Q2 2022 Dorian LPG Ltd Earnings Call
Greetings and welcome to the Dorian LPG second quarter 2022 earnings Conference call. At this time, all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
As a reminder, this conference is being recorded. Additionally, a live audio webcast of today's conference call is available on Dorian Lpg's website, which is www dot Dorian LPG Dot com I would now like to turn the conference over to Ted Young Chief Financial Officer. Thank you. Mr. Young. Please go ahead.
Thank you Daryl and good morning, everyone. Thank you all for joining us for our second quarter 2022 results Conference call with me today are John Hows, It, but terrorists chairman president and CEO of Dorian LPG limited.
John look chorus, Chief Executive Officer of Dorian LPG, USA, and Tim handful Chief Commercial officer as a reminder, this conference call webcast and a replay of this call will be available through November 10, 2021.
Many of our remarks today contain forward looking statements based on current expectations. These statements may often be identified with words, such as expect anticipate believe or similar indications of future expectations.
Although we believe that such forward looking statements are reasonable we cannot assure you that any forward looking statements will prove to be correct. These forward looking statements are subject to known and unknown risks and uncertainties and other factors as well as general economic conditions.
Should one or more of these risks or uncertainties materialize or should underlying assumptions or estimates prove to be incorrect. Actual results may vary materially from those we express today. Additionally, let me refer you to our unaudited results for the period ended September 30, 'twenty 'twenty. One they were filed this morning on Form 10-Q.
In addition, please refer to our previous filings on form 10, and Form 10-K, where you'll find risk factors that could cause actual results to differ materially from those forward looking statements.
Finally for our discussion this morning of our second quarter results. You May also find it useful to refer to the investor highlight slides posted this morning on our website both under the recent news section on the homepage and under the news and media tab, which can also be located on our homepage www Dot Dorian LPG dot com.
With that I'll turn over the call to John how did terrorists.
Okay.
Yeah.
Okay.
Thanks, Tim.
Yep Yep.
Yeah.
Uh huh.
Okay.
Good morning, or good afternoon, as the case may be.
Uh Huh, John and I are speaking from Stanford and Tim Hansen, calling in from Copenhagen. Thank you for joining us to discuss our second quarter 2022 financial and operating results.
We now have 62% of our seafarers fully vaccinated, 27%.
Or 236 out of 889 were vaccinated at U S ports.
The pandemic has brought our teams closer and coordinating efficient and safe crude changes and is also enabling us to engage and integrate our seafarers and to our processes of fuel and emissions savings.
Our seafarers will be our most valuable partners and their continuing effort to decarbonize.
Our fleet performance and technical teams are assessing emissions saving devices, which potentially will reduce consumption of our eco fleet.
Since January of 'twenty 'twenty, our efforts to reduce emissions and resulted in fuel savings of over two and a half million dollars.
We were able to achieve solid market rates this quarter by optimizing our positioning and timing.
Ton mile demand increase but bunker prices have also risen alongside crude oil prices.
The Baltic index averaged about $42 for the period July 1st of September 30th down roughly $10 from the previous three month average.
Yeah.
At 50, 160, Baltic average for the quarter July to September the T. C equivalent was about $8000 higher than at yesterday's 56 dollar pool.
North American exports continued to rebuild after reaching low levels last fall due to COVID-19 delays.
Middle East exports are also recovering from their four week moving average.
Is it right.
Past 700000 last week.
Actually 750000 in mid October It was 700000 at that last week of September.
And that's our highest excellent number from the region since last February.
The arbitrage between Mont Belvieu and the far East index price for L. P. G has widened in recent weeks.
The Baltic V. L. D. C index is trading at about 56 currently up from 45 at the end of September and 37 in mid September we have a constructive view of the winter market.
On the supply side of the market U S. NGL production is a resilient. Despite the short term impacts from Hurricanes in late August and early September.
We expect exports from both the U S or in the middle East to increase in the winter months.
OPEC plus continue to implement production cut reversals and as winter demand returns.
Yeah.
With new building deliveries limited to seven between November and February and can can now congestion increasing the vessel supply demand balance looks favorable.
Given the 100 plus differential between H S F O and L. S. F O R 12, scrubber vessels continue to justify our investment.
The H F O two L S F O spread as.
Has maintained a quarterly average spread above a $100 per ton for all of 2021 which is nearly double the average spread we saw in the second half with money 'twenty when it was $54 a ton.
We took the opportunity to optimize our fleet by selling the captain Marcos I know for a firm price.
Given the demand for vessels of this type and a desire to improve our debt cost we have exercised the repurchase option on our other two captains, which has the dual benefit of paying off our most expensive debt and giving us full flexibility with respect to these vessels.
The decision to free up these ships isn't not in any way a deviation from our capital allocation focus on returning capital to shareholders where possible.
I'll now pass over the line to attempt to further brief you on our.
Commercial results.
Yeah.
Thank you John.
Third quarter 'twenty, one continued many of the trends that we saw on the previous call.
North American on the dogs, and demonstrate robustness Asian demands or Asian import demand grew in crude oil prices continued to climb with the average Brent crude oil price.
At about 73 on a dollar a barrel in Q3 of 'twenty, one global seaborne LPG was marginally up compared to Q2, it's when they want them.
750000 tons off the same periods in 2020, and North American exports was slightly down in the third quarter compared to the second quarter, but the increase in middle East volumes.
The low exports from.
North America.
North American exports were hampered by the production difficulties emerging after Aragon Ida.
Production was shut down at the end of all of course aside from the storm related decline in production North American LNG, NGL production and thereby the LPG export projects at the levels seen in the Covid prior to.
The increasing export volumes from the middle East come on the backs of the reversal of production cuts agreed by the OPEC plus countries commencing from August.
This is not to say all export nations from the Middle East increased exports.
<unk> seen from Saudi Arabia and Iran.
Set by low exports from the United Arab Emirates and Kuwait.
Import volumes into India increased by about 1 billion tons compared to the second quarter imports into China, South Korea, Japan declined.
Okay.
Despite the new P D H plan commencing operations in China during the first quarter 'twenty, one run rates for progressive dropping during the quarter.
40 margins due to rising feedstock has been suggested that's the main course September.
Analysts power costs and energy control restaurants in China.
Yes.
It has been hindered us course September.
September fines and run rates. Although this cannot currently be estimated how severe damage control measure would be Q4 'twenty one.
So cost of P H margins remain positive.
The programs are not spreads reversed in Q3, 'twenty, one would not becoming the preferred feedstock for steam crackers in Asia, providing some explanation for the declining <unk> in South Korea and Japan.
Whereas the global.
Seaborne volumes were slightly up off the prior quarter.
She supply outpaced demand for the third quarter and freight markets were down quarter on quarter.
The rise in bunker prices prices also negatively impacted the time charter equivalent.
Earnings.
Could you one indication.
Margaret for the Middle East to Asia average about 40 to.
$42 per ton during the third quarter compared to about 53 enjoying thought up in China during the second quarter.
The P. P. G three index, which indicates the market rate for U S Gulf to Asia average about.
The $88 per tons during the third quarter compared to 87 or $2 per ton during the second quarter.
In the east of Suez market, there was considerably basketball what hanging through July.
Yeah.
After that he or she has kept relaxation on strong markets and make sure they're discharged in the far east.
Yeah.
In the June July is the only supplier vessels coincided with the low export volumes from the Middle East in June and July.
Crews.
At the end of July and thereafter remains largely stable. Although the index was under pressure. There was several Congress from Australia, West Africa, and barges to India that was concluded premier's.
The <unk> three.
Which is the U S called too far East Asia.
Index, followed the bounds on trends that you won a G India or Asia Air Route how long it remains.
However, the beauty of G. III remains a premium to the V. A P T y.
It can also be noted that while the index has dropped in <unk>.
One picture was reported a slower $73.
She burrowed very few fixed social scheme concluded at the low end once the boardroom of demography was found the rebound considerably in the same week.
Dimension picture 71 or $73.
It was reported a fixture of $85 a tonne.
<unk>.
The development of the E rate mortgage you mentioned three.
Demonstrated quite stock how important buying prizes in the far east at all.
Most focus with maybe some rise in Mont belvieu prices and its negative impact on the arbitrage. However, when the far East index rose on the back of dramatic crude oil price increases in the mid of September the arbitrage open quickly to shipping to facilitate shrimp tacos.
Panama Canal congestion dropped during August and September as new Panamax container ships were delayed from savings to the Panama. After COVID-19 outbreaks in Shanghai and Ningbo in July.
They were prevented from depart introduce turbos, while this would have facilitated the transpacific.
Trade and rituals yeah, she used to this agent.
The rising crude oil prices therefore are supported.
Positive Julie during Q3 F. 'twenty, one by widening the arbitrage the same price increase their same price increase sorry didn't hardly at all survives the bunker.
<unk> expenditures by about 70% and thoughts.
So relative to Milwaukee TCE earnings.
During Q2 of 'twenty, one the average cost per ton of every dose of a few large what's about $503 per metric ton in Q3 it averages.
There's about $536 per ton.
The negative impact on earnings from the rise in Congress. They always just several positives for the remainder of 'twenty to 'twenty one.
LPG demand has been robust during the third quarter, despite its challenges and no obvious.
The chairman says to the demands are reported Furthermore, North American productions.
Yes remained strong and middle East exports are forecast to grow auto injectors.
Plus production costs.
Lastly, whereas Panama.
Kind of all congestion furlough during the third quarter following a significant hold all container vessels in the Chinese ports just mentioned.
Congestion is now increasing adding to the utilization.
Got it.
Pete.
Increasing congestion in the new Panama locks adds to planning complexities and cost to the supply chain and this whole concept to continue.
Using this strategy three dual jewel of Panamax.
She has been contracted on long.
Term time charters at attractive rates with purchase options for delivering in 'twenty to 'twenty three.
This is from rate.
Future Bon ton is provide us numerous older.
South Korean shipyards at time of writing current grade in time for the North bound transits, so the new Panamax.
The new Panama Canal, you're searching days, whereas.
The old kind of all three things.
Cricket trends, it's not only in Peru planning customers, but they also bring down costs and increase the feasibility of using LPG as a propulsion cure for these ships as long palaces via cable goes who can be avoided.
With this I'll pass on to test.
Okay.
Thank you Tim.
My comments today will focus on our financial position and liquidity and of course I'll round out our second quarter results.
Since our last report we've exercised our repurchase options on the captain John and the Captain Nicholas.
We expect the John to close on or about December 1st and we'll pay about $15 $9 million, including accrued interest in cash on or about that date.
We expect the Nicholas to be delivered back to us in late January 2022 and we anticipate a cash payment of approximately $17 8 million and.
In addition to paying off our highest cost debt, 6%. The repayment of this debt enhances our flexibility to consider asset sales, even more opportunistically as we have seen firm pricing for vessels of disadvantage.
We will continue to evaluate fleet optimization opportunities as they present themselves.
At September 30, 2021 we had $98 1 million of free cash and as of yesterday, our free cash balance did roughly unchanged at $92 3 million.
I'd point out that even pro forma for the two repurchases and an $8 million payment on our Kawasaki Newbuild that is forthcoming we retain a healthy cash balance. In addition, we do continue to consider several financing alternatives that would allow us to free up equity in our vessels without significantly changing our cash cost per day.
With a debt balance of $576 2 million at quarter end, our debt to total book capitalization stood at about 38, 8%.
Binder, we have no refinancings until 2025 ample free cash as well as an undrawn revolver.
On that basis, we expect our operating cash cost per day for the coming year to be approximately 22000 per day, which excludes the $8 million progress payment that I mentioned for our new building. That's due in our fiscal fourth quarter that is the quarter ending March 31 2022.
Before turning to my our our results again, I'd remind you that the investor slides are available on our website either under recent news on the news media page and they may be useful as we walk through some of the results.
For the second quarter, we achieved a total utilization of 95, 7% for the quarter with a daily T. C. Its time charter equivalent revenue over operating days as we define those terms in our filings and 30996, yielding a utilization utilization adjusted TCE per day I E T C.
Revenue per available day of about 29000 and $647.
Spot TCE per available day, which reflects our portion of the net profits of the Helios pool for the quarter was about 29008 then.
In addition, looking at the Helios pool as an entity.
It reported a spot T C, including C O waves of approximately $29003 49 per available day, and Helios overall, including its time chartered out vessels reported result of 30004 O eight.
B a better pool results overall were a function of the attractively executed time charters in the Helios pool.
Our daily Opex for the quarter came to 9184, excluding amounts expensed for dry dockings, it was 9210, including those costs.
Those levels represent a significant improvement over last quarter, we're pleased to see a reduction in our running costs, which sequentially sequentially. It's been noticing the modem that most notable in the areas of Crewing and spares and stores.
Within the quarter, we saw our daily Opex again, excluding those dry docking related amounts generally decreasing sequentially, which was consistent with our expectation of improved opex as conditions slowly normalize.
Our time charter in costs for the quarter was $2 4 million. After we redeliver the asked the most earth during the first quarter. However.
However, we did take delivery of the osmose venous during October.
On a full quarter basis, which will be for the quarter beginning January one 2022 our T. C N expense will increase to approximately $5 $4 million.
Our total general and administrative costs for the quarter was $9 4 million in cash G&A, excluding G&A, a cache, which we define as G&A, excluding noncash compensation expense was about $8 1 million.
Of that $8 1 million roughly $2 4 million.
<unk> reflected bonuses to named executive officers and several other members of management. Excluding this amount cash G&A was $5 $6 million, which was down about 200000 from the previous quarter again, a positive development.
Our reported adjusted EBITDA for the quarter was $37 9 million, which included the three and a half million dollar gain on sale of the captain Marcos.
Excluding the gain excluding that gain the adjusted EBITDA was $34 4 million.
As you know we look at cash interest expense on our debt is the sum of two line items in our P&L interest expense, excluding deferred financing fees and other loan expenses and realized gain loss on interest rate swap derivatives on that basis total cash interest expense for the quarter was $5 $5 million down about $150000 from the prior.
Quarter.
We amortized them roughly $1.4 million per year in each of the captain John and Captain Nicholas So that's $2 $8 million per year together.
In addition, if you look at the some of the cash principal and interest for those two vessels for the period. The 12 months ended September 30, 2021.
That amounts to about $4 $9 million, which is roughly $600 per fleet day. So the repurchase of these two vessels will have a meaningful impact on our future cost structure.
We continue to benefit from our hedging policy and the favorable pricing of our Japanese financings, leaving us with a current interest cost fixed hedged and a small floating piece of 3.67%.
We currently have one vessel in Drydock and we anticipate a total cost of about $1 million for the completion of her.
Services.
Although we currently hold roughly an 80 economic 80% economic interest in Helios, we do not consolidate its P&L or balance sheet accounts, which has the effect of understating, our cash and working capital somewhat unless we believe it's useful to give you. Some additional insight in order to provide a more complete picture.
As of Monday November 1st the pool had roughly $21 million of cash on hand.
Following the return of over $150 million a share her show their capital through the self tender in dividend, we'd like to deploy some cash to debt reduction, but really with a view to fleet optimization not due to any concern with our leverage position.
We still have 27, and a half million dollars remaining under our current repurchase authorization.
In addition, the three Panamax T C N options T. C ends with purchase options are similarly, a reflection of our capital allocation philosophy, but taking advantage of our counterparties cheaper cost of capital we were able to conclude.
Three transactions that were both strategic and met our risk return requirements.
We will always be prudent in deploying cash, but our financial position does allow us to act quickly and meaningful opportunities as they may arise, including further opportunities to return cash to shareholders with that I'll turn over the call to John Lewis.
Thank you Ted.
This past quarter is the first one during which all 12 scrubber vessels of Dorian LPG fleet, we're in operation and they have produced significant savings in fuel costs, while producing emissions measurably below those vessels burning compliant fuels.
While visiting one of the scrubber equipped vessels at Freeport, Texas during loading operations, a couple of weeks ago. The gas analyzer of the hybrid scrubber system, which wasn't operation important at the time was recording Sox emission off 0.04 sell for more than 50%.
Lower than the compliant fuel supply in the market, which is 0.1 south for constant contact.
The emission advantages of the scrubbers are not limited to Sox emissions.
I'll show reduced by about 90% carbon in particular matter emissions.
That are normally produced by diesel engines, and which are harmful to the life and the environment.
We continue to average above $105 a ton of fuel for the 2021 calendar year being the differential between high sulfur fuel oil and low sulfur fuel oil.
So the last quarter. This differential price spread has produced savings advantage of about $3000 per calendar day for a scrubber fitted vessels.
These results validate our original expectations on the payback period, having returned about 40% of the Capex as of September 32021, notwithstanding events over the oil market collapsed during the calendar 'twenty 'twenty and that of COVID-19.
We are continuing to invest in our vessels performance and energy efficiency to reduce emissions and lower our operating costs.
The main measure is currently being considered for our vessels our route optimization and data monitoring software, including data collecting collection devices on board energy saving devices installed on our ships that can improve our performance and power and reduction of power requirements.
By capturing and redirecting energy dissipation towards vessel performance and emission improvements with our focus being on doing a better job with the energy we consume.
We are currently implementing marine technologies that already exist, which can provide immediate results, while buying time until technological innovation that advances mature and become commercially available in the coming years.
An improved environmental footprint is very important to Dorian LPG and following on our scrubber experience, we would be interested to explore marine applications for carbon capture and storage onboard our vessels.
This technology has been available to the industry and we now expect it will become viable for marine application within next next few years and provide an effective way of reducing greenhouse gas emissions.
The international market.
The International Marine organization M. P 76, and then may be see 77 committees will most likely dictate Ah that all the available options for the marine sector will be.
Engine power limitations energy efficiency technologies, and alternative fuels potentially also carbon capture for the for the longer term.
Our view is that these considerations, we will accelerate the focus on energy efficiency and will likely for shareowners to make hard decisions about the cost of investing in the upgrades of older tonnage to complete to compete in the main trades.
We're seeing it is likely that several news may conclude that there's more economical to scrap older tonnage, particularly those several generation older with a burden of high fuel consumption and smaller cubic capacity unless modern engines.
For vessels that are newer we believe that investments will be imperative.
And therefore, the best capitalized players will axis with access to reasonably priced capital would be best positioned to make the necessary investments and achieve the requisite returns our.
Our decision to invest in scrubbers was possible because of our financial strength.
<unk> has helped us generate very solid results, which gives us confidence as we look forward and evaluate the next wave in marine technology advancements.
At Dorian we consider that there is a clear goal to continue improving our greenhouse gas footprint eventually reaching a zero emissions target.
And we are optimistic that our fleet will be among the best positioned to meet the demands with charters regulators and shareholders.
And now I will pass it over to.
John how would you fit that.
Thank you very much and when.
Happy to take questions from anyone who can still give us any questions.
With prepared remarks completed we will now open the line for questions. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if he would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Oh.
Our first questions come from the line of Hallmark knocked out with Clark.
Please proceed with your questions.
Hi, Thank you Hey, guys Oh My God.
Hey, John Thanks for the discussion a lot lots of good stuff to talk about I did want to ask about the new buildings I'm. Obviously, you you've been a bit more maybe expansive of late and and it's interesting that time charter an approach, which is nice you don't have to put up capital basically.
No. These three latest conditions you know they come after the new building that you.
Have an order from earlier this year, that's financed via the the lease or the capital lease can you maybe just go over the difference in how both of these deals came together it came about.
Ken perhaps we we think about growth from here not necessarily there has to be growth, but in general as you think about expanding the fleet is it really the lease charter and type of approach that you want to continue to do going forward.
Yeah, Omar it's not a I wouldn't say that it's that we made a conscious decision to go one way or the other are they the new building that we concluded in Japan was actually came together after a very long discussed.
And we dived in and work with the shipyard and with potential Counterparties there and she is on a on a favorable finance arrangement. So that was one thing but are reluctant to do anything.
Anything more than that should be viewed as a a conservative approach to our to the new building market and the charter and I think the feature there. It was opportunistic I mean, we saw a well well priced time charters.
Where they are.
Option, Dubai, and and it really felt that we were in the opportunity.
We could take advantage of that opportunity. The timing was good is good and the features of the ships that distinguishes all three of those is that they are panamax and other words that there. They can transit the old Panama can now and we are quite feel quite strongly that.
That is a big differentiator going forward.
Okay. Thanks.
Thanks, John and just wanted to double check you know just so we understand that the trends are I can understand the transaction a bit there.
The initial newbuild in the Japanese one that's a you know a.
At least these three are charter ends and if the purchase option right along the way there's no purchase obligation as I understand it.
Correct correct.
Okay, and then just one one follow up I did want to ask just you know clearly the performance during the quarter at least from my perspective was quite firm and stronger than anticipated quarter over quarter, you realized rate was very little different from from from the prior quarter. However, the spot market at least from what we were seeing.
Being quoted had come off quite a bit I want to say averages, where maybe a TCE of call. It 33000 last quarter and then this last one it was 25 and so you had a pretty big difference in prevailing averages, but your average stayed the same any color you can give as to how your how your performance.
I guess, you could say outperformed relative to what we think the market did.
I should punt that because it's a difficult question.
But maybe I shouldn't because it's a difficult question no I think it's you know that.
We have never actually being very focused on quarter to quarter I think a very difficult. There. You know you have the quarters are short in voyages are long and they carry from one into the other so I don't I don't take great pride in over performing in one quarter or I don't get terribly.
I'm nervous about you know underperforming in another quarter.
So time charter out a stable element in the ER.
And the equation, but they but the spot market performance.
It's better to look at it on a rolling average of more than one quarter that it would include several quarters to get a real indication of a trend I think.
Yeah.
Thanks for that yeah, I understand but notable at least that the performance was a bit better than anticipated I'll leave it at that thanks guys.
Thanks Omar Thank you.
Thank you. Our next question is coming from the line of Brian Reynolds with UBS. Please proceed with your questions.
Hi, Good morning, everyone, maybe just to follow up on on the timeshare announcement with them.
With the purchase option I'm kind of just curious if you can talk about maybe the thought process around the duration of the announcement. It seems like there's no. It doesn't hasn't seem to fully invest in LPG dual propulsion, just given that emerging technologies, you know might occur.
I've talked about in the prepared remarks, just kind of curious if you can talk about a little bit more about those emerging technologies and you know how we should think about the tenure of the purchase options and whether we should see you know more capex spend on emerging technologies, whether it's five to seven years down the road. Thanks.
Yeah, Okay, I've got just a mine to answer that for you, but in respect of choosing you know to do.
These ships and with a dual fuel it wasn't our choice the owners made that choice, we chartered them in the incremental cost to us was nothing and they caused to the owner for having that feature is very small I mean in a day you know you I don't know if you've you can order a ship now.
And LPG ship with our with the without dual feature dual fuel features so it's a whole different discussion to the retrofit discussion, which where the numbers are still very considerable but in terms of new technology in and all of this John has been spending.
All of the time on it.
I'm sure I think it would be useful to everybody from here kind of review.
Yeah, Brian.
We have to consider a number of new technologies are dual fuel.
Is it is a good way to go forward, but also the ships that exist need to improve their performance and we have to look at a number of opportunities and new developments that are coming are two to the marine sector.
First of all we need to know exactly where the regulation will land and how it would land and what demands are gonna be made out of the marine sector. As you can as you may know the U has different you know requirements then D. I M O and now we.
Have a cop 26, which is so they're talking about other things so things have not landed yet precisely and once we know what we need to do we will make the decisions along the way the capex needs to be within reasonable and levels.
So we could at least be able to improve all of our fleets that you know it's it's it's it's it's it goes without saying so I don't know if you have anything in particular, you want to ask but happy to follow up later.
I guess, maybe as a quick follow up on I am out in C. O. P. 26, just kind of curious how we should think about what you guys are specifically looking at in terms of you know our carbon emission targets that would trigger an investment one way or the other.
Brian.
The main point is that we need to reduce our emissions are the C. O two emissions, but also nox emissions and a sox emissions.
So we've done that with scrubbers scrubbers can be changed and amend and then and retrofitted in such a way to reduce additional amount of Nox and C. O two so.
So that's it.
A clear way forward for US we cannot go to zero from now are we have to start and steps to improve our emissions and.
You have to do it in a in a effective way so are we.
The way we were thinking about it.
Great I appreciate all the color and that's all you asked me today. Thanks sure. Thanks, Brian.
Thank you and as a reminder.
A question. Please press star one on your telephone keypad.
Our next questions come from the line of Sean Morgan with Evercore ISI. Please proceed with your question.
Oh, Hey, guys. So.
Kind of closed out the remarks in the prepared remarks, Sean was talking a lot about upcoming regulations regarding carbon emissions and to me, it's sort of around a little bit with a lot of what we were hearing just a few years ago, IMO 2020, and they're kind of looking back at that now there's a lot of excitement going to IMO 2020 about things such as Ah were discussed.
On the call capital are restrictions for some for smaller operators from a levered operators and then some differentiation and it wasn't just for the LPG sector, but across shipping where you know stronger operators would benefit them and you know with the benefit of hindsight now and I am a 'twenty 'twenty I don't think that it really panned out the level of that.
That was kind of.
Trumpeted prior to the implementation so as we kind of look forward, a cop 26, and carbon emissions and some of these you know similar themes that we heard just a few years ago. What makes this different than sort of the last regulatory capital expenditure cycle that we saw at the beginning of 2020.
Well the writing is on the wall Sean.
I mean, the U S.
One has to think about ways to reduce it.
Whether it's going to be this way or the other way you know we have to be prepared.
We have to look at Prologis and at new ways of improving our performance and our emissions and.
What what kind of.
Are we.
We have focused on and I think that is available.
We have looked at ourselves we look at batteries, we are looking at carbon capture.
We're looking at modifying our scrubbers, there's a number of things on that on the table that you know I don't think it's a golden.
No silver bullet here.
It is a combination of a number of things that.
Chip will have to do and implement be able to improve their performance in respect of admissions and that's that.
Yeah. So I mean, I guess from the perspective of your operators like yourself I mean, there's definitely.
Something you have to really focus on and it's something that could go wrong, but from the perspective of shareholders. As there is no like an upside a I guess a golden scenario.
That they can kind of look for a kind of similar to what was promised as I am a 'twenty 'twenty or is it just is it just you guys are talking about it because it's an important operational.
The decision that you kind of have to get right.
I think it's the latter it's an important decision that we have to make US an environmental decision. We are all committed to do the best we can for it for a pub.
Yeah, but it's.
Also I don't want it.
I consider all of this to be an investment opportunity I mean, where we are looking at.
That is as an opportunity not only as an obligation. So we don't we haven't you know some of our competitors have invested in and battery units and others.
Things we were invested.
Internally, mostly an optimization so far and then you know.
Uh huh.
But but I I look at this whole.
Mental.
Uh huh.
Pressure [laughter] less as a as a pressure on us more as an opportunity to make a contribution and.
Hopefully two two.
Give us a better return to our shareholders as a result, and so far the efforts to reduce emissions are resulting in a fuel economies and as I said in my in my message. So I'm you know, it's it's the same thing actually.
Less less emissions comes with less fuel consumption.
Right I think you said there was 2 million of savings on the fuel consumption is that mostly slow steaming or is that specific technologies you're implying.
This is not from so assuming no no no.
This is not this is from optimization and then a better planning of.
Hull cleanliness is a direct result of having better feedback and of the operational conditions of the ships. So that we can decide when to clean the hall or a propeller or.
Better weather routing services.
It's really cool technology delivered savings.
Okay, well, so it sounds like a confluence of a lot of different factors are optimizing together alright. Thanks. Thanks, That's all I have.
Thanks, Sean.
Thank you there are no further questions at this time I would like to turn the call back over to John Hazard for terrorists for closing remarks.
Thank you all very much and I hope you have a good fall and.
Winter and stay safe and see you next time.
Yes.
Thank you for your participation. This does conclude today's teleconference you.
You may disconnect your lines at this time and have a great day.
Yeah.