Q2 2022 Ardmore Shipping Corp Earnings Call
Okay.
Thanks, Tony and welcome everyone before we begin our conference call I would like to direct all participants to our website at Ardmore shipping Dot com, where you'll find a link to this morning's second quarter 2022 earnings release and presentation.
Tony and I will take about 15 minutes to go through the presentation and then open up the call to questions.
Turning to slide two please allow me to remind you that our discussion today contains forward looking statements.
Actual results may differ materially from the results projected from those forward looking statements and additional information concerning factors that could cause the actual results to differ materially from those in the forward looking statements is contained in the second quarter 2022 earnings release, which is available on our website.
Now I will turn the call back over to Tony.
Thanks, Paul.
Let me first outline the format of today's call will begin with I'll discuss highlights recent market developments and overall Ardmore performance after which Paul will provide an update on product and chemical tanker boats and financials and then I'll conclude the presentation and open up the call for questions.
So turning to slide four.
The product and chemical tanker markets are continuing along at historically high levels with many factors now contributing to ongoing momentum, which we will discuss later on.
Our Mr's earned 3500 per day for the second quarter up from 15900 last quarter. The earnings 46600, so far in the third quarter with 45% fixed and are averaging $55 300 for fixtures concluded over the last two weeks.
Additionally, our chemical tankers are now approaching similar levels on a capital adjusted basis.
Given our operating leverage and spot exposure. This has translated into record earnings of $29 million or <unk> 82, a share for the third for the second quarter, and an estimated $65 million or $1 75 per share for the third quarter. If these rates are sustained.
Asset prices are also rising as buyers are not factoring in the strong market to their value estimates. Most recently the sale of a 2016 built Korean EMR at $34 5 billion up 25% from $27 5 million at the beginning of the year.
But despite the much improved market conditions, given the very challenging business environment. We just come through our priority continues to be rebuilding financial strength in order to then continue through our capital allocation priorities once our leverage targets are met.
To this end, we've just completed a refinancing of virtually all of our debt with our core lending banks prepaying most of our higher cost lease portfolio producing it from 14 down to just two shifts and thereby significantly lowering our debt cost and we've also engaged in limited usage of the ATM program over the past quarter to further build financial strength.
Operationally, we are very proud that our ships the ardmore Cherokee and the Ardmore counter have recently won the <unk> charity Maritime safety week competition, a testament to their crews a proactive approach to safety and their dedication to see pairing professionalism.
Moving to slide five.
On the product and chemical tanker market outlook.
The market is being influenced by many factors, but above all and now deeply rooted energy crisis impacting virtually all energy classes on a global basis, most notably in Europe .
While concerns about global economic slowdown about a global economic slowdown should temper expectations. There is nevertheless, a growing consensus that the conditions, causing the crisis and thats. The strong product tanker market may continue for some time.
Higher oil prices and volatility.
Reflecting in part the Underinvestment in oil and gas exploration for many years.
As a result of the Ukraine <unk> energy security is now an immediate priority globally, which will take some time to resolve.
Low global oil inventories the difficulty of restocking in a supply constrained market and strong competition for reliable supplies, we'd like to continue to drive physical supply demand dislocation and thus our markets for some time to come.
Under these conditions <unk> in particular are playing a vital role as most flexible and the largest tanker asset class by number of ships as they can trade virtually anywhere in the world and they comprise fully one third of the global tanker fleet.
Also it's important to point out that tanker demand is highly price inelastic the constant free even at today's high levels, it's less than 5% of the value of the cargo. So there would appear to be no practical upper limit on charter rates in terms of potential oil demand destruction.
Meanwhile, chemical tanker rates are tracking <unk> upwards as a similar dislocation in chemical and veg oil markets is driving ton mile demand. In addition to which there is less competition for chemical cargoes.
<unk>.
Moving to slide six regarding <unk> commercial and financial performance.
Our fleet employment strategy has positioned the company very well to maximize earnings in this market upturn.
We made a deliberate move to spot trading away from time charter out going into 2022 in anticipation of an improving market, but of course, neither we or anyone else anticipated the current strength.
Technically our fleet is trading 120% spot when including our time chartered in vessels now totaling five.
At an average TCE rate of 12600 per day.
As mentioned chemical tankers are now also doing very well on a capital adjusted basis, notably engaging on very long haul voyages, reflecting a key driver in this market.
In addition to the $40 million perpetual preferred issuance from last year has proven to be very valuable in managing financial risk, while leaving all of the upside to our shareholders in the strong market.
And then in the meantime, we're continuing our heads down business as usual approach regarding performance improvement in order to maximize earnings and cash flow with an ongoing intense focus on trading performance.
And voyage optimization, which is particularly important to this high bunker price environment.
We're also continuing with vessel efficiency improvements consistent with our ETP, but also.
Cash flow.
And then financially the recently concluded refinancing will reduce our average credit spread from three 2% down to two 6%.
<unk> got a roughly $2 2 million per annum saving.
Assuming a continuation of strong market conditions, we anticipate a meaningful reduction in our leverage and our cash flow breakeven levels by year end, thus opening up new capital allocation opportunities along with more sustainable ongoing profitability.
And with that I'll hand, the call back over to Paul.
Thanks, Tony I'll take a look at the fundamental incentive move to a financial review and capital allocation.
Starting with slide eight for demand fundamentals.
That's it for our product and chemical tankers remains very positive the IAA or forecasting global oil demand to increase by $1 7 million barrels a day this year and $2 1 million barrels a day in 2023 in spite of a deceleration of global economic activity.
In particular aviation activity continues to support oil demand with jet fuel demand, increasing by 900000 barrels a day or 18% since the start of the year.
And the disruption in trade flows associated with the Ukraine, and Russia War and energy prices are adding to ton mile demand.
For example in Europe is now sourcing refined oil products in the U S Gulf and the middle East rather than Russia, and this is unlikely to change anytime soon.
Meanwhile, as we've been saying for some time the ongoing trend in refinery dislocation will continue to have a positive impact on product tanker demand, providing an additional layer of growth.
Over the next four years Theres $8 9 million barrels a day of export refinery.
Capacity growth in the Middle East and Asia, as compared to $5 9 million barrels a day of closures of local market focus refineries in the U S Europe , Japan and Australia.
The combination of these developments means larger seaborne volumes of refined products moving over longer distances.
Overall product ton product tanker ton mile demand is expected to grow by 3% to 4% annually over the medium term, which should be well above supply growth.
Chemical tanker demand as a result of very positive driven by ongoing global GDP growth and increase in petrochemicals parts on the long term and favorable ton miles and enforces consistent with prototype of our markets in the near term.
Moving to slide nine we'll take a close enough to supply fundamentals the supply outlook for product and chemical tankers is also favorable driven by a low order book and increased staffing levels.
Net fleet growth delivering less scrapping is expected to be well below demand growth for the coming years.
Estimated net fleet growth in 2022 was one 4% for product tankers, and one 1% for chemical tankers with a downward trend expected to continue as you can see on the chart on the upper right.
Scrapping has been running at more elevated levels for the past few years and given the age profile of the fleet. This should continue.
29 product tankers has dropped in the year to date compared to 68 ships are 2% of the fleet scrapped last year.
And while the resurgence market may slow scrapping in the near term and <unk> faced with ultimately see scrapping levels increase in the long term.
Currently 9% or 271 chips of the prototype of our fleece and 13% or 239 ships of the chemical tanker fleet are over 20 years old and coastal Scuffing H.
At the same time, the order book for product and chemical tankers remains low.
The product tanker order book is at six 2% to 179 ships and the chemical tanker order book at 36, 3% or 78 ships delivering over the next three years.
New ordering activity is expected to remain low in the near term is very limited first availability until 2025 and.
And a lack of clarity in propulsion technology and emission regulations has dampened the willingness of the tanker owners to order speculatively.
Moving to slide 11, we take a closer look at fleet and operational highlights.
Continuing to invest in the fleet to optimize operating performance, we expect to complete one drydocking and ballast water treatment system installation in the fourth quarter with a total capex of $2 4 million <unk>.
<unk> forecasted revenue days for 2022, or approximately 9750, <unk> time charter in ships chemical tankers, representing 24% of fleet days for the year.
And operationally the fleet continues to perform very well with Don higher availability at 99, 3% for the second quarter.
Turning to slide 12 for financial highlights and guidance.
We're reporting earnings of 29 million or <unk> 82 per share for the second quarter, representing our strongest quarter ever.
And in addition to a strong chartering performance.
Continued our focus on cost control and efficiency improvements.
Operating expenses are at $15 9 million for the second quarter compared to $16 4 million for the same period last year.
And looking ahead, we expect opex in the third quarter to be lower at approximately $14 million. Following the sale of three ships.
Chartering expense was $2 3 million for the second quarter and will increase of $5 million in the third quarter, reflecting five ships on time charter in which in terms of charter back of the three recently sold vessels.
And as you can see in the chart. We have spent the time charter in expense between operating and capital components in our income statements from this quarter and more on that in a moment.
Depreciation and amortization totaled $7 9 million in the second quarter down $1 1 million from the prior quarter as a result of the sale of three ships and we expect depreciation and amortization for the third quarter to be about approximately $8 million.
Total overhead costs were $5 3 million for the quarter, our forecasting them to be in line with the third quarter.
Interest and financing costs excluding.
Nonrecurring items associated with the sale of the vessels came in at $4 2 million for second quarter, and we expected to be approximately $3 9 million in the third quarter. Following the prepayment of the debt associated with the vessel sales and the cost savings associated with the refinancing currently underway.
And finally this quarter, we are introducing EBITDA, which is EBITDA plus bareboat equivalents lease expense as a metric to enable a comparable valuation with IRS reporting peers.
Ardmore reports under U S GAAP, while most of our peers report under <unk>.
<unk> is different from U S GAAP and its presentation of lease expense by including it in depreciation, whereas U S. GAAP does not.
As a consequence assessments that are chartered in for greater than one year result in higher EBITDA under <unk> and under U S. GAAP.
Therefore to assist in the process of a like for like valuation, we are introducing EBITDAR as comparable to EBITDA reported by <unk> peers.
The effect is that we will add back the lease expense, which is the implied capital component of the contract expense to EBITDA to arrive at EBITDAR.
A full reconciliation of business provided on slide 22. This presentation and also in this quarter's earnings release form 6K release this morning.
And turning now to slide 13, we can immediately see the reality of the current market.
The charter rates for the second quarter were very strong, but they pale in comparison to charter rates in the third quarter.
<unk> was 27800 in the second quarter with Mr's, earning 30500 chemicals, earning 22000 per day on a capital adjusted basis.
For the third quarter with 45% of days booked to fleet averaged 43300 per day, comprising <unk> of 46600 per day, and Kevin have tanker rates of $32 900 per day.
And to put into perspective on slide 14, we're highlighting our operating leverage and providing some illustrative calculations of EPS and net income at different TCE rates.
In the highlighted bars, you can see annualized net income and EPS based on charter rates for the second quarter and approximate charter rates for the third quarter.
Based on the fleet average TCE in 2000 727500 per day, which is proximate to what we reported in the second quarter. This translates to annualized net income of $120 million and EPS of $3 25.
And using fleet average rates of 42500 per day for the third quarter based on the bookings to date. This translate to annualized net income of $265 million or $7 15 per share.
As you can see what our operating leverage to high rate environment, a substantially resulting in stronger financial performance.
Moving to slide 15 for the balance sheet in the second quarter, we finalized the refinancing of our debt facilities existing <unk> for three separate loans for $308 million in the aggregate.
The new loans are being used to refinance 19 vessels, including nine vessels financed under leases.
The loans comprised of 185 million fully revolving credit facility of 108 million senior term loan and a $50 million receivables facility.
The two main known subsidiaries are priced at LIBOR plus at an equivalent of LIBOR, plus two 5% a significant reduction of existing debt pricing and all three loans are sustainability linked and include a pricing adjustment feature linked to carbon emission reduction and other environmental and social initiatives.
The refinancing of hugely advantageous for the company is allowing us to eliminate expensive leases, taking the number of leased vessels from 14 to two since the start of the year.
And the average credit spread on the desk was substantially reduced from three 2% to two 6%, resulting in annual interest savings of $2 2 million per year.
And final documentation is in progress and we expect it to be fully completed October when all the leases are refinanced.
And in addition to refinancing we engage and limited usage of the ATM to build financial strength, we issued $2 8 million shares in the period at a weighted average price of $7 40 per share raising 25 million in net proceeds.
And as a result of these initiatives and favorable market conditions, we are well on course to build a fortress like balance sheet consistent with our capital allocation objectives in a very short timeframe.
Finally, moving to slide 16 for our capital allocation policy.
Our capital allocation policy was introduced in March of 2020, and the overall objective is to build shareholder value in a highly cyclical industry.
The policy is designed to ensure that ardmore is well positioned to capitalize on opportunities through the cycle and developments in the industry.
And our priorities remain the same we maintained the fleet over time in terms of number of older ships reduce leverage to below 40% grow accretively to scale on returning capital to shareholders.
And we've made significant progress towards these objectives over the past 18 months the preferred share issuance in mid 2021 buttressed the balance sheet through the COVID-19 weakness, while protecting upside for common shareholders and.
And the exceptionally strong charter market is now affording a great opportunity to further improve capital structure and reduce debt.
And the priority now is to accelerate debt reduction and clear the pathway to consider different uses of cash when those targets are met.
With that I'd like to turn the call back over to Tony.
Okay.
Thanks, Paul So to sum up then <unk> charter rates are now at levels offering impressive returns for this quarter earnings of $29 million or <unk> 82 per share representing an annualized return on equity of about 40% and.
And for the third quarter to date with 45% fixed potential earnings of $65 million or $1 75 in EPS and an annualized return on equity of about 90%. If these levels are sustained.
<unk>.
We believe the product tanker market is being influenced above all by the energy crisis, while the prospects of a global slowdown should temper expectations. There is growing consensus that the energy crisis will not be resolved anytime soon.
Meanwhile, product tanker supply demand fundamentals also look favorable with solid demand growth expected on the back of strong oil demand growth.
Even after recent down downward revisions and product tanker supply.
Contracted supply constrained by shipyard berth availability and continued scrapping.
As a company we remain focused on operating performance and are making good progress.
In addition towards our capital allocation policy objectives in other words leverage reduction in fleet size management, which will which one that will allow us to pivot to other priorities in other words further growth and returning capital to shareholders.
In addition, our energy transition plan is still very much at the center of our thinking most immediately driving efficiency improvements and progress with our <unk> Marine joint venture, while continuing to seek opportunities and are gradually but nevertheless, profoundly changing business landscape.
I don't know Curt.
I wanted to take this moment to thank our CFO Paul <unk> for all his effort great results and companionship over these past 12 years and wish him the very best in his future endeavors.
At the same time as you will see in our separate press release, we're very pleased to welcome our new CFO , Bob Kelleher to the team and we look forward to working with him from September one.
And with that we're happy to open up the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two.
The first question is from Sean Morgan of Evercore. Please go ahead.
Hey, guys.
I'm on for John Today, you wanted me to.
Really our.
Sentiments to Paul and wish him luck.
<unk> not sure where he is planning to go but if it's New York and I'm sure we can make.
Room for one more Irishman here so.
Just.
On the <unk> marine.
Sorry, I think it's been about a year since that's closed are you guys seeing.
Commercially ready to start.
Licensing alpha royalties or where are we sort of commercially with that business line.
Thanks, John I'll take this and firstly, thanks for your comments and John also so yes, even marine has made a lot of progress in any one corp. Indeed has made a lot of progress over the last.
A number of years, particularly in the last 12 months in terms of commercialization at this stage if they could decode issue licenses.
Focus has been for the moment to get the technology of <unk> to that end the hydrogen one vessel, which was announced last December is construction is well underway I think on the last call, we announced that they've got a proven and principal from Lloyds and.
And hydrogen one maritime partners. Our JV partner have also I think just appointed.
There are.
Order Dara fuel cells to partner with the <unk> system, so huge amount of progress on the commercialization and modernizing the technology and I think in terms of next steps you will see kind of commercial progress and perhaps licensing over the next couple of quarters.
Okay. Thanks, Paul and then just a follow up for Tony I think on the broader market.
Obviously nice improvement here in rates on the clean <unk>.
Just wondering how much of that do you ascribe to sort of dislocation from Russia.
The changing geographies.
Clean product production and then I guess, just just kind of a return of travel demand and how sustainable do you think this nice.
Client environment, we have.
Yes, good question, Sean and that's what we tried to focus on to the presentation. So I think youre hitting out a few things there one of our fundamentals.
The jet fuel most particularly.
So I think underlying all this is a pretty healthy dynamic in terms of supply and demand.
There is.
What we're seeing in kind of hearing more about now is just more broadly in energy crisis, but obviously is in part being driven by Ukraine War.
There are other factors at play and this happens at a time when.
A lot of a lot of consumers are running with very low inventories and are having to go look very far away for a reliable source of supply.
Karl Thanks, Thanks, a lot that's all.
Thanks, Sean.
The next question is from Ben Nolan of Stifel. Please go ahead.
Alright I appreciate it.
And good luck to you Paul.
Miss some of our outings.
Outings, but.
Yeah.
I guess I would start.
From a sort of a bigger picture macro question you addressed this a little bit in the capital allocation.
With.
A target of 40% leverage at these kind of day rates youre going to get there really fast.
Especially with the addition of the ATM that you've been somewhat active on there.
I guess, Tony for you Big picture.
If this market can sustain here.
Or at least reasonably healthy levels and the leverage gets down.
Already one ardmore to be I don't know a year from now or two years from now how would it look different.
Now that things have sort of transitioned from.
Theoretical to actually possible.
Well I think that kind of a year to year. So now with the market continues at anywhere near these levels. We will obviously have reached ARP.
Leverage targets et cetera.
Sure.
Well before that and we will be in a position and probably be returning lots of capital to shareholders.
Under those conditions.
And also being well positioned to find the right opportunities for growth.
If the market isn't sustained.
We believe we'll be in a position to I.
I think as you pointed out I think our financial strength is going to build pretty quickly and thats going to give us a lot more flexibility about capital allocation priorities.
So just to take a step back the overriding objective when we set out the capital allocation policy was to position the company for well timed and therefore highly accretive growth.
As well as well as more of a regular return of capital to shareholders.
Alright.
Although I guess I suppose the tradeoff and this has always seemed.
Seemingly the case in shipping I mean, you addressed in the presentation that MSR values have come up a lot.
Yeah.
It's always a tradeoff to you do you pay for growth, even though maybe prices are higher versus.
Again return of capital I'm, just trying to get a sense of again, how you think about executing on growth.
I think you know us well enough to know that we're.
Not momentum players so we will.
<unk> be quite prudent in terms of how and when we engage in growth.
The last big step, we made was quite a while ago now was the frontline fleet acquisition.
We bought those shifts there.
<unk> line of ours, when they were about a year old we got them for 29 million each and now.
Six year old ship is worth $34 million to $35 million. So.
We don't need to necessarily.
Do that well and acquisitions, but we do think that there is potentially pockets of opportunity that could arise over the next year or two even in relatively strong market conditions, but otherwise we can be patient.
Okay got it.
Please.
Be able to generate a lot of cash flow for the next at least three years.
Right.
And then and then lastly for me.
I think I caught this at the end when you were talking about just sort of the.
Chartering strategy and so forth.
You guys looking to maybe lock in.
Or.
It will lock in gains, let's say on some of the charter ends by chartering out those vessels.
Securing cash some cash flow visibility is there what's the shape of the curve there I mean is it.
Substantial decline for time charter versus spot.
At the moment, it's very heavily backward dated so we're looking at we've talked about the spot rates one year Tc is probably around 20000 now substantially lower and then it's maybe flat for a couple of years. So we're not we're not drawn to those kind of numbers yet.
It also depends on our view on the next kind of one to two years at the time that opportunity arises, but also you have to factor in who the counterparty is.
And how how reliable they are.
To perform even if rates fall off.
Yes.
Alright, well I appreciate the time and Apollo I'll Miss Miss our conversation.
Thanks, Brian we're talking soon okay.
The next question comes from Omar Doctor of Jefferies. Please go ahead.
Thank you Hey, guys good afternoon.
Congrats obviously on a very strong quarter and it looks like you've set up the third quarter does look even better and also Paul Congrats on Euro 12 years with Ardmore, it's been a pleasure and definitely look forward to seeing what you have coming next.
Not a bad way to go with those refinancings here the past couple of months.
I wanted to ask about just kind of going back to Ben's.
A question about capital allocation, obviously your priorities in order are maintaining the fleet followed by getting the target leverage below 40%. That's obviously it seems like that's a bit different than in the past where the target was to get the 40.
Now, it's below which makes sense of how far below 40, do you want to get too.
You're probably reading a bit too much into the below Omar I think we're happy with if we include the perhaps.
And the leverage component then I think I think we're happy below 40% on a mid cycle basis.
So we will.
But it seems like there's a lot of momentum heading heading towards that target right now.
Okay do you think that's something that.
Obviously, it's all.
All projections, but is that a figure that you think you can get to by year end based off of how things are playing out so far.
Yes based on how things are playing out now definitely.
Just look at the forecast for <unk>.
<unk>, even have a moderate assumptions for <unk> I think I think that probably gets us there.
And then.
Very pleased when that happens because it opens up all sorts of other opportunities.
Notably returning capital to shareholders, but also looking for growth opportunities without without playing into a hot market.
Yeah, and I guess, just kind of on that note of looking at.
Opportunities.
What do you think makes sense I know a couple of years back after that floating storage, but when we had a good amount of excess free cash and you went up you bought.
It was a bit older the quality shift, but it was I think 2010 built how do you think about it.
The next time, you deploy capital in buying ships or a ship could you see doing something opportunistic like that again or do you focus more on going younger.
That's a really good question.
We're really happy with that one acquisition we made.
You had quite a bit of cash, but the reality is that that ship today than even today.
Is breakeven rate, including full overhead allocation of 11700 per day so.
That always works.
We obviously over time need to consider how to how to rebuild build and modernize our fleet.
We think our timing is pretty good in that respect in terms of what the right type of ship will be for the future meetings.
Meaning that nobody really knows quite yet, but hopefully we will have visibility on that in a year or two.
And if in the meantime interesting either on the product or chemical space opportunities come to buy more modern ships.
Good price.
Yeah.
So in some form obviously, we'll take a hard look at that.
Thanks, Tony and just one final one just on the EBIT fell.
The older <unk>.
We've seen asset values go up tremendously over the past several months any interest in monetizing.
Another portion of the Ardmore fleet, whether it be the hand piece or the chemical tankers are you you are happy with what you have at the moment.
Yes, no those ships, we actually kind of held held out to sell those ships for about a year.
As with the intention of taking the back on the on the medium term time charter basis. So that we could efficiently exit chips that we're approaching 15 years of age, but keep keep them in the fleet from the.
And earnings standpoint.
Kind of commercial commercial platform standpoint.
So.
What's interesting now is it rates and I think we've seen this in the Drybulk market rates are so strong that they are actually kind of monetizing themselves through cash flow.
So we don't we don't feel that.
I think there will come a time that people will look back in hindsight and say, yes that was the time to sell.
And that's very very difficult to call looking forward and I don't think thats really in our mindset at the moment anyway.
Got it thanks, Tony Thanks, Paul and again Paul.
Pleasure working with you and good luck.
Future.
Likewise Omar thank you.
Again, if you have a question. Please press Star then one the next question is from Chris Tsung of Webber Research. Please go ahead.
Hi, Hi, Tony and Paul Thanks for taking my questions.
On the new sustainability launch.
Facility.
A bit on the factors that were considered securities as of late.
And what did the pricing adjustments look like.
Okay.
Thanks, Craig Great question I think when you.
When you think about sustainability linked loans or if you're thinking about the way the shipping finance market is going.
I think if you want to get access to attractive funding well priced funding from top tier banks you have to you have to show your credentials on sustainability and sign up to some pretty pretty robust targets in terms of where you want to go to in your carbon reduction so I would say in terms of the loans themselves.
Fact that we're able to get very sharp loans, what is given the overall economic environment.
A pretty sharp price in a big saving on our existing existing debt. That's achievement number one and then on the specifically on the pricing adjustment and it's approximately five basis points, plus or minus which is which is market for sustainability linked loans, but I suppose the main point I would say is in terms of accessing kind of top tier financing.
Competitive pricing with the leading banks you need to you need to have a pretty robust standard feature built into them.
Got it thanks, congrats on securing that looks great and then maybe just thinking about.
Ardmore scale, and perhaps bandwidth like how long do you need.
Tony.
Two commercially manage them.
I am Chris you faded out there at the end could you repeat the question.
Yes, sure. So just when thinking about scale and bandwidth free operations and how long do you continue to partially managed subsidiary chemical tankers.
It's on an ongoing basis, but I think they're I think they're really pleased with the results. They are achieving right now so hopefully it will be with us for a while.
Okay.
With those brings that fleet up to 30 ships altogether, which.
We think as is okay for the time being in terms of.
Commercial platform and market reach.
Alright, Okay and for the three vessels that you sold and charter back tears when would those options need to be declared in our the way farmer a softer than the current charter rates.
Yes, so those are.
Specify what exactly the rate is but.
The structures two years term and then an option one year and.
I think the I think the one year option is probably declarable are probably a few months before the end of that two year period. They are just starting now.
The rate if you combine it with the other two charter in ships.
Average of the five ships is 12600 per day, so thats way below current levels.
Okay, great. Thanks, and lastly, just <unk>.
All of US at Webber research, Congrats and best of luck to Paul.
Thanks, Chris and hopefully we'll speak to you all soon.
Yes definitely thank you.
This concludes our question and answer session and today's conference. Thank you for attending today's presentation. You may now disconnect.