Q3 2021 International Seaways Inc Earnings Call
Got it.
[music].
Welcome everyone to the international Seaways fourth quarter 2021 earnings Conference call. My name is Victoria and I will be.
Nature called today, if you'd like to ask a question during the presentation you might GSI by pressing star followed by one of your telephone Keypads I'll now hand over to James small General Counsel from International Seaways, Steve again, James. Please go ahead.
Yeah.
Thank you.
Good morning, everyone and welcome to International Seaways earnings release Conference call for the third quarter of 2021.
Before we begin I would like to start off by advising everyone with us on the call today are the following.
During this call management may make forward looking statements regarding the company or the industry in which it operates these statements may address without limitation the following topics.
Outlooks for the crude and product tanker markets changes in oil trading patterns.
Forecasts of World and regional economic activity and demand for and production of oil and other petroleum products.
The effects of the ongoing coronavirus pandemic.
The company's strategy.
The anticipated cost savings and other synergies and benefits from our merger with Diamond S shipping.
Any plans to issue dividends or prospects.
Purchases and sales of vessels constructed of Newbuild vessels and other investments.
Anticipated and recent financing transactions.
Expectations regarding revenues and expenses, including vessel charter hire and G&A expenses.
The estimated bookings and TCE rates in the fourth quarter of 2021 and 2022 four in other periods.
Estimated capital expenditures in the fourth quarter of 2021, and 2022 or another periods.
Projected scheduled dry dock and off hire days.
The company's consideration of strategic alternatives.
The company's ability to achieve its financing and other objectives.
Other economic political and regulatory developments around the world.
Any such forward looking statements take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends current conditions.
Future developments and other factors that management believes are appropriate to consider in the circumstances.
Forward looking statements are subject to risks uncertainties assumptions, many of which are beyond the companys control that could cause actual results to differ materially from those implied or expressed by the state.
Factors risks and uncertainties that could cause international Seaways actual results to differ from expectations include those described in our quarterly reports on forms 10-Q for the first second and third quarter of 2021.
Our 2020 annual report on Form 10-K, and in other filings that we have made or the future may make with the U S Securities and exchange question.
With that out of the way I would like to turn the call over to our President and Chief Executive Officer, Ms. Lois of Rocky Lewis.
Thank you very much James.
Good morning, everyone.
Thank you for joining international Seaways earnings call to discuss our third quarter results.
We have positioned <unk> to take best advantage.
Tanker market recuperates.
Right.
The fourth quarter global oil demand growing by 3 million barrels per day.
Worldwide oil inventory.
Kept destock.
So pre COVID-19 level.
And refinery margins have increased in both the east and the Western Hemisphere.
OPEC plus.
Continues to bring an additional 400000 barrels per day of oil supply.
Every month back onto the market.
If we turn to slide four of our deck.
We recap the.
The benefit we are realizing.
From a merger with Diamond ads.
We share our focus on fleet optimization.
And our success in returning capital to shareholders.
Starting with the first bullet.
The merger is both transformational and accretive to international Seaways.
We have nearly doubled our net asset value.
And Triple our fleet size.
D wave is now established as the largest U S listed diversified tanker company.
By bringing together these two leading USA tanker owners.
With a long term focus on customer relationship.
Both with deep cultures of achieving stringent safety standards.
And strong governance.
We are well on our way to delivering compelling strategic and financial benefits to all of our stakeholders.
We solidified our power alley, and the large crude sector with 28 combined.
Suezmax.
And we created a new power alley with over 50 product carriers.
Our increased scale.
Capability and operating leverage have.
Have significantly strengthened our ability to take advantage of the recovery in crude and product tanker demand for the benefit of shareholders.
In the month of October.
Even as we just are beginning.
The rate recovery in the tanker sector.
On vessel values, our fleet value rose.
By $50 million.
Equating to a $1 per share.
This just illustrates the upside potential.
Of our asset base.
Our integration is progressing as planned and the teams have come together well.
We remain on track for achieving annual cost synergies of $23 million and revenue synergies of $9 million.
We expect to achieve this within 2022 by sticking to our plan and our lean and scalable model.
Turning to the next bullet.
We have maintained a strong balance sheet.
Our diverse capital structure.
As a pillar of our success.
And our progress in this critical area.
P J.
Our loan to value is a solid 46%.
And our access to capital is strong.
We recently entered into a $375 million facility of long term financing at attractive terms.
And as we head into the emerging tanker market recovery.
Jeff will discuss our financing in more detail later on the call.
I would like to highlight that with our current total liquidity.
Roughly $300 million.
We are well positioned to operate effectively in all tanker markets.
And to take advantage of attractive opportunities as they arise.
And the next bullet.
We highlight our return of capital to shareholders.
This remains a central part of our disciplined approach to capital allocation.
Combining the $31 $5 million.
Or $1 12 per share special dividend that we paid in the third quarter as well as our regular quarterly dividend. We have now returned a total of $73 million to shareholders since 2020.
Our $50 million share repurchase authorization remains in place to further act opportunistically for shareholders.
Turning to our third quarter results.
Our net loss was $29 $4 million or <unk> 63 per share excluding merger related costs and gains on vessel sales.
And a sustained weak rate environment during the quarter.
We generated an adjusted EBITDA of $8 million.
At quarter's end we.
We had $133 million in cash and $173 million in total liquidity.
And as I noted earlier.
Current liquidity is approximately $300 million.
Moving to our final bullet.
We outline our ongoing fleet optimization program.
Which is focused on monetizing older noncore ship.
Year to date, we have sold or agreed to sell 14 ships with an average age of 17 years.
At attractive prices, reflecting the higher steel.
I'll use that underlie ship values today.
In addition to generating expected net proceeds of $83 million.
After repayment of $57 million of debt.
We will also preserve approximately $12 million.
Of cash.
<unk> on Drydocking and ballast water treatment system installations that will now be avoided.
The ships, we have sold for recycling.
We sold in compliance with the Hong Kong Convention.
Combined with enhancing our balance sheet. The additional liquidity provides further capital allocation flexibility for international Seaways.
Details on the sales may be found in the appendix.
Turning to slide five.
We update the oil supply and demand balance.
Oil production continues to increase.
U S hurricane related shutdowns.
Have recovered and come back online.
And OPEC plus.
Is gradually and systematically ramping up their output.
With seven 3 billion vaccination administered globally up from just 4 billion a quarter ago.
We are seeing stronger economic growth.
Resuming in the world.
And third quarter oil demand has improved.
To an estimated $97 8 million barrels per day.
This is up from $95 2 million barrels per day in the second quarter, and it's almost 6 million barrels per day.
Up year over year.
Of much needed demand recovery.
The IEA has upwardly revised its 2022 expectation.
Oil demand.
They now forecast and increased demand of three 3 million barrels per day in 2022 over 2021.
And the chart on the right hand side of the slide.
Consistent with the recovery in demand oil inventories have rapidly declined in the world and are now below the $2 16 to 2020 averages.
The stock draws are needed to set the stage for the tanker market recovery.
And our very encouraging markers.
Combined with the OPEC plus relaxing output cuts.
And each month the surge in demand for oil as global economies reopen and start to grow.
Are travel rebounds and.
In vaccinations are administered globally, we are optimistic that all of these signals together.
Our strengthening for our rate environment.
On slide nine.
We look at ship supply.
The overall tanker order book continues to be low.
We take our supply curves.
Projecting fleet declined in the medium term.
Shown in the top right chart.
Elevated.
No there've been very few new buildings placed and no new buildings on the VLCC front since June.
Ordering has been tempered by the combined uncertainty around propulsion ship type.
Higher steel input costs and increased new building prices.
Recycling has the potential to limit fleet growth based on the aging VLCC fleet.
And we have now seen 14 vessels.
Have gone to the recycling market on the VLCC fleet. So we started the year very low and the pace has picked up in the last couple of months.
17% of the existing VLCC fleet is now at least 17, and a half years old and 8%.
Is at least 20 years old.
In contrast, this to the nine 5% VLCC order book.
As ships age and reach their ballast water treatment system deadlines.
Stanfill capital investment is required to keep them trading.
Based on these dynamics <unk>.
Recycling activity has been building in the market.
Particularly given the.
The current low spot rate environment.
And the record steel prices.
I now want to turn the call over to Jeff.
To give us our financial review.
Jeff.
Thanks, Louis and good morning, everyone.
Let's move directly to reviewing the third quarter results in more detail.
Before turning to the slide let me just summarize our consolidated results.
Third quarter, we had adjusted EBITDA of $8 million net loss for the third quarter was $68 million or $1 44 per diluted share compared to net income of $14 million or 50 cents per diluted share in the third quarter of 2020.
When excluding the impact of the disposal of vessels, including impairments and merger related charges net loss was $29 million or <unk> 63 per diluted share.
Now if you could turn to slide eight.
This slide summarizes the results of our business segments for Q3 2021 versus to Q3 2020 at the top of the page and on our last 12 months' basis on the bottom.
The decrease in Q3 in last 12 months revenue and EBITDA, primarily results from the impact of lower average blended rates in both the crude oil.
Product sectors.
Now turning to slide nine we provide a third quarter review.
In the fourth quarter 2021 earnings update.
If I look at results in Q4, thus far.
We booked 59% of our available Q4 spot days for Vlccs.
An average of approximately $16100 per day.
58% of available Suezmax spot days at an average of $13900 per day.
<unk>, 47% of our available Aframax LR two spot days at an average of 11100 per day.
<unk>, 45% of our available Panamax spot days at an average of approximately $16800 per day.
Okay.
On the product side, we booked 46% of our fourth quarter MLR spot days at an average of approximately $9400 per day, and 42% of our handy sized spot days at 7300 per day.
These fourth quarter rates are encouraging and consistent with our view of market fundamentals as we've seen a rebound in almost every asset class since the latter part of Q3.
Now if you turn to slide 10.
The estimated cash cost TCE breakeven for the forward 12 months beginning in October 2021.
Later.
On this slide.
International Seaways overall breakeven rate is estimated to be $18100 per day over the next 12 months.
As always these rates are the all in daily rates, our owned vessels must earn to carry to cover vessel operating costs dry dock.
<unk> costs cash G&A expense.
Debt service costs, which means scheduled principal amortization as well as interest expense.
On this slide we've also shown breakeven, which exclude principal amortization in this case the cash breakeven for the next 12 months is estimated to be $12200 per day.
At this time as I normally do I would like to reaffirm our cost guidance for the year for modeling purposes.
For the fourth quarter, we expect regular daily Opex, which includes all running costs insurance measure these and other similar related expenses for our various classes to be as.
Carlos.
For Vlccs $8800 per day for Suezmax 7600 per day for Aframax 8200, Panamax 7900 <unk>.
<unk> 7200 <unk>.
<unk> $7400 per day.
For details on projected Drydock capex and off hire days by quarter, you can refer to slide 17 in the appendix for an update.
Continuing with cost guidance fourth quarter cash interest expense is expected to be about $12 million per quarter.
Cash G&A is expected to be about $9 million.
As previously stated full cost synergies are expected to be achieved in 2022.
And finally, we expect about $6 million in the fourth quarter equity income from episode, JV and $29 million for quarterly depreciation and amortization.
Now if we could turn to slide 11 for our cash bridge.
Moving from left to right, we began the third quarter with total cash and liquidity of $174 million.
During the quarter, our adjusted EBITDA was $8 million.
Equity income from JV.
<unk> cash by $6 million in cash distributions from <unk> were $3 million.
From the episode JV, we expanded $15 million on dry docking and Capex at.
$14 million on the second installment of our as part of our agreement to build three dual fuel LNG vlccs.
Next we acquired $44 million in cash related to the Diamond S shipping transaction net of merger and integration related costs.
We received $62 million of proceeds from vessel sales.
Cash interest and scheduled principal payments on our debt with $56 million.
We also gained $20 million from the issuance of the credit facility and finally, taking into account the $31 5 million.
Dollar special dividend issued in July prior to the emerging merger and a $3 million regular quarterly dividend in September.
As well as the negative effect of working capital and other charges in the quarter of $13 million. The net result was we ended the quarter with approximately $133 million of cash and a $40 million undrawn revolver, yielding total liquidity of $173 million.
As noted as of today total liquidity stands at approximately $300 million.
Now turning to slide 12.
I'd like to briefly talk about our balance sheet.
As of September 30, we had $2 $4 billion of assets.
Which is reflective of the recent merger. This compares to $1 $5 billion of assets as of June 30.
As of the end of the quarter, we had $888 million of long term debt.
As you can see on the bottom of the slide our net debt to total capital at the close of the quarter was 45%.
While our net loan to value.
<unk> was 45, 7%.
Yeah.
Turning to slide 13.
The pro forma combined company debt as of November accounting for the merger and also recent financing activities.
As we announced in October.
We recently entered into lease financing arrangements with ocean yield assay or.
For the six Vlccs previously collateralized, our cynosure credit facility.
The net financing amount.
$375 million represents 90% of the six Vlccs fair market value.
The proceeds of this refinancing were used to prepay the $228 million outstanding loan balances under the cynosure facility and therefore increased our overall liquidity by approximately $150 million.
I'd like to take this opportunity to say that we appreciate the strong report support we've received from Cynosure export import bank of China Bank of China, and Citibank, who originally extended the project construction loans.
That we assumed in 2018, when we acquired these vessels.
However, we are very pleased to enter into this attractively priced long term debt facility to further diversify our capital structure, the terms and harmonize well with those in our other corporate loans, while also unlocking additional liquidity.
As you can see our total debt balance pro forma for our two most recent financings is approximately $1 two 4 billion with $40 million currently undrawn on an over all $225 million of revolving capacity.
We expect to utilize some of the proceeds of the ocean yield financing to pay down revolver lowering interest while still maintaining higher liquidity.
As we continue to maintain a healthy balance sheet, our debt reflects a highly competitive cost of capital.
Long term maturity profile with the vast majority of debt due in 2024 or later.
That concludes my remarks, and I'd like to turn the call back to lowest for her closing comments Lewis.
Thanks, a lot Jeff.
The steps, we've taken to enhance our scale our capabilities.
And our operating leverage have put us in a favorable position to unlock significant value for shareholders.
We will take advantage of the tanker market recovery that is underway.
The completion of our transformational and accretive merger.
Is double our market cap.
Tripled our fleet size.
And significantly strengthened our earnings power.
Importantly, we have solidified our power alley in large crude and we created one in the product sector.
During the quarter.
In addition to concluding our merger.
We executed on Cree on key strategic priorities.
Maintaining significant balance sheet strength during this downturn.
And we kept optimizing our fleet, which we will continue to do.
As we disposed of ship.
That were on average 17 years old.
At a time in the cycle, where secondhand values were buoyed by underlying steel prices.
We distribute at $38 million in dividends to shareholders during the third quarter. This included.
The $1 12 per share special dividend as well as our regular quarterly dividend.
This increased our total returns to shareholders.
Since 2000 $20 million to $73 million.
I want to pause for a minute as I do our conclusion and just acknowledged the silent and steady reliable seafarers at international seafarers.
Were particularly proud to share that we reached the milestone.
Having 70% of our seafarers.
Both at home and.
On board.
Of 2500 strong vaccinated.
This is a number that we're working to increase every day.
As we enter the fourth quarter.
Our prospects remain strong.
We're encouraged by our fourth quarter bookings to date would show improvement over the third quarter.
We have significant liquidity.
Of approximately $300 million and a high.
Quality sleep.
Our product and crude tankers.
And we are on track to a tree to achieve.
The synergies from our recent merger.
That concludes my formal comments and wed like to turn it over to the operator to take questions.
Thank you we will now start our Q&A session, if you'd like to ask a question. Please press star followed by one on your telephone keypad now.
To withdraw your question. Please press Star Pizza shows the one prepared to ask your question. Your telephone is on mute locally.
Our first question comes from Randy given just from Jefferies. Randy. Please go ahead. Your line is open.
Howdy Louisan, Jeff How's it going.
Very good Randy how are you today.
Good good nice to see the quarter to date rate guidance at better than expected levels. So clearly the market is improving here, but.
But separate from that your balance sheet, obviously in great shape keeps getting better I guess, what is the plan for some of the incremental liquidity from these recent sale and leaseback and the vessel sales I know, Jeff you mentioned debt repayments kind of going forward is there a specific leverage ratio that you were targeting.
Jeff Why don't you go high rent there.
Sure. Thanks Lauren.
Yes, Randy.
Look I think it's part of a big picture here.
That we post the Diamond S merger.
We have the benefits of scale in this regard are that we have lots of opportunities to do with alcohol balance sheet optimization.
Fleet optimization, but we're also doing balance sheet optimization.
That's a different.
<unk> related to different assets different loans to value.
Increasing liquidity as you mentioned.
So I think it caught us partway through and stay tuned theres more to come. It's just really excited frankly to have had the opportunity to use is sort of almost like a financial whiteboard.
And start to optimize the balance sheet in terms of the last part of your question.
Robert and I, both mentioned that we're down to the mid Forty's in net.
Net loan to value, that's we feel really good about that.
After having completed.
Our merger they doubled the size of our fleet in deadweight tons. So that's naturally going to work down to below 40, where it was before.
In the course of natural amortization and.
Capital allocation that we will do so.
I think we're in a good spot, but we'll probably look to the lowering the leverage a bit from here just to get into that below 40 area, where we were pre merger.
Okay, Alright, thanks, guys.
And then you mentioned just now fleet optimization and you've certainly done the right things to take advantage of the current disconnect between high asset values and low rates right selling some of your older vessels chartering in some vessels.
So with that are there still maybe additional sales candidates remaining in the fleet are you kind of happy with your current ownership there and is there another specific asset class you'd like to maybe gain some operating exposure through additional time charter ins.
Yeah, Okay, Randy So you know what.
You'll notice is.
Where were you chartered in and where we have recycled chip museum that panamax.
So the vessels that we recycled.
You know really performed extremely well and we're actually approaching 20 years of age and we in chartered in that space, where we want to make sure that we have enough commercial presence there to really take advantage of that niche where we earn a premium.
And then.
We constantly look at the entire fleet.
What we have coming up and I think one of the things that that's been really good I noted in my comments that.
Put in the month of October you know you saw asset values start to pick up a little bit.
An increase and that's a very good position to just continue looking at the fleet all the time and making those decisions on.
Pruning and then still looking opportunistically in the market.
Four potential in charters, so that we're set up really well for the recovery.
Got it makes sense.
Looking forward to seeing the continued <unk>.
Element of the new and improved Imus W. So thanks again.
Thank you Randy.
Hi.
Yeah.
Thank you Randy our next question comes from them on the credit <unk> from Clarksons <unk> Securities. Please go ahead. Your line is open.
Hi, Thank you hi lowest Jonathan.
Geoff and David.
How are you Omar.
Hi, I'm good I'm juggling juggling, a few calls so I apologize.
Okay.
If I ask a question that's been you addressed already but I did want to ask Lois I did hear you discussing just now the panamaxes.
Yes, and in regards to that niche trade.
Now you start you are selling the older vessels, replacing them with the in charters is that is that your thought about it.
Your thoughts going forward over the long term is to service that trade with charter ends or do you see yourself investing.
And owning the asset outright.
Hum.
For that area.
You know we're opportunistic a couple of years ago, we picked up.
And individual baffled Maguire, <unk>, which added very nicely into that fleet. In this case, we had an opportunity to pull in a couple of charters. So we'll look opportunistically Omar we're not wedded to one particular methodology and we like to be sure that we have enough presence there to defend.
Defend what we think is a great niche trade.
Hello.
Sorry.
Any audience.
IRA has dropped his line.
Oh, Okay. Okay very good we can always come back to them.
Now Pablo when he comes back with my connect him in the Meanwhile, we're going to move on to our next question from <unk> from H C Y loss right.
Please go ahead.
Yes, good morning lowest on Jeff.
Just.
Question on <unk>.
The U S exports.
If you're seeing any changes there.
There is some estimate for next year.
Oil prices that seven year high sub CNS Mets increasing.
800000 barrels for U S production next year, and I guess, just as a matter of time maybe.
Until we see that materializing more exports, but can you have a presence there and can you maybe talk a little bit, but what youre seeing there as of late and if you see any indications that thanks.
Exports are picking up.
No great question, we were stabilizing rate in crude exports out of the U S Gulf somewhere around 3 million barrels a day, but for sure as rigs get that added back in the U S. Gulf that I think shale producers hedge their books forward.
The prospects for increased production in 2022 are there.
Projecting to be over 12 million barrels per day in 2022, which is ideal for U S crude production.
<unk> lighting unit is quite busy right now and.
We look at them as something of a leading indicator.
And we also understand some of that offshore production that had been offline due to Ida has been brought back online so.
I think that the formal numbers from the EIA has steadied out around 3 million barrels a day, but we look for that too.
To increase.
Going forward here.
Okay.
No discussions yet on contract for next year.
I guess, that's typically a spot trade.
Oh, yes, yes.
Absolutely that's typically a spot trade and.
You'll see the lifting.
Very.
We'd like to see more of the long be moved out of the U S Gulf going east.
Right got it. Thank you and just another question on your MLR.
I know youre dealing now with.
Completing the integration.
Ration of the Diamond fleet most of the ships are in the Orient pool can you comment a little bit on the performance in the quarter. If there were any one off items the performance of the shifts.
Nor oriented pool versus the ships that were not.
Yes, so for sure the third quarter or is the transition quarter for us and as soon as we concluded the merger.
The two things that we did from a commercial perspective, what we did.
In immediately and we worked in close collaboration.
With the former Diamond staff to move the Suezmax it.
Into 10 field and I think that those baffled did quite well coming in at 10 $10700 per day for.
For the quarter and on the MRC. We are the vessels that we moved and we've had you know we're ahead of schedule by three months by a quarter on the technical transfers from capital over to our providers.
And on that front the vessels that we moved out of capital we put some of those with new Oriental we put some of those with CPA, which is our product carrier pool with ultra gas.
And you.
Coming in at $10000 per day for the quarter.
And even the 9400 looking forward into the fourth quarter, we feel that both of those pools are performing up to our expectations.
Okay. Thank you that's all I had.
Hum.
Great. Thank you guys.
We will now move on to Liam Burke from B Riley financial Ma'am. Please go ahead. Your line is open.
Thank you and good morning, Louis Good morning, Jeff.
Good morning Ali.
Lewis.
The OPEC production estimates are increasing and I know there has been a capacity overcapacity on the VLCC is due to lower production.
With new production numbers do you see faster absorption of existing VLCC capacity.
Yeah.
It <unk>.
Clearly by I mean, they're better than the rates being booked at <unk>.
<unk> in the fourth quarter, but thats clearly.
Still quite anemic.
When you look at things, but you see that there.
The higher cargo count.
Not only out of the middle Middle East, but.
Really worldwide and that's what we needed to see.
Behind the scenes you guys when I mentioned in the comments that you do.
Year over year today, we have 6 million barrels per day higher demand than we did a year ago. I mean, this is what we need to see for us to get to the tipping point of where we go into that higher utilization rate and we really see where we get all of that of your base to build upon.
On the entire fleet, and particularly I think the base because.
In in October.
The Chinese really are imported.
Not even 9 million barrels a day had an eight in front of it. So we like the least amount that they have in several months.
Now we know that demand is increasing and that inventories have been pulled down so at some point that will shift and we will see those rates start to go up.
Fair enough and staying with the Vlccs.
You've got the two new builds with the existing contracts.
Is there any possibility that you'd consider doing more of those types of deals.
Yes, so it's three vlccs that were building at <unk> with the dual fuel LNG.
Capability.
And absolutely we would look together.
With customers I think that's part of how.
Tanker owners, we will look to be successful going forward the work in collaboration with customers to build on it.
And ideally you know when you have a contract and you work closely with the customer that really gives you enough confidence to be able to do that.
Great. Thank you Ross.
Thank you.
Thank you Liam we will now move on to Ben Nolan from Stifel. Please go ahead.
Hi, guys. Good morning. Thank you for that I think today my name is Pamela Boules from Stifel asking question on behalf of Ben Nolan.
So my first question relates to the sale leaseback transaction and their relation to liquidity.
You guys talked about how the transaction has had a significant improvement on liquidity.
Clearly this flexibility can be used in a number of different ways, but should we see.
Think of this for now it's just a defensive move to protect against the chance of a softer longer market or just being opportunistic on capital availability.
Yeah.
Jeff why don't you jump in there.
Yeah, Thank you and welcome.
To Seaways call.
Absolutely the latter opportunistic.
<unk> made some comments earlier on the call and I would just underscore that bet.
One of the benefits of the Diamond S merger.
In terms of the scale and provide seaways is the opportunity to be opportunistic so I hate to be without it there, but the opportunity to look at.
Whats really attractive financing so we're very selective when we look at our.
Financings that are structured as leases, but this one ill take the boxes for us in terms of the long term.
<unk> price financing high loan to value.
Covenants that are completely harmonized with the rest of the debt in our capital structure.
And.
Furthering the theme we've been on which is diversifying our capital sources is really important so for us that's yeah, yeah, and it is very opportunistic and what we're going to do in the short term is.
Is use that excess liquidity to pay down revolvers and save interest expense. So.
We've got a good use of proceeds reducing interest costs, and increasing EPS and increasing optionality for capital allocation going forward.
That answers your question.
Yes. Thank you.
Uh huh.
So I wanted to ask about the assay. So is there any update on how you guys are thinking about the long term strategic fit of the two asset sales in the current operating fleet.
We continue to have the same.
Our outlook on our episodes, where we're very happy with the fixed income they provide and as of the third quarter of 2022.
We'll be mortgage free and international Seaways will receive.
$21 million.
Free cash flow through.
That joint venture. However, we do continue to look at.
Monetizing the assets with our partner.
Should we find someone who we feel so values that appropriately.
Okay.
Awesome. Thank you guys again.
Thank you.
Thank you.
Thank you very much.
We currently have no further questions I will now pass over to Lois that Bruski for final remarks.
So thank you everyone for joining international Seaways today.
And we look forward to the tanker market recovery as we get deeper into the fourth quarter.
Thank you very much.
Thank you everybody you may now disconnect your lines.
Okay.
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