Q4 2022 Frontline Plc Earnings Call
Good day and thank you for standing by welcome to the fourth quarter 20, twenty-two frontline plc earnings conference call. At this time, all participants out and listen on them out after the speaker's presentation that will be the question and answer session just.
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I would now like to kind of conference over to the first week of today. He used to love flashed that please go ahead.
Thank you.
They're all thank you for phone.
Phone plans fourth quarter earnings call.
<unk> today for those of you who are analysts it's quite a few companies reporting today [laughter] I have a.
Feeling some of the questions in the upcoming queue and they will be focused on the termination of the combination I agree with you or not but let's for now focus on frontline and the smoking markets. We've had in the fourth quarter.
Although the implications of Russia's invasion of Ukraine cause most of the headlines we believe a from a tanker market perspective, Charlie and what's the capitalist from client posting the best quarterly results in over 14 years.
As they finally fired on all cylinders throughout two quarter Liam.
<unk> business model.
Silence.
That's quickly look at T C numbers on slide three and the deck.
In the third quarter from planet <unk> six to $3200 per day on our vehicle fleet.
$7900 today on our Suezmax fleets.
The $68800 per day from out on our <unk> slash from accurate.
And finally, the inverted earnings relationship between our segments, where at least temporarily reversed.
So far in the first quarter of 2000, <unk> book to 87% of <unk> at $68300 today Sir.
77%.
<unk> $702400 today, and 68% of our I love to slice up from my space at the solid $63900 per day again, all these numbers in the table or on the low to discuss basis and they will be affected by the amount of ballast.
We ended up having at the end of Q1.
Before I gave them to Inger justice quickly jumped to slide for in the deck.
I'll repeat a few key points on the phone Kleinsmith composition.
Frontline continues to hold one of the most efficient fleets and industry and our Davis.
Diversification has proven profitable for all our shareholders. During 2022 scrubber spreads continue to incentivize investments hoovering north of $200 per metric ton and we are installing scrubbers from two additional vehicle.
Seeing we have only to lease left without this cover.
The average age of our fleet is a comfortable five years from planet well positioned in CIA terms and also for the upcoming EU.
ETS considerations.
Now, let's take you through the financial highlights.
Oh, thank you.
Good morning, and good afternoon, ladies and gentlemen.
Let's turn to slide.
Alright.
And.
First quarter, we achieved.
It'll operating revenues.
<unk> $3 million.
I just did it better.
$207 million.
We came in after net income of $240 million.
Which is the highest coordinate income that has.
And since 2008.
Then we had on just a net income of them 216.5 million.
Yeah, just a net income in the fourth quarter increased by $133 million.
Compared with the previous quarter.
And that was given by an increase in other times soccer equivalent earnings do.
Due to the higher T C.
<unk> went through earlier in the presentation.
This was partially offset by a general increase in expenses.
We declared a cash dividend for the third quarter of the 30 cents and for the fourth fourth quarter of 77 cents.
And the fourth quarter dividend is it that you said that you could turn out to 17%.
Sure.
December .
December 31st 2022, we have your wife, the estimated useful life followed vessels from 25 to 20 years.
Which is expected to increase depreciation expense Firefox 69 million 45.
<unk> six.
The balances.
Total balance his numbers have increased with 227 million in this quarter.
And the main drivers delivery of some diarrhea.
Revaluation gain on the <unk>.
Increase in vacuum capsule and also the net income that they aren't in the fourth quarter.
As of December 31st 2022.
<unk> had $556 million in cash and cash equivalents.
Including Android amounts undernourished senior unsecured loans to send a tech octopus securities and cash requirements.
<unk> described seven.
And let's take a look at cashflow potential.
We escalate average cash cost. Thank you invest for 2023 of approximately $27000 for the interface <unk> $1500 for this Max's and $17600 a day for Elektra tankers.
With a fleet average estimate of about $22300 per day.
These are the customer. Thank you started going to these fees and one I'd like to try and get into subsequent 23, all in the first quarter.
With respect to operating expenses.
Mm recorded $8800 per day for the disease.
17604, 7600 for serious boxes, and 8700 482 tankers.
And be dry docked two that's listed in the fourth quarter that most of our lives a fee and vanilla two tanker.
Looking at the right hand side on the side, we shall free cash in.
Millions and for sure after the service basis can feed.
Thanks.
If we look gap assumed CTC rates of $75000 per day with five historic spreads to visit to see for serious accident Ella two tankers.
Fee cash potential.
More than $1.4 billion or $6.46 per share.
And with that I think I need you to work with you again [laughter] yeah.
Yeah. It's we are in kind of a market, where where are the potential is it's a substantial if you'll need to slide aches I'm just recap what happened in queue for in the stock market.
You know I haven't <unk> sneak peak of what's to come.
I think it's probably not the secret that we are tremendously bullish for the next couple of years.
During the quarter all segments from <unk> perform.
It was finally able to turn for <unk> to to shine.
The average wasted market earnings for tankers are actually flirting with 2004 highest so you see in the in the shocked below on the left hand side with a yellow column Uhm I think in general the market has been drinking <unk> <unk>.
Substantial Q4 and the therapy.
Wow. This is the average wait to earnings for all time case, obviously, what's happening <unk> I'll I'll choose a phrase <unk> I'm gonna be able to see US together has made this possible is we are in the market conditions, where it's not only maybe also see outperforming.
It's basically all segments before me.
Chinese imports are back above pre COVID-19 levels hovering around 10 million barrels per day.
And the <unk> shipments to China, <unk> I would like to say the big ships are back.
During Q4, we sold the G seven crude oil price cap come into effect on December 5th.
We have a C M already lots of crude on.
Two large being redirected to you know around Europe .
To Asia.
Middle East predominantly so the effect of the <unk> of the <unk> was somewhat muted we also need to keep in the back of our head during to a mild winter in the northern hemisphere.
Oil prices were also hovering below or around $8 today, making Russian crude comfortably probably below the price cap.
Definitely too.
In line.
We believe if the three major themes out three embarked on again.
Upcycle.
First it's oil demand.
As long as we have oil prices.
The area, where we are now hovering a taped to $90 per barrel.
We believe or in demand will continue to be fairly strong. If you look at the sharp at the bottom left this is from E. I a.
It's kind of.
Confused is another confusing shot that goes in one direction.
It shows a lot of volatility.
Going forward.
By the end of 2024 expects global oil consumption to be more than 4 million barrels per day higher than where we are now.
Asia in particular time nice expect it to be the key driver.
And I was returning from Covid Lockdowns.
The second big part of this equation is obviously fleet's supply I'm.
In total tanker fleet growth is set to turn negative during 2000 to 2004. This has not been seen.
Since 2002, and if you look at the middle shots below you'll see the columns for the various years of growth.
<unk>.
Go through <unk>.
23.
We expect to have about 3% growth in the total fleet of tankers globally.
That will be used to reduce to 1% in 2024 on it'll actually turned negative during the year and in 2000 2005. The overall fleet is expected to reduce by 1%.
A change in trade dynamics may actually accelerate this right now 12% off the tanker fleet is above 20th we've had very limited scrapping the ships are inside trading kind of beyond their expected lifespan.
So obviously in the regulatory changes or any initiatives in this respect could accelerate the feature direction.
World's seaborne trade and this is the bottom right tons.
The graph is expected to grow by 6% to 7% annually over the next two years.
This is a function of the key the moms centers being in Asia.
Key production growth coming out of U S in Latin America predominantly.
The overall or the books thumbs up 5% are actually slightly below and now we're looking ups delivery windows in 2026.
Let's move to slide.
I look up a bit further on the order books.
During last year, we have the lowest contracting activity in decades. If you look at the graph on the top left hand side, you will not find one column since 1996 and this is a history I actually have available that is lower than the sum around 7 million debit funds <unk>.
Complexity in 2022.
So we go into 2023 this activity continues to be reached at.
If you look at the <unk>.
Isolated there are now <unk>.
During 2023 will have 112, Vlcc's pulsing 20 years.
That will be 13.2% of the.
Of the Empire fleet.
<unk> at 28 units and that represents the 3.3% over the existing fleet.
If you look at the Suezmax. This this this is even more pronounced by the end of 2023, I say for you, but first will be above 20 years.
Perhaps they represent $14 five per cent of the fifth the order book case that the mobile is 10 vessels.
<unk> 1.7 per cent of the fleet.
The luxury market, it's a bit more balance there's a few more sips some order, but they have the same age profile so often.
About 400.
<unk> in the World 25 will turn 20 <unk>.
During 2073.
Dr represents about 6% of defeat the order book is current at 51.
Better represent 12.8% of it.
Appointment that I made before on Lilah tooth is that effective kind of age open the luxury starts to or the effectiveness of trading a lot too starts to be reduced afterward.
15 years due to quite a few shockers limiting their suffering any activity for vessels that go beyond the 15 year trestle.
If as I move to slide 11.
How 'bout Gonna look at some of the key exporting recently.
What kind of the state of the market as I mentioned earlier that the three major themes or was the oil demand fleet subprime distances, but in order for the mom to be cost.
Sufficient supply we need production as well.
World crude oil exports are now back to pre COVID-19 levels finally.
We're hovering at about 42 million barrels per day of oceangoing volumes.
Just north of 40% of the global oil.
Production.
West Africa continues to struggle, but saw a modest improvement in the fourth quarter.
Latin America is becoming an increasingly important export the region in particular, Brazil and <unk> are.
Are the keys for growth.
Russian exports are surprisingly resilient and export exports are back to pre emission levels I think some of the statistics there may be colored by the by.
Kind of increased exports ahead of the fifth of December price cap, but still Russia still seems to find homes for as crude.
U S exports continue to be firm and we're particularly surprised after the S. P. R releases stopped during November .
More or less stopped during November last year.
U S continues to be the.
<unk>, where we will see production increases and over the next couple of years. He was alone will actually represents close to 80% of new toilet.
Online.
Globally.
Then if we moved to slide 12.
Go through the summary.
The frontline reports the highest quarterly nothing comes since 2000, net a call $240 million.
Our cash David Dunn, which is obviously the combination of Q3 and Q4 is a dollar and 70 cents.
We took delivery of the three remaining you'll be able to see new buildings from Yunde unsold one <unk>, both 200, <unk> 2000 line bills.
As far as we see it sign up took center stage in the fourth quarter and imports in China fell to China are back to pre COVID-19 levels.
<unk> continued to recover there's a limited fleet's supply and then increasing <unk> are the key drivers for the years to come.
We continue to believe that from clients efficient and transparent business model will generate shareholder returns.
And with that.
Would like to open up for questions.
Thank you as a reminder to ask a question you need to slowly pressed one telephone keypad and my finance to be announced until they tell you. A question. Please press star one one again.
<unk> this will take a few moments.
Now we're going to take all the first question and it comes from the land of modern Doctor from Jeffrey So that need help and please ask such a question.
Thank you. Thanks. Thanks. Thanks, Thanks for the update clearly a lot of positive thieves developing here either.
You touched here on the last slide Laura is about the new building program now being officially complete with the deliberate. These final three Vlcc's you did tell a couple of older tankers, the Suez and the <unk>. What are you thinking about frontline's strategically as we move forward you know absent large scale M&A.
How did you think about the fleet from here. So the first time in many years I would say that you you don't have an order book do you love to sell more ships.
In this market to replace the ones you sold how were you thinking about that.
It's a very good on climate, a question and in what way.
Cough.
Serving is that asset prices are moving a bit the head off.
Markets.
To descend investing in say a new build.
You look at the VLCC assume the closer to $50000 per day of earnings consistently for the next 20 years to make 15% to 20% return on the investment. So so we feel that the prices have a mood may be ahead of.
Tons of times.
Tom charter rates.
Graves.
So we don't really have it comfortable and also secondly, due to the the lead time to receive a new building.
Probably wouldn't get through them, so 2000 2006.
We have two and a half years, they're off of a substantial asset price risk should something happened to this market.
On the <unk>. The prices are continue the prices continue to be elevated.
And again.
The the T C market doesn't give us kind of the the returns where we're looking for so so it's.
Then again, we have some assets in our portfolio about the probe me, we should consider selling.
To the high contrast, the prices the thing is that.
Earnings potential remain so high on these kind of more.
Sure assets to to to to go with that.
That's we are a bit split the mines are we just going to continue and harvests and keep this uniform as long as they make a lot of money or are we gonna take confused <unk> elevated acid prices.
Uhm the taken profits on the sources.
All our assets are actually fairly okay from a CIA perspective, so so we're not too nervous about that.
But I, but I think the question you're raising here is probably the question most shipowners are asking themselves.
Yeah, I came interesting one yeah lots of different ways to look at this.
Expensive.
As you mentioned the return profile needed.
So a new buildings at least so then maybe.
Maybe as you kind of hinted at early on the call about the discussion of the combination with your.
To the extent you can you can say anything about this but.
Clearly there are lots of changed over the past several months.
When it comes to urinate for instance.
Can you envision revisiting that combination or that merger for somehow CMP, we're no longer to get her involved or are no longer an obstacle.
Just simply wanting to know as you think about the termination of the agreement with you on that that is that just simply specifically because of the CMP situation or was there something else.
The the last part first.
With respect are probably answers. The first question. The first part of the question. So it was not only the CMP blocking position. That's the tree gave to the termination that were also certain.
The requirements were and Tim case so.
So so so I think.
Blocking position was one of the major reasons.
Our board decided to terminate but there were other factors.
Legal factors in play as well.
As it is right now a combination with you and all of his off the table.
But obviously.
That could be a scenario.
In the future where that discussion comes up again, but as it is right now at the end of that has been absolutely no discussions with you are now since the termination in this respect.
It is firmly off the table.
Got it well thanks for that color Lars I appreciate the the time I'll turn it over.
Thank you.
Thank you.
Now they're going to take our next question.
And the question comes clan of John Chapel from ever call ISI. Your line is open please ask a question.
Thank you good afternoon.
Apologies for the Monesia of this question, but it's pretty important so youre dividend policy back to paying dividends and I think with the ruling on February 7th kind of all handcuffs. They're off you can do it whenever you want to do with your cash if we look at the third quarter and the fourth quarter distribution based on adjusted earnings it looks like about an 80.
Percent payout ratio. So the first thing I wanted to do was.
Confirm if there is a.
An actual payout policy that we can model to 70, 80% off adjusted earnings and then the second part of it is this depreciation reset that youre doing where you're adding $59 million in annual depreciation.
That's not cash, but it is earnings so.
Does that mean that the payout would potentially pegged to cash as opposed to EPS going forward because of this DNA reset.
And let's take the first first.
And there is a set payout policy in stolen is that what it means that I.
I guess you can use them.
80% that we have been paying now for the last quarter past the good day I guess isn't it.
And the transfer will be the <unk>.
With respect to the depreciation policy I wasn't sure I got your question that could you. Please repeat.
Yeah sure. So if you pay out policy is based off of net income.
<unk> 59 million, adding $59 million of depreciation.
It's pretty it's pretty meaningful it's over.
Over 50.
It means the property five six cents.
<unk>, if not more than that.
Hello, I think we lost you there John .
<unk> okay.
Thank you.
[noise].
Now we're going to take our next question.
And the next question comes from the land of I mean.
My throat try from Deutsche Bank is open please ask a question.
Hi, everyone. This is Chris Robertson on for a mere thanks for taking our questions.
Hello, Hi, Chris.
Yeah, you spent quite a bit of time hearing the presentation talking about the older into the fleet and I think it's an important question moving forward. So.
And your mind the owners with vessels over 20 years of age do you think that there is simply going to ride out. This current cycle and then exit the market or do you think these owners will engage in fleet replacement ordering at some point in the future. So I I guess in other words, how much of the older ended the fleet is likely to get replaced at some point versus simply just going away forever.
<unk>.
[noise] Yeah. That's again, a very good question I think his thoughts with the the you know.
The older portion of the fleet we have.
Two.
[noise] brackets.
Fleets, we have the absolute <unk> the woman, who have gone completely wrong, the entree administer lemon Iranian and crude that's basically it's a fairly large portion of the 20 aircraft sleep. They are probably not gonna reinvesting moment promise to any point in time.
Just gonna <unk> assets as long as they float then we have.
More.
Kind of mature <unk>.
Probably you know.
Oh bring around 17, and a half years, which we now tend to call the Grays fleets.
A large portion of the street.
Currently being engaged in creating a Russian crude on products.
Again, I think the same goes for <unk>.
In the future, where hopefully there is peace in Ukraine, the the trading pumpkins normalized <unk>. Some of these owners just exiting thing the market altogether.
Blame not doing much of a replacements, so I think kind of where you're going to see the replacement activity is with.
Normal compliance shipowners us ourselves <unk>.
We are in the industry for the long run.
Meaning that too we're actually going to be here for the next 20 years as well.
So it's going to be.
It is like ourselves.
Probably gonna make up the order book at some point, but again back to two or Mars.
Question in the beginning.
We need that.
Cannot mix to walk to make that financial decision.
You could say that we've had been inflation on asset prices, we have inflation on wages and I've actually a certain countries struggling to even get workers into the odds.
But what we really need now is inflation on rates because the rates are thinking of high enough to the hand back investment at this point.
Okay Uhm that that leads into a follow up question I think you mentioned the yards here in the labor shortages. So my understanding and correct me if I'm wrong is that the limitations on shipbuilding capacity at the moment, it's more to do with a lack of specialized labor then it has to do with a lack of infrastructure. So in your mind what.
Yes, what is the likelihood that certain governments either engaged in stimulus or tried to revitalize the shipbuilding industries or tried to incentivize training of laborers that could help kinda offset that in the future.
I think that's very likely particularly.
In China, who is.
Net short hydrocarbons in general.
They have a huge incentive from a government side too to try them unrevised vitalize.
You know the.
The shipbuilding industry, and I've actually already seeing that a coupla yard <unk> are kind of getting back online again.
Two of US it's a modest degree at this stage, but.
If you look at the orders that can be placed in 2025. These are predominantly Chinese yards for.
<unk>, it's a structural issue I just learned up to the average age of the Japanese.
Shipyard worker is 67 years.
I'm only 52 myself, but.
So how much the only one that counts.
When you reach 60, so so.
And Korea.
Extremely efficient high technology, they actually have a higher margin building LNG carriers or vlcc's or even containerships. So so it's.
It is it's a it's a difficult.
I can't really give you a straight answer the Colorado Gabe.
No that's really interesting color. Thanks for that large I'll I'll turn it over.
Thank you.
Now they're going to take on the next question.
And the next question comes to that of grant from BT.
Your line is open please ask a question.
Hey, Thank you and good afternoon, and good morning, everybody I'm Lars.
I was hoping you could talk a little bit about that.
Market and really I guess some of the questions that that that was been having and we have been hearing from investors is.
Clear the market.
LCC market is strong and.
And really some of that strength in the market more recently has come in the face of.
Really lower crude exports out of the middle East Ie, Saudi Arabia, and we can appreciate that China is absolutely importing more crude oil.
But I guess, we're kind of wondering is there a little bit of a zero sum game and they're aware if China's importing more it just means another Asian producer or Asian consumer is consuming less and really just kind of any color you have around the strength in the market. Despite OPEC slowly ratcheting.
Down production.
Of course Craig.
But I think it will say witness during 2022 was obviously.
It was a smaller segments.
To perform.
In the <unk> segment first then <unk> then <unk>.
<unk> cleaned up to two to trade products that's.
<unk> aframax demand up.
Suezmax has started to have a field day on aframax them.
To be able to see it started trading suezmax them.
So you are right in the way that a lot of the demand for Vlcc's currency is actually walk you typically would call us through smacks tribe used calls to UK calm for instance, we've seen.
<unk>.
Hi amount of fixtures.
The.
<unk> is stepping in.
We also saw it briefly and <unk> I.
I assume that's the West African market <unk> started to become a bit shaky <unk> quickly to cap the suezmax earnings so to.
To try and make sense of it I think.
The situation around oil being redirected from Russia too.
I'm going to Europe , being redirected to middle Eastern Asia.
You're basically seeing.
Both are from <unk> getting drawn into that trade limiting the amount of natural ships in those markets and the coupon pocket.
Have given the vlcc's opportunities to.
Enter that market.
Yeah, basically having good returns in that market too so so.
So it is a bit of.
The various asset classes in Ethan get into something is missing segments.
And you're right in saying that for pure kind of traditional VLCC trade that probably isn't enough oil to engage to faithfully.
At this point.
But you know it's.
This is going to move back and forth in cycles I believe as we proceed.
And I think it was quite encouraging to see where everything bottomed out in the first quarter, where we're still.
Pretty solidly in north of at least our cash breakevens.
When the markets turned.
Okay, Great that's super helpful and then.
Another question that I think people are wandering around and I know, there's not an easy answer here is around the dark fleet I mean, clearly everywhere you read.
I guess sanction cargos are still moving.
I I guess I'll ask it this way do we have any sense for how many vessels obviously, excluding the Russian.
Russian flag fleet or the Russian owned fleet could.
Could be could potentially be in that market.
And really as vessels or in that market.
Is there any way to kind of gauge what the utilization of those vessels off all would be and say if I'm trading and I guess that dark type fleet.
I'm, assuming that's less efficient but.
Kind of any color you have around there I think would be helpful.
Yeah.
Regretfully, it's going to be a bit of guesswork.
Your guesses are better than mine [laughter], but both tours.
First I'd like to say that.
Just with a gray fleet on the free trading on Russia that is.
Still.
Good quality fleets, you know trading in accordance with the rules well.
Well maintained ships and so forth, although there may be a bit challenged by age. So so I I would kind of leave that up a side on the dark sleep I've seen the estimations of 5% to 6% of the <unk> smacked with being engaged in that trade.
If you look at the efficiency, if you call a compliance mobile meals. The C 100 per cent I would say these ships, but probably a 30%.
We've previously model. The overall leads the sea fleets and left my dinner, where we would say that.
A.
Over the 20 year vessel that's.
It has an owner you'll never ever heard of.
You would.
Perhaps et cetera per cent efficiency to that ship.
Compared to say, a darn sorry, Gray fleet, Russian trader, who will probably only get 50% to 60% efficiency out of the ship basically due to the limitations in the comply in the markets a shake with Russian history have uhm.
Thirdly, the modern compliant more movie to see if that we own.
We will be 100 per cent and if you do that exercise.
Even see how the fleet growth.
Is it harder for all their faith is not growing anymore, it's actually the capacity to trade oil globally being reduced as we go forward.
All the dark fleet.
The wounds trading listed barrels.
I don't think that fleet is growing as much as it did for the last couple of years.
That is obviously good.
But that it's also scary outfit it is growing older and.
Mind, you, it's a visa shapes that are not being properly maintained so we're probably getting closer to environmental disaster at some point there.
Okay, well. Thank you very much for the time and have a great rest of the day.
Thank you.
Thank you.
Dear Mister John capital from ever call. If you have any further questions. Please can get past how one button.
How about going to open the next line.
And the question has come from the land of China type of home at a call. Your line is open please ask the questions.
Thank you sorry, I don't know what happened there.
Hello.
Yeah, it's probably my fault.
Just to revisit that topic again, and I'm, sorry, I know, it's only seven cents a share but I just wanted to know like with the depreciation going up so much. It's it's gonna have an impact on earnings. So frontline has historically been a dividend payer based off of net income I was just wondering if that makes shift too from free cash flow given the fact that the depreciations changing.
Thanks, so much.
No I think I'm going back to why we had done. This then I mean, what we have done in a way is to just the VSS.
Can you spell that.
Life of other vessels and uhm.
In a way that the 20th is Morgan.
<unk> obvious Belive spent 25 years.
So that is why we have done this changed and if you look at the menu.
Terrace neighborhood, they had 20th.
Not only half vanilla is that kind of common thing.
And.
What I said with respect to <unk>, if you just divided by.
Four quarters senior all this I get to that year.
Number of using a payout <unk>, 80% would be about five cents per share. So that's what they're talking about.
Okay.
Thank you and then you pay down $60 million at the Ham and facility.
I think there's some use of proceeds from those vessels sales.
With the cash that you're generating Illustratively based off of this year do you foresee a more aggressive paydown of debt and especially.
Having facility just with cash from operations or do you think you'd need to sell more older tonnage to kind of accelerate that the leveraging.
Although we have not made any specific plan solve that I've heard that the payment of their hand, and as I said anything about this turn off the 17th actually is called.
It's.
<unk> nine 2024, and that's taken away so yeah.
Okay, well, thanks for letting me back and have a great day guys.
Thank you. Thank you.
Now we're going to take our next question.
And the next question comes Sudan.
I mean, <unk> I need something police asked a question.
Hi, This is Chris Robertson again, just gonna try to sneak in one last question here has it relates to Chinese demand.
So.
There's been an impressive demand recovery, so far I guess, how much further do you think this can go.
Just based on post Covid recovery and then in the coming years with the new refinery additions that are being added where.
Where do you think that overall Chinese important demand can shake out over the coming 12 months.
Ah marked.
That's sharp pleasant <unk> some of the myths that we have seen.
Try and.
It's quite aggressively and periods, where they feel that the oil price is.
Discounted.
They are preparing kind of four increased demand.
<unk> it's.
I believe the highest we've seen from China is around 13 million barrels per day of imports in them.
And sustained period of time.
It's difficult to say, what I'm hearing a little bit it stops.
Allude to some of the oil production growth.
For oil export growth that we've seen and we are back to pre COVID-19 levels that China is not back to pre COVID-19 levels in terms of domestic demand.
They actually have a very big.
Consuming.
Airline markets internally in China.
Unless we kind of go towards the summer.
Where Europe .
He's going to recover we're going to go on holiday too. So are the Americans and so our them the Chinese.
I think that's gonna be quite exciting considering the fact that the oil production levels are are not really higher than what we have we're missing.
Couple of years of.
Normal demand growth, which historically at least has been between enrollment 2% per year. So so I knew subscribed to those that are quite bullish oil prices and.
In the second half the year.
I'm a bit worried about how.
How the supply and demand picture, it's gonna look on.
Williams.
Is fully up and running again.
OPEC has spare capacity so they can still supply.
China with more barrels but.
Yeah, I'm looking forward to to to to see how that story of walls.
We also need to keep in mind here that although China house imported lots of all them. They're also exporting significant amounts of products that will always stop.
Domestic the mum.
Catches up so.
Yeah, it's going to be interesting.
Yes, definitely very interesting. Thank you for that that's it for me.
Thank you thank you Chris.
Dependent participants would like to ask further questions at this time piece Contrapest, Taiwan telephone keypad.
There are no further questions at this time and I would like now to kind of conference Oba tell the speaker Mister last bash that for closing remarks.
Yeah. Thank you very much for again for Darling in the honest.
Listening to our our queue for presentation.
The amount is Francis always available so they have further questions over the coming week.
I would like to obviously think frontline organization for a fantastic result on a fantastic quarter. Thank you.
That does conclude have a conference for today. Thank you for participating you may know all disconnect have a nice day.
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