Q3 2023 Frontline PLC Earnings Call
And remind the audience of July August is normally call the summer lull in the tanker industry.
Sites meant in June did give us high expectations for the for the fall market and although not jaw dropping we havent seen versus the tanker market continues to be firm with risk rather than.
Rather on the upside down the downside, but there are many pieces to this puzzle.
Get to some of them in this presentation.
I give the word to ing it let's look at our <unk> numbers on slide three in the deck.
In the third quarter frontline achieved 40.
With us today on our VLCC fleet 36, $37600 per day on our Suezmax fleet, and 33 and $900 per day on our <unk> flush Aframax fleet.
We saw the more normal split between the segments.
This converged against as we progress into Q4 with 81% of our VLCC days booked at $48100 per day, 70% of our Suezmax days at $50300 per day.
70% of our LR twos slash Aframax days at $51300 per day.
Again, all numbers in this table are on the load to discharge basis, and they will be affected by the amount of ballast days, we ended up having at the end of Q4.
I would also like to highlight that these numbers exclude the 24 vlccs that are delivered during this quarter and next further as we can only account for revenues when the vessel is laden the new vessels are not likely to affect revenues for Q4 materially.
I would now like to letting you take you through the financial highlights.
Thanks, Ross and good morning, and good afternoon David.
None.
And I think they can turn to slide four.
Perfect statement.
Frontline achieved total operating revenues and expenses of $232 million.
In the third quarter, and adjusted EBITDA of $173 million.
We reported net income of 107 seven.
$7 million or what.
Eight cents per share.
Adjusted net income and net profit of $8 8 million or 36 cents per share in the third quarter.
The adjusted profit in the third quarter decreased by $129 million compared with the previous quarter.
And that was mainly driven by a decrease in our time charter equivalent earnings due to lower TCE rates in this quarter, which was partially offset by application in other income and expenses.
The adjustments in the third quarter consists of $17 9 million gain on marketable securities.
<unk> 7 million share losses of associates confidence.
400 <unk>.
Loss on derivatives, and 11 1 million of dividend.
Let's then.
We look at the next slide five.
Frontline has strong liquidity of $715 million in cash and cash equivalents, including the undrawn amount of our senior unsecured revolving credit facility, the marketable securities and minimum cash requirements for the banks, but the September a circus.
2023.
The current portion of long term debt in the balance sheet at the third quarter includes $91 million from a loan facility in the first quarter of 'twenty, four which was refinanced in November 23, and then also $75 <unk> million related to the senior.
Evolving facility, which we in October 23 extended to the first quarter of 2026.
We have no remaining new building commitments and no meaningful debt maturities until 2027, and we also have a healthy leverage ratio of 52%.
Then I think we can turn to slide <unk>.
Six.
We estimate average cash cost breakeven rates for the fourth quarter of 2023 of approximate approximately $28200 a day for the Vlccs.
<unk> $5700 per day for the Suezmax tankers and $17100 per day for the <unk> tankers.
With a fleet average estimate of about $24200 per day.
The fleet average estimate includes dry dock 72 <unk> tankers.
This quarter were a one vessel only includes 50% of its startup cost due to docking in between two quarters and also want to see in the fourth quarter. The cash breakeven base. Excluding drydock cost is estimated to be $2000 lower or 22000.
$200 per day.
We recorded Opex expenses, including dry dock in the in the third quarter of $7400 per day for Vlccs $7500 per day for Suezmax tankers and $7100 per day for the two tankers.
One suezmax.
Drydock in the third quarter and finalized in that.
The fourth quarter.
Q3 feet average opex, excluding dry dock.
$7400 per day.
Then lastly, let's look at slide seven.
And how does the acquisition on the 24 Vlccs is funded.
As you can see from the slide.
We will finance the purchase price of $2 30.
$35 million for.
The 24, Vlccs with the bank facility of $1 4 billion.
152 million cash proceeds from the sale of the 13 7 million shares of unit now to CMV.
49 million cash on hand.
$99 7 million from all of its senior unsecured revolving credit facility and also $514 million John Desimone from Canada.
The ambition is to minimize need for cash from the shareholder loan through strong clients capacities to deleverage the existing fleet due to the historically low loan to value and or sale or older non equal less efficient vessels.
This filing or the word against us.
Thank you very much singer.
Hum.
I started with.
The introduction.
Three was a challenging quarter.
Just so the audience on slide eight.
Hum come remind themselves if we look at the three graphs at the bottom side of the slide.
You look up.
By August September you will see kind of what states where we're in.
Despite this we actually managed to churn quite a good return for this quarter I believe.
The biggest theme in Q3 was definitively the G seven price cap.
Came into force in the earnest Russian crude under increased scrutiny.
Fleet sailing with Russian crude.
Yes.
Bruce on owners decided to return to the normal Russian fleet, which increased supply basically competing with the frontline fit as we progressed through Q3.
I think on the positive side, the China continue to grow.
Yes.
With record.
In port volumes.
Exports surprise to the upside incurring very healthy top most.
We got to U S sanctions on Venezuela lifted I'll come back to that later, we did see towards as we walked into Q4 are growing political risk.
The Israel Hamas conflict. This has two effects.
The physical kind of trade off ships per se, but it's it's the security concern in respect of our seafarers and it's also an operational concern when we sale through the area.
I've also mentioned earlier and presentations that we do have more and more system out there.
<unk>.
Now that we have kind of less amounts of black swans in operations in the market post COVID-19.
And then we come back to which is very rare occurrence.
Sure.
On Opex.
Eagerness to balanced markets.
So on that note, let's move to slide nine.
So.
I was actually just trying to check from Twitter, whether if OPEC have actually come with this statement.
Yes.
But it seems that.
There is a lot of.
People betting on 1 million barrel per day cuts into next year or during next year. In addition to two.
Saudi Arabia is 1 million barrel a voluntary code.
And I think it's.
It's prudent to remind the audience that OPEC output production.
These terms are not the kind of equal out.
And production is not exports.
As oil demand is very firm, we also need to remember that the OPEC is not the only supplier.
Also this production target leaves room for individual nations to adjust their export levels.
Exports seem to be more correlated to domestic demand amongst the large producers Rob.
Kind of the stated.
OPEC targets.
The experienced since August this year for instance from Saudi Arabia is that their exports have actually increased.
Also if you look at aggregate the graph on the right hand side looking at all.
Oh that reduces we've actually seen the same trend.
So as production is actually coming off in line with the rest of targets exports is actually increasing.
And again the reason for this is basically because the domestic needs for this oil or for oil has been reduced switch that enables the various OPEC members stocks to export more.
At the end of today I believe is oil revenues.
What really matters for these nations.
We kind of commitments to balance in the oil market is probably difficult for OPEC considering all the alternative sources of crude we currently have.
With that let's move to slide 10.
And some of the tanker narratives.
One thing that's quite the pricing is.
First of all the stickiness to Russian exports amidst.
A very.
Stated.
<unk>.
Policy again.
Sorry.
Well first of all.
It's the market is quite surprised about Russia.
The resilience of <unk> exports.
Copper very firm policy on <unk>.
Being purchased or on the bright side. We've also seen a wrong is still in restructuring.
Rising to maintain their exports and even increase them as we come into the second half of this year and then lastly, Venezuela is kind of the new entrants to the table where U S.
Sanctions have been lifted.
Also U S exports are at record highs and they're increasing.
With regards to Venezuela, we expect.
Their exports to be able to increase by around 300000 barrels per day of short term.
Basically to reach six to 700000 barrels per day annually. This is not a massive number but if we look at just the MAU athlete there.
There are 4% to six vlccs on subs.
Yes.
Or even sell linked crude.
In the later regulatory in December late November and December.
And this is actually a significant number of vessels that are not available to U S. Exports. So we believe that this is this will actually.
To some extent tighten up the Atlantic market.
Then lastly, what we have seen and I mentioned this before on seasonality and we've had $2 5 million barrels of refinery.
Capacity, which is now back after the full maintain them.
And since a lot of this meant a lot of this volume is directed to oceangoing oil. This is a significant percentage of the 42 million barrels of oil that is transported everyday.
Let's move to slide 11.
And we've included in this presentation, what we called a very long view on this is kind of interesting observation both from a product.
A view, but also from a crude point of view.
East and west of Suez.
The pipelines of the ocean seem to be strategy.
New oil production capacity.
<unk>.
Is being contributed contributed from west of Suez, We've seen Brazil, increasing production, we are seeing the new production coming out of Guyana, we're seeing them sell them X.
Exports, increasing and we see that shale continue to increase productivity.
The same time, we're seeing a strong refinery capacity to be built up or having been built up and to continue to be a buildup is a suez.
This will benefit both crude transportation as feedstock into this refineries and products trade with benefits from this development.
For the clean products or refined product will flow back west of Suez.
And I think it's important to note that the future tanker capacity is not reflecting these projections on the trade extension whatsoever.
Let's now move to slide 12.
Order books.
We have gone through this slide every quarter now for quite a while.
It's not materially changing I would say.
We see the.
Virtually no new orders for Vlccs over the last quarter on the order book stands of one 8% of the fleet.
I think it's at least in my time in shipping. It's the first time, we're only looking up three vlccs to be delivered next year.
This will affect the markets come Q1 normally you will have I wouldn't say a wall, but you would have a significant amount of vlccs being delayed from the previous year into Q1.
This is also likely to affect the demand for our luxury juice as a lot of these vessels on their maiden voyage will carry refined products.
This will not be available in Q1.
We've seen both the Suezmax and the luxury fleet increased.
But predominantly in 2026 and to some extent in 2027 most recently.
This gives us an indication of the App.
Yard capacity to build in 2026 is waning.
And we're now more focused to 2027.
Repetitively said this many times now.
This gives us.
Quite a long time going forward, where the fleet growth is expected to be muted.
Also please keep in mind that.
The effective age of our key trading altitude is much closer to 15 years 20 years.
Got it.
On page 13 I thought.
We have time for <unk>.
Yes.
As most of the listeners would be aware of.
You have imposed attacks or a fee or whatever you call. It on carbon emissions inside the EU and in out of EU and shipping is to be included from the first of January 2024.
The.
EUA exposures on current voyages going into 2024.
Our already exposed.
100% of the missions on voyages within EU.
He needs to be accounted for 60% of emissions going in and out of EU.
Hey.
Will.
Apply.
This scheme will cover 40% of the total emissions and touch on before 70 in 2025 and 100% in 2026. This is a fairly big change to how shipping.
Is being orchestrated within the EU.
For every tonne of carbon we emit inside the EU or in a way are in are on our way out we actually three two tonnes of carbon.
And this means that we need to buy carbon credits.
For each Tom women's.
<unk> are easily available and can be traded through various expenses.
European Union and other ones monitoring this and that we need to report.
During our via our normal <unk> reporting to the authorities.
I think the headline here is that.
The Big question Mark here.
Our industry really prepared for this change.
Frontline, we have decided to take a very pragmatic approach.
First of all we have a modern and energy efficient fleet, meaning that we should be competitive our emissions.
Most likely to be lower than our peers.
We also have the sizes to look at this.
An additional fuel costs, so basically put it into our <unk> calculation.
Put it in our freight calculation.
So it's basically an additional voyage costs also our overall fleet.
It is only 60% of our voyage days of are exposed to the EPS, but I think it's very important that this is coming.
Basically around the corner.
There has been some discussions in the press about this there are ongoing discussions between charterers on owners on how we deal with this from a charter party and a legal perspective.
Scale has already peaked.
Yes, indeed see their world.
Okay.
What will be the same patent.
In the amount of business.
Evidently increased cost to the softer appropriately to the shopper.
I think it's going to be interesting to see how this plays out next year.
And as I mentioned, we're already getting exposed because the vessels that go into the EU for our cargo operation in 2024, and some of these are being fixed as we speak will be exposed to the EU.
Yes.
Yes.
Okay.
So let's move to <unk>.
Go through the summary.
Yes.
So tankers are performing and if you look at the bottom chart here on this page and I think this is important because we're obviously.
As Ive mentioned today and I was quoted in the press out obviously a lot of fireworks in the market.
But if you look at the columns to the right we are actually on an average.
As a.
<unk> tanker fleet, including all the tankers, we are actually not doing too Bob.
The tankers are performing.
And maybe now it's time for the Vlccs at least looking at the most recent developments in the market.
Frontline has more than doubled its VLCC position and we are nearing a protracted from top to bottom.
The fundamental backdrop remains we have decade, low order books, and we have further extending lead times for that to be replenished.
Frontline has by this transaction increased our operational leverage.
Global oil demand is expected to grow.
Short term medium term oil demand expectations.
The expectations are very good and we're seeing that in the numbers.
We have the same political risk increase and this creates tension in the oil on the freight markets, but we believe from clients large modern fleet and very efficient.
Our business model is ready the next chapters unfolds.
Thank you very much for that.
I'll open up for questions.
Thank you.
As a reminder, if you wish to ask a question. Please press star one on your telephone keypad and wait for a name to be announced to withdraw. Your question. Please press star one again please.
And Bob will compile the Q&A roster. This will take a few moments.
And that will go and take our first question.
And it comes from the line of Jon Chappell from Evercore ISI. Your line is open. Please ask your question.
Thank you good afternoon.
Three kind of quick clarification questions mostly.
If I can start with you so the slide on the output versus production versus exports is very interesting obviously the exports.
Started to pick up meaningfully from August, but if I look at your quarter to date bookings on the Vlccs, just a little bit only a little bit higher than what you did for the full third quarter and Youre also insinuating that because of the ballast days that number comes in less than 48000. So.
Probably even a shorter or a more narrow outperformance relative to <unk>.
What's been holding back the seasonal recovery in the fourth quarter. So far for Vlccs. If the exports have lifted so meaningfully off the bottom in August.
It's a very good question.
It's.
It's a it's a daily discussion points amongst.
At least in house in frontline because the general activity in the tanker market is extremely high.
We're there.
A lot of cargos being worth a lot of fixtures being conducted every day.
Uh huh.
Very quite a few players Sarah seemingly very happy with doing last done.
I think kind of one way to explain it and I'm going to be quite Frank here.
If you look at middle East as an export region.
About 70% of the cargoes going out of the middle East are contracted so it means that they are either under a coa or some form on time charter coverage.
They are the CRA surprised of the.
The spot market.
But it only leaves like kind of 30% of the cargos coming out into the spot market to begin to be negotiated.
And then if you look at the balance between the owners you will also find that quite a few of those 30%.
Owners that are carrying kind of in that market.
Necessarily.
<unk>.
Our marine client for the market to go up.
It's.
Either they are they're kind of mode.
Both charters and owners.
Or for other reasons, they are not really that interested in fighting this market.
So it leaves us with very few.
Well to reuse the term real owners, but are there to basically hold back and fight for the next world scale plants, and I think I think kind of geographically the market has become more and more efficient. So when we have situations in the VLCC markets, where you would say okay. This is going to pop about five points because there is only one.
One ship in position.
Suddenly that one ship and the position the last one or two points below law.
<unk>.
It's a very kind of the dynamics is very difficult to understand Ron.
On the Suezmax and Aframax is I believe kind of.
It is explained by the increased scrutiny, particularly by <unk> on.
Former Russian traders, which basically has increased the fleet supply in kind of this.
<unk> market at a price of the indices starting.
Basically what you need to do what we need to see is that this market just need to grind for a bit longer before the tightness becomes evident lastly, we do still see a significant volume of oil being transported of ships. The ships that are totally out of our emo or insurance.
Or legal or whatever.
The framework so so.
If you look at the population of ships that are above 20 years.
It was commented by one analyst in the morning meeting today Youll see a 1996.
Lifting Iranian crude.
You do wonder why is this still going on.
So so so I think.
No.
So that should answer your.
And many other people's questions I guess.
Yes, I appreciate that thank you.
The second one for you on slide seven completely understand the ambition to minimize the shareholder loan.
$540 million and I understand that there is opportunities to refinance it also potentially sell some noncore vessels.
But liquidity is $715 million.
If I look at this chart I assume that that $149 of cash on hand, 4900 on the senior unsecured as.
As part of that $7 15, so that takes you down to $5 65 of liquidity, which would be more than the shareholder loans. So I guess the question is why can't you use the existing liquidity understanding you don't want to use every last dollar of liquidity.
To bypass a significant portion of the shareholder loan immediately without being reliant on vessel sales or refinancings.
Okay.
$750 million.
CN.
The first and even us as also as a part of them.
And let's say financing of this transaction.
So he has to take that out first at least.
Then also the sell side.
Another 15 includes.
The undrawn portion of that again.
Senior unsecured revolving credit facility, we have staked in this slide that is.
Our plan to use about $100 million.
And also of course, we need to have some cash.
Our balance sheet to support.
Yeah based on also minimum cash requirements.
Yeah.
So I think you will find that the beginning of.
This.
And the cash.
Fortinet and Thomas as well.
Okay.
Last one Super quick just understanding the dynamics of the fourth quarter. I think you were clear the revenue from the 24 Vlccs, we shouldnt expect anything until January when they left their first cargo.
Obviously, the interest expense would fall in December what about operating expense and depreciation will operating expense and depreciation hit the profit and loss statement as soon as the vessels it and therefore, the revenue will be the only lag.
Yes, I guess.
I talked about earlier.
Today and what's that.
So you could probably assume that as much as 15 vessels will be delivered.
Fourth quarter. After this 24, let's assume that.
One the <unk> inhibitor second day in December and then you'll get about 255 operating days in December but these vessels.
And then so as you say he will have their operating expenses of course, because from the very first day you take delivery of the vessel that then start to increase.
He will also have then.
Interest expense on the non drawdowns and you can also have the depreciation number levels.
That's correct.
Okay. Thank you inger thanks Lars.
Thank you. Thank you.
Keith.
Now we're going to take our next question.
Just give us amendments.
And the next question comes from the line of Amit Mehrotra from Deutsche Bank. Your line is open. Please ask your question.
Hey, good morning, good afternoon, Laurie <unk> Andrea This is Chris Robertson on for a minute just.
First question on <unk> for you on slide six talking about the dry docking expected for <unk>.
Have dry docking days kind of trended recently I know that there are pretty elevated during the COVID-19 congestion times, but are they around 30 days now per vessel 35, where does that sit now.
No no.
Symphony Gaidar things that they have in the fourth quarter is about 20 to 75 days for each stocking.
Okay. That's helpful.
And then Lawrence maybe a market question for you turning to China.
Chinese oil import demand has been pretty robust this year I guess the spike.
Some economic issues in the property market issues going on still.
What are you seeing in terms of.
Today.
<unk>.
Of Chinese oil product demand domestically and what are your expectations around export quotas.
Coming into 2024.
Yes.
Well as here in Europe.
Specific comp right Tim.
Economical headwinds.
End of <unk>.
Dominate to the merits of around China, Hasnt really been noticed on the crude oil imports side.
Incidentally its actually the same case, if you look at the LPG.
Coal and iron ore as well.
China's team is seemingly a pretty healthy.
I think overtime here in China.
Oil and oil products.
Some more conifer consumer goods, rather than an industrial good potentially explaining some of this resilience. We're also seeing that.
China did you or at least.
As indicated that they built a lot of inventories kind of as we proceeded into Q3, but which apparently are drawing on now.
On the product export side.
I think kind of how this winter will bear with us is going to be a key to that.
Because we didn't see that so a little bit last year.
With the fairly mild winter in the northern hemisphere across the globe.
You saw that China's kind of ability to export or willingness to give export quotas on product was pretty pretty good at the beginning of 2023. So I think the last questions on product and product quarters is probably more a question than anything.
On the input side, we saw them just recently increased the import quotas of fuel oil, which as you know.
Actually quite the quad.
Positive in light of kind of the fare of China.
Try not to stop growing.
Got it thanks for the color on that Lars I'll turn it over.
Thank you.
Thank you.
Okay.
Now we're going to take our next question.
Just give us some amit.
And the next question comes from the line of Omar knocked up from Jefferies. Your line is open. Please ask your question.
Thank you Hey, good afternoon.
Yes.
I think obviously as it's called gone on we're starting to see headlines coming out that OPEC plus how have agreed on a cut and it looks like we're still waiting for the statement, but it appears a million barrels of incremental.
Now, we don't know if thats, a cut or just the quota reduction, but just I guess in general.
Storage, there's always been this close relationship with Vlccs, especially that cut as bad a boost as good that seems to have been challenged here over the past several quarters, I guess and with your commentary on the presentation like as far as as you kind of think about it how do you think that this market plays out here in the near term.
F&B Theres a million barrels taken off the market, obviously, a re as a negative but just big picture.
What do you think that means for Vlccs and say the suezmax.
Over the next few months.
No.
I am.
Tempted to say, it's flat or positive.
But.
Can't.
Can't really say that.
Think of this notion of OPEC cuts.
Predominantly that happens in or around the middle East.
If you look at in a very historical perspective. This was the middle east countries dominated.
Crude oil exports in total.
Now on the landscape has changed.
South America, even the North Sea and West Africa to some extent is big contributor too.
I think there is no doubt that the demand side.
Kind of east of the Middle East some east of Suez.
And then.
And I'm not the only compensate so that helps us Uh huh.
<unk> kind of said this that this is in fact, great news for U S fracking and great news for U S production.
But it will also benefit the long haul trade of crude oil, but I think.
Initially, it's obviously a bearish is fine.
Got it.
To contradict.
Opex very very bullish stance on demand.
So that's maybe something will needs to dig a bit more into.
But.
So number one.
Assuming demand is going to be the same.
You need to source oil from elsewhere.
But number two also keep in mind that.
As I mentioned production is not necessarily a.
Exports.
Do see that.
The middle Eastern exports are actually more correlated to the temperature and the middle east over the summer when they do consumer loans for cooling.
Rather them.
The state of the.
Kind of production corpus.
Thanks, Laura I appreciate that.
And then I guess, maybe it does feel perhaps that the as time goes on we're going to see more of that non OPEC production.
Start to fill the gap.
Well I guess.
As you think about the 24 vlccs coming on.
Obviously.
You have those finance.
<unk> been pretty vocal about not needing to raise any equity to fund the transaction.
And kind of went over the liquidity earlier anger I guess.
Any updated thoughts on the need or potential.
Willingness to want to issue equity, even though your leverage is still at 52% any any updated thoughts on perhaps wanted to tap into equity just to derisk the transaction.
Hi.
No not really to the quarter and I believe we were fairly vocal in this.
<unk>.
Inger.
Look clearly stated that.
We have.
<unk> in our existing or old from client to say to institute some of the word.
<unk>.
We are also kind of looking to see if we can divest certain assets to maintain our very modern fleet.
So so so we.
I believe we have the same message as we did when we went public with the transaction.
We will just continue that.
Thank you just wanted to ask that and then final final one just on the dividend. Obviously you have the I think I may have asked you this last quarter or maybe last month. When you held the call. Following the announcement of the deal just in terms of the dividend you've had this unofficial policy, perhaps paying out 80% of earnings.
That was recently.
With a lower net debt gearing how are you thinking about that dividend does that change percentage wise. Once the deal is complete and you're up to a higher leverage or are you still comfortable with say that 80% being a good thresholds.
As you rightfully say, we don't have a policy, but the expectation should be around 80%.
And we'll continue to do that as long as the market allows us to do that this is why we don't really have a policy because we don't want to be forced to pay out the dividend.
When it's not kind of feasible from from.
<unk> financial perspective.
So this is basically at the discretion of our board.
<unk>.
The main shareholder is more interested in dividends than you are.
So I think you should expect that to continue going forward.
Okay.
That makes sense. Thanks Lars.
Thank you.
Thank you.
Yeah participants as a reminder, if you wish to ask a question over the phone. Please press star one on your telephone keypad.
Now I will go and take our next question.
And it comes from the line of Greg Lewis from BT.
Line is open please ask a question.
Yeah, Hey, Thank you and good afternoon, everybody and thanks for taking my questions.
I guess I had a question around.
As we look out at potential pockets of oil production outside of OPEC.
Clearly there's been some some guyana has been a nice bright spot.
I'm kind of curious is as we look at that.
South America.
Yes.
What's your outlook on volumes from that and then I guess theres been more recent headlines this week.
They are coming at us in a 1 million directions about Venezuela potentially.
I don't know Theyre unhappy with whats happening in Guiana, and Theres talk of.
Invasion of Guyana.
I guess my question is what is how much.
Crude is hitting the international market from Venezuela today, how much is coming from Guiana, and if and if there is a disruption there.
What segments of the tanker market are probably going to be most impacted by that.
Well the.
I believe you are the Venezuelan exports.
Strong advocates in my model.
The U S.
On relief on the sanctions is basically because the U S.
In our refining.
Industry of the crude slate versus the word for that.
Do need this.
Barrels.
They cant refine warrant.
So that didn't need this mix into the refineries.
So so so one would assume that most of this <unk> more or less ongoing short haul on that from potentially suezmax into U S. But what we've seen recently is that there is a lot of VLCC cargoes being built up and actually some of them are being are pointing towards India.
So I guess, the jury's still out on Venezuela.
Satellite is.
We're exporting between three and 400000 barrels per day prior to the sanctions getting lifted.
It is expected on this mine number it's Betsy you read in the press is that they have.
Mike the short term be able to increase this to 300000 barrels per day.
But with the 300000 barrels per day, so they're going to be in the six to 700000 barrel per day kind of export capacity.
Which portion of this is going to U S Europe or Asia, it's very very difficult to gauge.
They do still apparently to try in a couple of billion dollars.
For.
Bob.
All four four alone kind of slower financing deals that put them some years back.
When it comes to <unk>.
Producing on exports because it's a small nation that don't really consume anything.
Around 450000 barrels per day.
I think in the Venezuela Guiana.
One could probably have some comfort in the fact that.
Virtually all their oil production is owned by U S interests.
It's probably likely to think that U S will help.
In protecting their sovereignty over this.
Areas that.
It's very early days.
Speculate on that corporations are going as normal.
As we speak.
I think part of it so there is the <unk>.
Bright spot here is that we have I think most analysts have been quite surprised by how resilient. The U S. Production has been this year and even growing kind of above expectations. Despite the lack of docs and the lack of capex and the lack of everything.
Uh huh.
The same time.
We've seen that Latin America, there are more and more barrels being kind of squeezed out of the various basins there.
So we're kind of mildly optimistic about that development going forward.
Okay, Great and then.
As I E.
Think about that.
The Q at the.
At the at the Panama Canal, I mean, clearly that looks like it's impacting the smaller segment of the product tanker market is just as we look at like.
North American cargoes heading down too.
Southwest South America.
Is that has there been any knock on effect on the LR to market just given thats, where your focus is.
Im trying to understand these disruptions and I guess it could.
<unk> ships at priority over product tankers, which is keeping product tankers more I was hearing that you might even see some.
<unk> go through the Strait of Magellan is is there anything.
Is there any kind of knock on effect that we're seeing there thats impacting the <unk> market.
I wouldn't say it's <unk>.
Significance to put it that way.
And then we haven't really.
It's not that often.
Been exposed to the.
Through the Panama Canal.
We are on the old location balanced the true from the other end.
<unk>.
But it's not.
Yes, I would play down the impact at least on the larger clean muscles.
Because we haven't really seen that tighten up the market pretty much or increase to come most of your columns.
Perfect. Thank you for the time everybody.
Thank you.
Thank you.
Jeff participants just a last reminder, if you wish to ask a question. Please press star one on your telephone keypad.
There are no further questions at this time and I would not like to hand, the conference over to bust that for any speaking remarks.
Well. Thank you all very much for listening in.
I wish you a pleasant day.
We will hope.
Hopefully.
There is some.
Obviously, where the fireworks at least theres some firecrackers left in this market as we move into this umbrella.
Thank you.