammonia until we sort of decide that they should be converted, and that could be before. There are specific, deliveries. They will be Dean as conventional vessels. It will return, should be fairly the same, the amount of money that you have to invest in order to

The strix.

She is relatively conservative. We talkin about a million million and a half which anyway compared to what we did to go during aspects. I mean part of it would have been spent. Anyways, what do we do? Exactly their first and foremost, we're talking about reinforcement of the deck where the potential tankers that will hold, either the LNG, all the ammonia and

Different different wait. For those specific tanks will be located. The second part that we're looking at is the piping system. So that whenever we would decide to put those tanks on the deck, the piping system would already be there so that we don't have to open the ship like a can leading to the engine room. And then, of course, in parallel, there is quite a lot of development on the engine themselves.

And you may have noticed on my introductory remarks that in fact The Yards but but more specifically the engine manufacturers beat em ano be equal to E. Le are looking at development of new engines as well as retrofits and both Technologies should be ready at approximately the same time. So if you have an engine today, and it has the sort of minimum features to be converted to

Will be possible at a later stage. The amount of capital that you will need to to spend in order to do those conversion is still unknown. Of course, we know what it costs to do that on an energy vessel. And and there are a lot of similarities so it should be between 10 and 15 million at the beginning. And I think that we would only do that if we had a contract. And the reason why we believe that being an early adopter will provide a competitive Advantage is because

We have, we have a feeling that there will be a race at some point, but certainly, as of 2023 to reduce the emissions for our client. So, as I mentioned earlier, in the call, we are customer driven. So, whatever the customer wants. We should be able to produce, and that's exactly what we anticipate will happen on those vessels, or the Next Generation.

Okay. Okay. That's very helpful. I appreciate that color. And this is the follow-up. I want to come back to scrapping for a moment that it sort of slide that that's the downgrade on the red light, green light yellow light. That's why do you think that, you know, what do you need to see potentially change that either hit those numbers or maybe see acceleration in traffic?

You know, you can do it.

Well II wish I had a crystal ball or I wish someone would listen to my prayers. I think that we are all surprised at, you know, more than 50 ships. Basically, we should have been scrapped still trading and and we have explained the last school. So I'm not going to repeat what we said. It's a school that pretty much all of them have been identified in those illustrate the way to circumvent. The rules is quite astonishing, but it is what it is and I don't think that your honor.

Now, we can do anything about it. The way we look at the second half is the following. We believe that there is a certain capacity that can do these trades, and we are probably at the limit. So we don't see another 50 ships of that, same age profile going to do straight because they are not, they won't be necessary to transport the original Venezuelan Kudos. So we think that we are almost at the end of that.

Any ship that is facing a dry dock, any sheet that is not earning simply because they are put at the back of the cube and the user decides to decide what to do with the ship. It's likely to go to the scrap yard. So the second half will be a mix of sort of a natural scrap profile that we had predicted and should happen already, but we're not talking about the same shit you're talking about.

New ships arriving to the same age profile. And then of course, if there is a change in the Iranian sanctions imposed by the US that should open The Floodgate for ships to be recycled. And there we would be, we would be surprised if we wouldn't see a number of the ships that are two day trading not rushing into those recycling yards because the capacity there is constrained. And so we believe that that owners would be very, very quick to

Have the opportunity at the current scrap price, which are the highest that we've seen in more than 15 years.

Okay, that's great color. I appreciate it. Thanks for the time.

I'm

Or of HC Wainwright, please. Go ahead. Yeah, good afternoon. The you know in the fleet and how you feel about the Sleep going forward. As far as the until compliance, you mentioned that you need support to develop fuel compliant vessels. You have taken steps now to invest in the new generation vessels. How do you balance being too?

And you know, holding on to some of these older vessels that like you to be big cash generators. If we get an Up Cycle here in the next two to three years because I think we probably like you to have another down cycle before 2030. So just curious. How do you you know, balance that investment in the new ships to meet these goals and also not giving out the cash generation capability of you older ships.

When you look at what we have sold, I think that this was not a surprise to the market. I mean we're talking about forward Salem's in the form of ceylonese back with new purchase of the gation on some vessels and and they will be redirected to their owners when they reach 15 years of age. And when you look at the way your own a position itself as a quality operator, the ships are more than 15 years of age regardless of their emissions. I've always been trading in the in a different segment.

Point with different clients. And so that's not where we're position yourself. So generally speaking between 15 and 17 and 1/2, which is between two surveys. We are looking at selling the vessels. And as I said at the beginning, from time to time, we forward sail vessels. Because we believe there is a good opportunity to do that. As far as the new, the new buildings are concerned. It was a mixed bag of opportunistic, acquisition, you know that we have taken contract that where

Abandoned by some owners who couldn't fulfill their obligations. The same for some slots. And then as we were busy, contemplating the landscape, we thought that the fact that there are very very few slots available until end of 24, beginning of 25 and that we are more likely to see continues man from containers. LNG dry, bulkers meant that it was a little bit more opportunistic and then we add this layer of

Accessibility on the new technology so that we could convert them. So I guess what you have to look at is regardless of the emissions. What we have done should not be a surprise to many people maybe with the exception that euronav is not did not build a reputation for being busy at the yard. But we also need to be realistic in flexible in that approach. And then when you look only your purely at the emissions, we are recycling. All the tonnage against new autonomous.

Which is anyway outperforming from an admissions and therefore consumption perspective. So earning potential on the normal Market or on a market that is influenced by Omission is secured with the capability of doing, even more on the emission promise.

Okay, thank you and just continue to do that. And when you speak about, you know, another day before 2030. Yes, the market is cyclical and I guess that we have always had to balance. What do we get rid when the values are very high, but this is what we're eating. And so I don't think that this philosophy should change and it will be the same going forward.

All right. Thank you and my follow-up, please. You know, so, you know, you've invested quite a bit here in the last, you know, two years in in new vessels. Do you feel like over the next 2-3 years? So you need more support from the Trotters or the oil companies to build new vessels that comply with the new regulations. Or would you continue to do opportunistic purchases?

I think that everything we do need to be the Strategic opportunistic. I think we have done. What I would say is strategic in the sense that it's pleat rejuvenation. For the reason. I just explained. I mean just makes a lot of sense, especially from a value perspective. But also, as we said, I mean, modern vessel would consume 30 or 35% less than 11, 12 years old vessel if we do have support from our customers.

We will always be there to to render the service and we have mentioned in previous calls. We're not at all against llog. We just believe that. It's a, it's a technology that might be a little bit more risky. Given the amount of money that you have to invest the prom without having a contract. We participate to various tenders organized by shell in total. We felt that the return will not be enough for us to to golf to cover.

This is premium that we had to pay for the technology. There was also a lot of technical details that maybe you guys are not aware of, but the best was ordered by total compared to the ones order by shell. It's a different energy technology. It's a low pressure versus high pressure and has its pros and cons. So now, the market has stabilized the, the, the price of the new buildings going up with the price of the premium technology is going.

I'm down. So let's see what the customers need. But from what I read in the press or even in specialist price. It seems that a lot of the oil Majors. A lot of our customers are busy, scratching their head on how to meet those lower emission requirements. So, you know, they can always come to us or come to the market and we will always be there to analyze whether it's worth building a specific ships for what they want. Or whether we prefer to pass and contango.

Being independent.

Great. Thank you. Little girl.

Is from Randy Gibbons of Jeffries, please go ahead.

Red.

Yeah, it's a question that we must ask ourselves on the daily basis. But let me, let me start with the, I was here with the beginning. So when you are in a high rate environment, like we were in 2020, you have the choice of enjoying, say $100,000 a day versus chartering out at sixty thousand dollars a day. So you, you must make the decision of. Do I forgo earnings today in order to protect and you will remember that? You can only

Protect six months or maximum one year?

Or do I do, I indeed remain on the stock market? And you know, there's going to be sick of killing, you know, that it's going to be super rich at the high point and quite painful in the Leupold. And I just that, we've looked at many opportunities. We have taken a handful of Charter. You're absolutely correct. Most of them have been delivered. They were between six and nine months contract. And and so today, we are, we are left with only one.

Vlcc DC out and then five or six years backs. TCR right now, the the rate for TC are just too low. So they just guarantee you to make a loss and most of the time, the charters will ask for one or two years options. So you are at a level that is not, that is better than the spot rate. That's not difficult, but it's still not profitable. And on top of that, you're giving away a lot of optionality.

So we don't feel it is the right time now to do more on the TC front. As far as Todd time, Charter in is concerned, we've taken to suezmax. I believed was what four for five months ago. We are looking at into the market but it's true that what people ask is is different than what we want. And for some reason, we are not like the big traders who can insist on an optional teaching.

At when an owner TC out, is vessels to another owner, the conditions that it can upset. Accept are very different than when each others are two real client or to work real end user. And that may be because there is a relationship behind it or maybe because there are multiple PC in the portfolio that they are negotiating. So at the moment, quite frankly, there is not many opportunities on one side or the other. I TC. Yo, TC out, but we

TI to watch. What's the market very carefully?

And then I guess the last question for me, is it fair to assume the dividend will remain at around 3 cents, a share. Even with negative earnings, for sure. And 3Q, and possibly for Q or will the primary return of capital, b, share repurchases eventually.

Well, we have dedicated slide on that and obviously we've done dividends. We don't share buyback. We've done further Capital Investments and that's capital allocation. I think that it's

It's part of the strategy in. I explained that in the preliminary remarks that every part of the cycle. But also every source of management has on the future will have an influence on what we do. You know, we have a track record of what we've been listening 2005. So 17 years as far as your next concern, six years, as far as New York is concerned and I think people can

Themselves what we've done with the capital?

You know, I prefer to for instance buy back my shares hundred and eighteen Million worth of shares last year than just doing that right now. Why? Because once you put back the shares and there's more defense for the remaining shares. So I think that the order in which we did it was was good. If you ask me, if you ask us, maybe we should have done a little bit more share buyback last year and a little bit looks dividends.

Because because then it would have been even better for the current shoulders, but I I guess that you know little Capital allocation is what it is and I think that you have to entrust management to do the best they can with the with the capital.

Got it understood and it's the 3/10 dividend. Just is that a new minimum or how do you think about that? Is that a quarterly go quarter by quarter. It's not it's not a new minimum. So we had six sorry. We always have my own ways for six or seven years. We've had 12 cents per year. We were able to distribute dividends and now we are able to distribute for dividends with the same policy and going forward. We believe that it's it's very

Small amount of money and we will try to maintain for as long as we can God. Yeah, six. And semiannual for a while there and then you went quarterly. All right. Well, thanks so much.

You're welcome.

The next question is from Omar. Not te of Carson's. Please. Go ahead. Thank you Hugo. Just wanted to follow him. I know last year you were a bit more aggressive with the share BuyBacks taking advantage of this kind of stock price relative to NAB.

And now here you've actually got nav, that's probably a little bit more solidified just based off of Market activity. So just wanted to thank, you know, as you as you think about the this Market here over the next three to six months. Do you see yourself being more active, more aggressive on the BuyBacks or maybe just taking a step back and focusing on either liquidity? Bringing those dried stalks forward or thinking about the the future. Any updated talk, sir?

You know, II want to say, I don't really have the comments that I think we are opportunistic. Obviously, as I just mentioned, I mean, I prefer to do by back last year because this year, simply because you everybody benefits already last year, but also this year on that. And, and in the future, we don't really look at discount to nav, even though we are, we continue to be frustrated about what the share price is trading, because I don't believe that.

Back is a good way to close the gap.

It closes the Gap when you are busy doing it, but in the long term, it usually doesn't close the gap. And, and we've seen that. I mean, even spending a hundred twenty million. Yes, we had a much lower discount to a Navy. When we were doing the program. And the minute we started, we found ourselves getting a same discount or even bigger discount. I think that you're buying back your shares for the long term. Not for a discount to any V, which is fluctuating a

Owing to The Valleys of the vessels Etc. And the long term means that there are more dividends more earning per share for full shoulders that that continue to be shoulders of the company, you know, going forward. I cannot, I cannot tell you anything else. And what I just mentioned, we will continue to watch what we can do with the capital. We are generating is true. That we've been very busy. We've been very busy. This reading dividends. I'm back. So investing in quite a decent amount of money. I mean, it's

About a billion, of course, a lot of that will be leveled, but nevertheless almost a billion investment for the next two and a half years. So it's not insignificant and and we are happy about the three ways. We spend the the capital for shoulders as we believe they will create a lot of shareholder value at the time of doing that or in the in the future.

Thanksgiving that that's clear. I just wanted to. Yeah, maybe just a little bit more emphasis on that. It may be just as a follow-up for you. You go over for Brian, as you mentioned spot Market has recently and you mentioned the Middle East, having some kind of eased. But just wanted to get a sense, tonsure export car goes from what you're seeing on the Atlantic side, whether it's from the US or West Africa, any color you can give in

The house that vlcc market has developed here over the past three months, in comparison to the Middle East.

Ryan, do you want to do you want to go ahead with that? No, absolutely. I mean, it is a good question. We're seeing a little bit more increasingly seen in terms of us Imports, which is offset. As Jonathan Chappell said earlier with regard to some of the volatility resilience of the US exports that tended to sort of net off against each other. And I did mention in the, in the remarks that the, the excess level of of ships in the least, which is the what 4045 percent of

Vlcc has actually very very slightly improved in terms of that excess capacity, but it's still very much on a physical basis. I think, you know what we've seen from the Ia today is very reflective of the market over the last three months. In that there's they say, you know, June we had a nice surge in demand and increasing the amount of available Supply and therefore cargos. And in July is reverse back with obviously some of the variant Delta very soon in the restrictions that have come through there.

I think in a nutshell. Yes, we're seeing pockets of this growth, but it's

Sort of follow through and sustained. And, unfortunately, that that's been the holding pattern. We've we've been in there for a while, and we're going to fling continue to get to to, to adjust to that. Like you say, it is a malaise and it looks like it's going to believe this, but at least the rest of this quarter. But yeah. Pockets of growth, I think us Imports drawn, some encouraging signs, both the Middle East and from West Africa, but again that then it's been offset elsewhere. So we do need the, as you said earlier, we need the

A to be sustainable and also, to be more uniform across the various trading patterns.

Yeah, thanks Brian. Yeah, it seems fits and starts. Okay. Appreciate the color. I love, turn it over.

The next question is from Chris Webber research and advisory, please go ahead.

Ed, good afternoon. How are you?

Thanks. I am just wanted to ask about the optional third. Vlcc that you guys exercise back in July. How much is that for?

It was the same price as a matter of fact, leave him. Okay, so that couple with the three suezmax has five total, please about a new building program, almost 600 million dollars. Just wanted to get a sense of timing around casually. When will you guys have to pay for the best?

Delivery and also it sounded like earlier that they were all going to be financed by your balance sheet. But is there any consideration of taking on additional debt?

In 2022 to be delivered in 2023 and 30 times before. Usually it's the the financing ratio is 65% 6065 percent. But when you're talking about new buildings here to get 65 cents. We also looking at a ECA, a type of financing which one more time available for new buildings and not necessarily for secondhand perches and market. So that's a maybe another advantage.

Great. And maybe just for my follow-up. Just turning back to like 10. That line probably starts to boil steaming and its impact on Cosmo. All right, I guess I wanted to join the stand presumably. There's like four or I guess that. What speeds would it make sense for the Google TV box, full of steam and really trying to go down to like, half of this or are we near that level to try to get a sense?

How come?

Well, Chris, I mean, the the speeds are they've only been measured by clarksons. I think since 2010 on a monthly basis and these are the lowest Peak that we, we've seen those records were begun to seek real estate than we have seen a capacity response, but it's also just defined just knowing a light. On the fact that we do expect some real growth as most observers and clarksons do for 21. And then we expect, again, all the agencies are suggesting that tomorrow.

Both will then have another leg up during 22 which will be. As I said before the Baton being passed, really will 21 and 22 recovery being more of an oecd situation where those countries with high vaccination rates, and then hopefully giving way to to longer-term miles of the Emerging Markets coming through but just to try and get it and draw a picture of investors that, you know, we are crystal ball is as as fuzzy as anyone elses at the moment, but I think there's a very big belief amongst investors.

We need to get back to q 4 levels of consumption of people 2019 that is before we can see any traction on with the kind of point out that the fact that there are a lot of multiple factors impacting our Marketplace. And these are two variables will be very important when we start to see some tracks coming in Freight rates. So that's the reason for putting that there that we do see a bit of a two-stage recovery in terms of the ton-mile story. But also, you know, not to be too concerned. If capacity is going to come back a little bit because the speed, the flow

It will speed up as I said before since 2016, if you strip out some of the volatility of 2020. There's a 62 percent correlation between beat and raped and that makes perfect sense. If you think about it, they'll be the split, the fleet speeding up in response to that our program. So it's just trying to paint that picture of it. Be aware that it isn't just a simple calculation that we need to get consumption up to a certain level. There are multiple factors involved in.

In the type of Market, as always.

Great. Thanks. Brian for the color. Thanks for the time.

This concludes our question and answer session. I would like to turn the conference back over to Hugo. Just shoot for closing remark.

Thank you very much everybody to listen the second quarter earnings school and look forward to talk to you next time with hopefully a little bit more positive news. Thank you, bye-bye.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect.