Q3 2021 Torm PLC Earnings Call

Yes.

[music].

Ladies and gentlemen, thank you for standing by welcome and thank you for joining Tom plc third quarter 2021 results conference call.

Throughout today's recorded presentation, all participants will be in a listen only mode.

The presentation will be followed by a question and answer session. If you would like to ask a question you May Press Star followed by one on you touched on telephone Preston.

The stocky followed by zero for operator assistance.

I would now like to turn the conference over to MS. Layoffs Abbe Goldstein. Please go ahead.

Thank you and thank you for dialing in and welcome to <unk> Conference call regarding the results for third quarter of 2021, Brian name is sometimes <unk> head of Investor Relations control.

As usual, we will refer to the slides as we speak and at the end of the presentation, we will open up for questions.

Please turn to slide two.

Before commencing I would like to draw your attention to the Safe Harbor statement.

Please turn to slide three.

The results will be presented by executive director and CEO, Jacob <unk> and CFO, Kimberly I will now hand, the call over to you Jacob.

Yes, Thank you Andreas and please turn to slide four.

Thank you all for starting in this afternoon.

Really thrilled to be here today as we now published our results for the third quarter of.

2021, as already mentioned by Andreas and here in the third quarter, we were still impacted by the market downturn caused by the COVID-19 pandemic is it in general lower global demand for oil products and our third quarter ended with an EBITDA of 30 million.

And a loss before tax of $14 million and he has a return on invested capital ended at minus one 9%.

The product tanker fleet realized an average TCE rate of $12854 per day and this was.

Well supported by our largest segment the mass where the achieved rates were $12785 per day.

Now looking into the fourth quarter of this year, we have so far secured bookings at $12985 in a market that is showing clear signs of a recovery, especially in the west.

We are also now successfully integrated all of the team tanker vessels and the modern era tools scrubber fitted vessels, we acquired earlier this year and yet since the end of the quarter.

Additionally, secured operational lease financing for nine of our existing vessels with a sale and leaseback arrangement that will generate and increase liquidity.

$76 million.

Now kind of turn to the next slide slide five please.

The product tanker market as I said it was challenged here in the third quarter and Emma benchmark rates charged to actually multi year lows at the start of the quarter.

<unk>.

Significant progress with the vaccine rollout here in Europe and also in the U S.

That had a positive effect on mobility and also on oil demand recovery in the west, but an outbreak of the more transit transmissible Delta virus and southeast Asia led to renewed lockdowns in that region and subsequently lower demand for product imports.

Here in the second half of the quarter, we also experienced that hurricane Ida.

Coast down several of the refiners in the U S. Gulf They were offline and that resulted in lower product exports from that region. This was further aggravated by the weak crude tanker market throughout the quarter that also led to an increase in the crude cannibalization, which we have also seen.

In previous times of lower freight rates.

Please turn to slide six.

In recent months, we've seen relatively robust improvements in the global oil demand, which have resulted in drawdowns of the excess inventory buildup in the first half of last year.

However, the recovery in demand has not been met by corresponding increases in supply, resulting in a situation where all inventories have continued to be draw down and in some regions to levels, which are even below pre COVID-19 loss.

Much of the supply tightness is actually artificially it results from other Clos.

Crude oil production quotas that are ramped up only gradually and they have not been sufficient to meet demand growth.

As long as supply growth remains below the demand growth will continue logically to see stock rose we expect the inflection point to be reached over the first quarter of next year with OPEC plus reaction.

The gradual supply increases coinciding with seasonal slowdown in oil demand growth.

However, this inflection point could be reached earlier, if OE clause would react to the current political pressure from a number of large all important oil important importing countries in the wake of high oil prices and release more oil to the market.

It is also important to mention here that with inventories being drawn down to solo levels inventories will need to be build up again at some point, which will then act as a demand boost to tanker demand. In addition to more normal trade flows.

As already mentioned, we have seen significant progress.

Declination rates in the West which has allowed countries to keep their societies and economies open even as COVID-19 cases have moved higher.

Even though many emerging economies in Asia are still lagging behind in terms of vaccination rates significant improvements have occurred recently, which makes me confident to believe that large scale mobility restrictions as a political tool will be less prevailing even if new waves of <unk>.

Infection should occur.

The political willingness to let the virus coexist has been increasing.

Heskey obstacles on.

On transportation fuel demand recovery lastly, being removed.

Yeah.

The demand for Jetblue is still lagging behind especially when it comes to the international travel, but also here we are starting to see more signs of improvement with the U S. Having recently reopened international price and as an example, Singapore easing travel restrictions to visitors from an increasing number of countries.

With several other Asian countries planning to do the same.

Furthermore, we also see that the potential guests, who all substitution amid the current natural gas shortages can give a further boost to oil demand over the winter.

Please turn to the next slide to slide seven.

Part of the reason supply tightness has been due to the effects of.

The four mentioned.

But hurricane Ida on U S crude production and refinery runs.

Hence, having a more temporary in nature.

Mccain IRA shaved off around 20% of U S. Gulf refinery runs and product exports, but also resulted in significant product inventory draws in the U S East coast, which needs to be built up again, hence supporting transportation demand going forward.

Here with the past couple of weeks, we've seen a strong pickup in the product tanker freight rates in the U S. Gulf as refineries are coming back from hurricane either related outages and planned maintenance, resulting in strong recovery and clean product exports, we're well positioned to take advantage of.

The increase in exports from the U S Gulf with about a quarter, 25% to 30% of our <unk> located in the Americas.

Spot rates for the larger segment for <unk> has also been on the rise and Tcs as of late.

Of $20000 per day for modern units.

Please turn to slide eight.

To sum up on the main demand drivers influencing the market. We can see that significant progress has been made from where we stood a year ago and although in many cases, we are not back to pre COVID-19 levels yet the outlook for the next 12 months indicates further improvements not least due.

Two increasing vaccination rates that will be supportive of oil demand recovery is also the increasing OPEC crude supply and global refinery runs and last but not least the need to rebuild depleted stocks in oil consuming areas.

And here.

Please turn to slide nine.

When we look at the more medium and long term demand drivers. The COVID-19 pandemic has accelerated the pace of refinery closures with two and a half million barrels per day of refining capacity, having close down or set to close and another 1 million barrels per day potentially being shutdown.

<unk>.

Most of this capacity is located in regions, which are already large imports of refined oil products, such as Europe U S. West Coast East Coast, Australia, New Zealand and also South Africa.

If we focus then on Australia, and New Zealand, especially the closest are of significant importance with two out of four refineries in Australia, and the sole remaining refinery and you'll see them closing down.

At the same time more than formulas barrels per day of new capacity is scheduled to come online mainly in the middle East and China regions, which already today exporters of oil products.

Both these developments are positive for trade flows and ton mile in the post COVID-19 world with only a few projects that are less positive for trade.

Slide 10 please.

Our positive outlook for the demand for product tankers over the coming three to five years coincides with the supply side, which is the most supportive for at least 25 years.

In the third quarter ordering of product and crude tankers combined.

Second lowest quarterly level for 20 years, reflecting the record high new building prices the limited shipyard space after record high container vessel ordering activity seen earlier in the year.

Consequently, the order book to fleet ratio for product tankers remains at a historic low level of 7% further supported by a similar historic low 8% order book to fleet ratio for the crude tankers.

Now on the other hand the.

Pickup in scrap prices have incentivized increased grabbing a product tankers.

With more tonnage being removed from the market year to date than during any full year in the past 10 years.

These two drivers are further supporting the case of a very modest fleet growth in the next two to three years, which we expect to be around 2% a year only half the pace seen in the past five years.

Now in my concluding remarks on the product tanker market, we expect improvements in the key market drivers for the next 12 months with more supply coming to the market at the same time as the impact of mobility restrictions on global oil demand is fading.

The need to rebuild depleted crude and product inventories is adding extra support to the market.

Oh Wow.

Medium and long term refinery dislocation low order book that I mentioned that is it.

Still supportive to the product tanker market.

Please turn to slide 11.

Now looking at <unk> commercial performance we have.

<unk> outperformed the peer errors in 24 out of the last 26 quarters in our largest segments demos.

And as I mentioned in the third quarter of 2021, we achieved rates of $12785 per day.

And here. Unfortunately, we do not yet have rps performance to compare against.

In general.

I am very satisfied that our <unk> platform continues to deliver.

Significant above market resource on a day to day basis.

Please turn to slide 12.

And yet.

A key deciding factor for delivering this above average TCE earnings is driven by our continued focus on positioning our vessels in the basins with the highest earning potential.

In the third quarter of 2021, we had an overweight east of the Suez, where we also saw an outperformance when looking at the full quarter.

Now I'll hand over to my colleague Kim for further elaboration on our cost structure liquidity position.

And the balance sheet.

<unk>.

Thank you Jacob please.

Please turn to slide 13.

Tom has a constant focus on operating expenses since at origination of the pandemic COVID-19 has introduced new challenges to ship operators, primarily driven by logistics challenges during.

During 2020 operating expenses increased from 2019, but because of our Watson platform. We have managed to reduce expenses to $6467 per day in the third quarter of 2021.

Looking at the first three quarters of 'twenty, one Opex per day has increased 3% compared to 2019, but when correcting for COVID-19 related crew expenses Opex per day has been reduced by 1%.

Slide 14 please.

Tom has consistently.

Through our performance generate liquidity to renew and increase the fleet through the lock to the largest number of vessels ever. This has been done while maintaining a stable and conservative capital structure overtime.

After the.

At the end of the third quarter, Tom has successfully obtained commitment from a Chinese financial institution for the sale and operational leaseback offline EMR versus which will generate liquidity of $76 million and which will further provide short with the optionality to buy the vessels during and at the end of the leasing period, if we deem that would be attractive.

Please turn to slide 15.

As of 30 September 2021, Tom had available liquidity of $186 million of cash totaled $110 million.

And we had undrawn credit facilities of $76 million.

The total cash capex commitments relating to our two new buildings for $7 million to $8 million.

30 September 2021.

With some strong liquidity profile the capex commitments are fully funded.

Please turn to slide 16.

After having finalized the Liza refinancing in 2020, we have eliminated all major refinancing of until 2026, which provides <unk> with financial and strategic flexibility to pursue value enhancing opportunities in the market.

As displayed we do not have any major repayments until after 2025.

Further.

We have in the third quarter secures stability in our interest rate expenses by increasing our interest rate hedge levels to approximately 75% on average over the coming five years.

Trump's new sale and leaseback agreements are expected to add $1 $6 million per year to debt repayment schedule.

Please turn to slide 16.

I would now like to sum up our financial position in terms of key metrics, such as net asset value and loan to value.

The value of term business Chaucer business, including new buildings was just below $1 9 billion by the end of the quarter outstanding gross debt amounted to one point.

$3 million is for 30 September 2021.

And as I mentioned, Tom sale leaseback of nine of our vessels with a $76 million to the outstanding debt.

All in all we have a strong and attractive price desk structure with repeatable banks and leasing institutions and we have hedged demonstrated our strong access to diversified funding sources in the market. We are very satisfied with our position.

Finally as of 30 September 2021, we had outstanding committed capex of $7 million to $8 million.

Related to our new building program and as mentioned our cash position was $110 million.

Net asset value was at $938 million is for 30 September 2021, which corresponds to $11 $6 or 74, five Danish kroner for sure and just before commencing this call Tom shares were trading at just above 50 Danish kroner.

I am pleased that our conservative balance sheet supports our strategic flexibility as well as our financial strength.

With that I will let the operator of multiple questions.

Ladies and gentlemen at this time, we will begin the question and answer session.

One wish to ask a question you May press star followed by one on that touched on telephone.

If you wish to remove yourself from the question queue. You May press Star followed by two if you are using speaker equipment today, please with the handset before making us it makes sense.

Anyone who has a question you May press star followed by one at this time one moment for the first question. Please.

The first question is from the line of Joe <unk> from Evercore. Please go ahead.

Hi, guys. Thanks, This is actually Sean Morgan on for Jon Chapelle.

He is out of the office today so.

Housekeeping items on the on the Chinese Leasebacks I was just wondering what what was the gross amount borrowed for the two separate.

MRO facility in the LR two facility because I think you mentioned the kind of net liquidity raise but theres probably some offsetting.

Related debt Paydowns.

Just kind of wondering what the growth was.

Hello.

Yes.

Good morning to you and thanks for raising the question so I'll hand, it to Kim.

Kim.

Yes, so the so.

I will answer like the LTV for the sale leaseback financing.

100 or so.

So it's.

Just get just get the number here it is.

Two things.

Once 167.

Million U S dollars.

To answer your question.

Okay. So thats for both the LR Oh, Okay, sorry go ahead.

Yeah.

That's where the LR twos and <unk> both facilities.

Ms.

No for the Ams denying Amos.

Okay for the nine Mr's, great once we said okay.

And then.

So on slide seven you talked about just the kind of.

Maybe it's maybe it's a new pattern or maybe it's just kind of a.

Recent.

Phenomenon, but there just the number of.

<unk>.

Natural.

Weather related disruptions to refining in the U S and so I'm just wondering if this is a pattern we're gonna be seeing kind of recurring is there any is there any.

Trading volatility of arms that sort of a rise to sort of offset some of the negative impact of refinery outages or should we just kind of look at that as just kind of a market negative whenever it happens.

I think it depends a lot on the duration of the outage and one was a little different with Hurricane Ida was that I think that the industry the <unk>.

Energy complex at large.

In the U S Gulf was well prepared.

<unk> for safety measures you closed down however, when you then add asset if there were any repairs et cetera to to come back into operation.

Issue here was actually not so much physical.

On the refining side, but it was that there were a lack of electricity to turn it back on so I think that was that was a bit unusual I would expect in the future. These outages to be more short term IU close it down and then you sort of turn the switch back on within a relatively.

Short timeframe that is that as our understanding of this so the difference here was exited to duration of.

The duration impact that you have.

Okay. So the duration kind of I guess made it worse.

Yes.

And then just you talked about the order book being pretty favorable and I guess, a favorable or about the mid low rates is something you might expect but how responsive do you think the order book would be.

Two kind of resurgence and improvement in product tanker rates do you think there's a lot of sort of latent demand that could come before it.

The market starts to improve or do you expect that.

Regardless of future rates, you'll see conservatism.

Yeah, that's a that's a great question.

Because obviously in history, we have seen that.

As you point to if freight rates they increase that.

The bonus and the vessel respond.

Immediately and then fill the void sort of and Theyre going to order a bunch of ships and this time around what it is.

What is surely quite supportive when we get.

When we turn the corner and freight rates.

Moving further from what they've already done then the lead time to ordering is today at least two to three years and even in that scenario I think that that is very clear that currently shipyards really favor different type.

<unk> of assets to be to be built so so I don't I don't think even.

A strong and.

And longer.

In a period of elevated rates would not immediately.

I mean that you will that you will have a very responsive ordering obviously.

Obviously, if this is not.

Not told in quarters, but years than it will than it would be a different matter because then the whole ecosystem of.

Also of shipbuilders and investors will find ways to.

Get the contracts done, but sort of in the very immediate future ice's likelihood below of a lot of the new contracting taking place.

Okay, Alright, thanks, Jacob and Kim.

Thanks for the questions.

The next question is from the line of will take back from S&P. Please go ahead.

Yes, Hello, Jacob and Kim just a few questions from my side as well.

You mentioned that you expect the inflection point for tanker rates to be during Q1, and possibly Q4, it's opaque increases.

Output schedule, but based on this current output schedule by OPEC.

You expected in Q1.

Do you see any other significant factors then this could increase which could either accelerate or slow this tanker rate recovery during 2022, and how do you see this.

<unk>.

Factor playing out.

I think that's it.

Very very good question.

As always all of that.

These events that triggers a market, it's very easy to see in the aftermath.

So I wouldn't I wouldn't be able to give you a very clear precise answer I think markets generally have a tendency to all react in both directions and currently what we are seeing is that there is a strong underlying demand for the larger tonnage is as I mentioned.

And we are now experiencing rates.

Well above 20000 for the loss, which we've not seen for some time.

What we would normally think as that that freight rate environment for the larger ships can still push the rates higher but obviously our customers. They will over time split these cargos into smaller steps in that you sort of have a.

And filtering down into the smaller segments, but given that the smaller segments for instance, the Pos that we're also experiencing freight rates at at and above $2000 as I mentioned in the U S. Gulf currently.

Then you could argue that it's already now teeing up for that if you have sort of the fundamental demand continues to build then that's the only one thing to do that is that the whole freight rate environment.

Ohio, So I'm not I'm, not suggesting that we ain't that reflection point, but I think it could happen anytime real.

We'll switch on the point about OPEC is obviously that if you have a step change in the supply of oil to the market that will stimulate demand for foil everything else being equal I think oil price will then state.

The risk of <unk>.

Significant further step up in oil price will be lower in that scenario and at the same time the need for transportation transportation of oil related products will also increase so so I think thats a real switch on in the market that could put the market on <unk> basically if it happens in the current freight rate environment, where we are seeing rates being.

Pushed up and our customers more and more coming back asking questions.

Related to our challenges.

Okay.

Another question regarding whether you have any tailwind at the moment, obviously rates are very low at the moment, but.

We have seen in dry bulk and container space that there is a lot of tailwind from congestion.

Also a theme in the tanker space or.

Something you see at the moment.

No I think the so there's two types of countries and I think it is.

Great point.

The debt in the containerized trade, especially.

It is.

Related to the Port infrastructure and is maybe then secondly related to COVID-19 restrictions.

In relation to the to the crew that is onboard and we are not experiencing any of the I think a big point to think about here is that currently a lot of the oil that we consume on a daily basis is actually just taken off the shelf. It is taken from inventories. So that also means that the <unk>.

<unk> that we are seeing in ports and out there. There's one exception, but that's not really a port or COVID-19.

That is at currently in the Strait of Bosphorus larger vessels have waiting time up.

Between two and three weeks. So obviously, if you think about a relatively short duration.

Cargo movements in that area on larger ships.

We are heavily impacted by that but that's a weather related issue.

Apart from that we're not experiencing in this sector.

Okay. That's very clear. Thank you and then a final question to your liquidity position.

You mentioned in line sale and leaseback agreements that you have.

But in that context, how comfortable are you with the current liquidity position.

The tanker market does not pick up.

Obviously.

Everyone expected to pick up during 2022, but if that doesn't happen.

Do you think your liquidity position at the moment.

Thank you for the question.

We have you have seen our liquidity position as we just presented it here and.

And we have.

Partially on Liza nine sale leaseback transaction for several reasons one of them being what you are alluding to here are directly addressing that and what is in these challenging markets.

Things are not happening as we are as we expect.

And so we've added this so we are very comfortable even if we enter into quarters that are.

We're not promising but as we've seen in recent quarters.

So that is one of the main reasons for doing that.

Our of course also.

If we see mortgage pick up as we've seen adding to both <unk>, but also the possibility to add on any strategic opportunities that would arise in the coming year.

We are very comfortable with the liquidity position, we have today and even more adding the nine.

These bag agreements as well.

Infrastructure.

Okay and is there more you can do in terms of adding more liquidity, making more selling leaseback agreement for.

If if we if we wanted to recruit of course, there are still room to add more leverage to oil.

On to our balance sheet, if we decided to do that.

Okay. Thank you that's what this is what we are very comfortable with this we would like so this is what we see right now this is Ed.

This is exactly what we needed.

Alright. Thank you so much for the question from my side.

Thanks, a lot Rick how good day.

As a reminder, if you wish to ask a question with Westar followed by one on your telephone. The next question is from the line of Fine dust Carlson from Kepler. Please go ahead.

Yes, good afternoon gentlemen.

Just a couple of questions.

Following up on what you said, Tim in terms of opportunities.

Sure.

Expand sort of beyond what you have done recently, what segments would that be in.

Or if you have any preference.

Uh huh.

Sure.

I guess that would be in the formal potentially adding home secondhand tonnage.

Yes, I can I can give a answer to that we do we do look.

Obviously at.

At all of the opportunities that are out there and if I were to assume it in a little then as you point to I think it would be existing.

Units with modern features.

So, let's say tonnage setup built within the last five to eight years that would be our preference in the segments going to point at anything and I think.

The three segments that we are focused on as you can also see would be <unk>, one and two and then it would really depend on the specific opportunity. We can't really can't really design the opportunities ourselves. So we are open to study the opportunities out there, which fits with what I've just described.

Okay and then another question on the market I mean with the weak crude tanker markets I guess you see some.

Competition from new builds entering the product tanker market as the first cargo.

Seeing any easing off of that or is that still.

An issue.

For your bus.

That has been an issue throughout the year currently there's a bit of an easing, but it's more actually because.

The number of new bills have gone.

Gone down a little and that will pick up.

Again in the first half of next year. According to the data we have so.

<unk>.

The.

Prevailing markets.

Sure.

If the crude tanker market is not.

Picking up from where we are we will see a continued flux of cannibalization on maiden voyage from crude tanker is also in the first half of next year.

When there is a.

When there is the order book, where you can say that it is irrelevant.

Okay. No that's helpful. Thank you.

Thanks, a lot.

The next question is from the line of William I'll Codell from Clarksons Securities. Please go ahead.

Yes, Thank you guys.

Florida.

Hi, guys.

Just curious about the timing of this sale leaseback.

The transaction did close.

And our maturities that you have to refinance so.

Yes.

Well what did ethanol.

Yes.

Yes. This is Dave.

No no it was actually not specific matures.

Had to act at.

It's a relationship that we.

That we have been working on for a number of years.

Yeah.

With our counterpart.

Have overtime identify what would be <unk>.

Suitable size of a deal what would be our first sort of.

Structure that fits both on desktop and on our side. So it was actually over time just identify.

A pool of assets.

Kim mentioned earlier, just shy of $200 million was sort of the sweet spot for them as sort of the first type of deal with us and and so this was a group of vessels, where it made sense for us to also do it. So that was that was there was no pressure as such but it was a strategic choice that it made sense to have.

This particular.

Financing institution as part of our debt structure going forward.

Yes.

Makes sense.

<unk>.

You have a lot of cash now basically.

Sure.

$185 million or so.

It wasn't a strategic choice that we are not I mean, this was not something we we had to do but we do feel very I don't know.

Very comfortable in general as it came also said whether this is then.

The scenario, where this needs to be used.

Defense or whether we have the luxury to use a <unk> offence in either direction. This is a sizable pool of cash that we can utilize to.

Two the means that we have currently.

The markets.

As I mentioned already are pointing in the direction that we have been waiting for of course, we would like to see that.

For more than two weeks.

But it is there are really strong signs of a fundamental step change in the market.

Currently and then we have this cushion of cash as you point to.

Yes interesting.

So.

How do you think about it.

<unk> opportunities now and then.

We are basically finishing up the scrubber retrofit program.

53 vessels.

Great.

Thanks, Paul.

When I look at today's scrubber premiums at least when you have.

On the two new ones left on an order.

Mhm.

So I would think about your fleet now.

Oh, Oh, you're going to position yourself.

And the upcoming regulations.

In that sense.

Can you give some more.

Color about that.

Good good.

A good point I mean, so if we look at sort of our.

Future commitments I think you point to that on scrubber.

We have finalized that program and where maybe if we had this call a year ago that would be.

Some conversation around was that really a sound choice because spread.

Tween high sulfur and low sulfur where at that time.

Well below 100 today as we all know it's it's come up again so.

I think over time, we're very comfortable with that investment and with that decision and then there is volatility in the split.

Currently very much to our in our favor.

Now if we look at the fleet and potential Capex, Yes, we got these two newbuild that seem to be coming out of Europe.

At our impeccable timing here towards the end of this year and early of next year that you will achieve and then we don't really have.

Anything so if I were to scripted I think we would.

Still.

For two.

Two at all.

Our investments in the large vessels simply because strategically we already today have a significant role to play in the <unk>. So if I, if I could choose myself, Florida I think.

Investment opportunities in the in the loss.

But of course at the end of the day it depends on the on the pricing structure and we don't feel that <unk> is the right way to go and we don't need.

From a strategic point of view too.

Go to elevated prices also because when we look at sort of our climate.

<unk> that there we are.

We feel very comfortable that with our own fleet.

The compensation that we will in advance of 2013 B meeting all of our iron ore requirement, then hopefully we can even up off the game on that as we as we progress and as we make all the sensible investments into additional.

Fuel efficiency you get it on existing vessels. So we are very comfortable with utilizing existing vessels both from our own fleet, but also obviously from potential new investments.

Great.

When you also consider share buybacks.

Given your discount to NAV.

What do you think about that.

I think we need to think about it but I think let's let's take that discussion I mean first I would like to have that discussion with our with our board.

Because so far we have been careful.

Around our our movements including share buybacks.

So, let's see that the market.

Really starts to return and then we have to.

The distribution policy, where we are.

Half year.

Can pay back 50% of the net result, and that can of course be distributed in terms of a straight dividend or share buybacks. So I think thats the.

Let's turn a few pages here in the calendar and let's come back on that issue when we when we've seen a couple of quarters of <unk>.

Considerably higher earnings than what we experienced last quarter.

Fair enough.

Just a final question for me on the market I mean, it seems to be very strong refining margins.

Across regions.

But still this.

Okay, and then the oil refining utilization you mentioned, that's coming up in the U S.

But.

What's keeping these refiners.

Problem basically processing more.

Crude and producing more products.

Do you think.

So that is actually the point that we also made around hurricane iron are having a profound effect was that there are outages.

Because of lack of entity, you'll see the same in China that actually you see the government imposed restrictions on the utilization of entity and that is also hurting for instance, the Chinese refinance it as also has been.

Problem in the refinery sector in USA launched that there has been a lack of energy basically two two.

Big complex facilities to up the and EBIT.

Even though the economic rationale is clearly there.

So let's see when when some of this energy crisis also.

I'm going to say.

Find its feet in there and you can release some of the entity again to the sector. Then clearly there's an incentive as you point to for them to ramp up their production.

Great. Thank you very much.

Thanks, a lot for us thanks for your questions.

There are no more questions at this time I hand back to NBS Abu <unk> for closing comments.

Thank you.

Actually I have a question here on the webcast, we will just pick up on.

So.

Here's the question from <unk> Li from fence, Gabon markets. What is the total sum of the Chinese leasing for this <unk> III a lot too.

Yes, I can answer that.

There's some business or just.

Just above 103 million U S dollars.

So I hope that's the answer you're looking for a whole lot.

Okay. Thank you. This concludes the earnings conference call for the third quarter of 2021 results. Thank you all for participating.

Ladies and gentlemen.

Fluent has now concluded and you may disconnect. Your telephone. Thank you for joining and have a pleasant day goodbye.

Robert.

Okay.

<unk>.

Okay.

Okay.

Okay.

Okay.

Yes.

Okay.

Okay.

Yes.

Okay.

Okay.

Mhm.

Yes.

Okay.

Okay.

[music].

Yes.