Q3 2023 Navigator Holdings Ltd Earnings Call
Chief Executive Officer, Mr. Gary Chapman, Chief Financial Officer, Mr. Oregon, Lindemann, Chief commercial officer, and myself, Randy given executive Vice President of Investor Relations and business development in North America I must advise you that this conference is being recorded today and as we conduct today's presentation, we will be making various forward looking.
These statements include but are not limited to the future expectations plans and prospects from both the financial and operational perspective and are based on management assumptions forecast and expectations as of today's date and as such are subject to material risks and uncertainties.
Actual results may differ significantly from our forward looking information and financial forecast with that I now pass the floor to Matt Peters <unk>, the company's Chief Executive Officer. Please go ahead, Matt.
So much Randy and good morning, and thank you for dialing into the navigator gas earnings call.
First of all I'd like to tell you how excited I am about introducing you to Gary Chapman, our new CFO joined navigators just over a month ago.
Gary has long experience that the leader.
Flipping on finance professionals ensure that he has hit the ground running and he is now already about your co part of the navigator leadership team you will soon see and hear more from him as Gary who will review the financial results with you in a couple of minutes.
I will now kick us off by reviewing the highlights of the third quarter and what reported was we generated operating revenues of $138 million in Q3 2023.
This is a strong 29% compared to the same period last year.
Adjusted EBITDA is a new record of 72 million for Q3, a vast improvement over last year's $42 million and higher than the result for the same quarters.
Recent quarters this year.
You may recall that Q3 is seasonally our weakest quarter. So we are pretty excited about this was Q.
Q3.
Adjusted earnings per share was 27 for Q3 2023, our cash position remained robust at just below a $108 million a quarter.
And that compares to $153 million when we entered 2023.
As part of that picture you should also be aware that this September we bought $9 million worth of our own unsecured notes in open market using cash on hand.
During the quarter, we paid a cash dividend <unk> <unk> per share and repurchased $3 million worth of our own shares.
We also now declare further <unk> <unk> per share dividend, plus just over $1 million worth of future buybacks. Following our Q3 results.
An important factor in our personal operating result was fleet utilization running above 93% in Q3, comparing to just 85% same period last year.
At the same time, our average TCE per day earned by our vessels were about $26000 for Q3 2023 compared to about 22000 in Q3 2022.
Smooth out.
Our throughput at our <unk> joint venture ethylene export terminal where quarter four 1 billion tons for Q3 2023 compared to 189000 tons of same period last year.
New expansion of the terminal terminal is well underway and we've already contributed Congress payments of $27 million made up of three payments of $9 million in Egypt April August and October this year.
We also announced a new investment alongside Yarrow growth ventures to acquire at 14, 5% interest in a same fuel solutions.
The first green ammonia pumping units are expected to be delivered in 2025.
That means that we are now really kicking off ammonia is shifting and thats the central Potbelly navigate our company strategy.
In recent news you will have seen that a number of Panama Canal transits are being reduced due to the lack of rainfall in Panama.
This will increase the duration of voyages from U S to Asia. This in turn will impact tonnage availability and Nike our utilization in a positive way.
Utilization is expected to hover around 90% in the final quarter of this year.
And TCE rates are typically stronger in the winter period.
Ethylene export volumes through the mortgage point terminal is expected to remain near nameplate capacity in Q4.
Adding to this the supply picture remains attractive with a minimum.
And the size of order book and large part of the global fleet is already more than 20 years old.
And now I'll hand, it over to Gary who will for the first time percent of CFO for navigating yes Hugo Gary.
Thank you very much Matt and good morning, everyone Slide six please.
I'm really pleased to be with you today, taking part in the story of navigator and building on all the great work done up to this point.
I am pleased to say that the third quarter of 2023 has continued that momentum with some very positive results we.
We saw operating revenue up 29% to $137 8 million in the third quarter compared to the third quarter of 2022.
And up from $135 million in the second quarter of 2023, despite the summer months, and hence Q3 traditionally being saved and the classic.
Time charter equivalent rates of TCE was stronger at 26278 in the third quarter.
Not set up from $22022 in the third quarter last year.
The bottom right table on slide six shows TCE together with utilization for the quarter, which was 93, 4% above the 90% we guided last quarter, driven mainly by our ethylene capable vessels and also ethane movements, where there have been higher ton miles that helped us.
This utilization is better than the 89%, we reported last quarter and better than the 84, 9%. We reported this time last year.
Although we have seen the overall TCE rate for just a little compared to last quarter. This is being more than offset by the better utilization, leaving us with higher operating revenues than last quarter and a strong result overall.
So when you have good rates and you have good utilization you also need to look deal costs and total operating expenses decreased to $110 million compared to $104 million last quarter. If you exclude the one off 5 million profit on the sale of the navigator Orion.
And in the second quarter, this year and $103 million for the same quarter in 2022.
Within those total operating expenses average daily vessel operating expenses decreased by $250 per vessel per day, or three 2% to $7680 per vessel per day for the three months ended September 32023, compared to 7930 per vessel fellows per vessel per day for the.
Three months ended September 32022.
Following all of this this quarter, we're reporting a record adjusted EBITDA of $72 2 million of fourth quarter in a row that adjusted EBITDA has increased.
Depreciation was steady on both interest income and interest expense for the third quarter of 2023 were affected by the higher interest rate environment. We are living in today when compared to the figure reported for the third quarter last year, noting that we have fixed interest rates.
And have entered into interest rate swaps for around 45% of our total debt.
The net income attributable to stockholders of navigator was $19 1 million for the three months ended September 30, compared to $2 4 million for the three months ended September 32022.
Earnings per share was 26 for the three months ended September 2023.
Compared to three cents a share for the three months ended September 32022, and.
And adjusted earnings per share, excluding unrealized gains and losses on derivative instruments was 27 and three months ended September 32023, compared to a loss of <unk> <unk> for the three months ended September 32022.
The greater Bay joint venture, which is 60% owned by navigator acquired its final vessels during the second quarter of this year and the vessel acquisitions under that program now complete.
This resulted in an increase in vessel available days during the quarter and going forward and now our operating revenue from the Luna pool is nil also as the vessels are fully consolidated into our financial statements.
No longer featuring as operating revenues or voyage expenses from the Luna pool collaborative arrangements.
The share of the results of the Companys, 50% ownership in the export terminal joint venture with an income of $3 8 million for the three months ended September 32023 with increased volumes exported through the terminal of 249857 tons for the three months ended September 30 compared to 199001.
Third 40 tons for the three months ended September 30 last year.
The tax charge for the quarter again relates to current tax and deferred taxes, mainly on our share of profits from the ethylene export terminal.
The balance sheet shown on slide seven remained strong with a cash balance of a little over $178 million at September 30. This compares to a minimum liquidity covenants on our bank loans and credit agreements of $50 million.
This cash balance is after all of our recent buybacks.
The strong cash balance will be used for capital redistribution, the ethylene terminal expansion and for projects and investments that can enhance shareholder returns.
The increase in net long term debt is Jason the financing of the five grades by joint venture vessels, but noting that our net debt to adjusted EBITDA is now only two nine times at September 32023, giving us a really healthy position to work from and with no loan maturities until 2025 as shown on slide eight.
Maturities for 2025 include the $100 million senior unsecured bond, which may or may not be refinanced depending on any investment opportunities that may occur and the two bank facilities totaling $190 million will likely be refinanced at a higher than current loan to value as the vessels serving as collateral are amongst younger vessels.
Yeah.
As a result, we expect that refinancing to be a cash positive event in 2025.
On slide nine we outline the estimated cash breakeven for 2023 at $19260 per day. This low level relative to charter rates recalling TCE for the third quarter was 26278 <unk>.
<unk> enables us to generate positive EBITDA throughout the shipping cycle.
To the right on this slide is daily Opex expectations for 2023 across our different vessel size segments, ranging from $7600 per day for the smaller vessels to $10100 per day for the larger more complex ethylene vessels.
We also provide a range for the expected annual spend for vessel Opex G&A costs depreciation and net interest expense.
On slide 10, we outline our historical quarterly adjusted EBITDA, showing a step up over the past several quarters and a further step up this quarter.
On the right of Slide 10, we show our historical 2022, adjusted EBIDTA LTM bar, incorporating the latest quarter and.
On an annualized adjusted EBITDA based on this quarter results in.
In addition, the EBITDA Baas further to the rights of those show the effects of an increase on adjusted EBITDA. If average charter rates will increase by increments of $1000 per day.
And on slide 11, given the numerous scheduled dry dockings next year. We've included a final slide to help guide on this important topic we.
We have 19 vessels scheduled dry docking during <unk> 2023 through <unk> 2024, with a total of 456 off hire days and token Drydocking Capex expected of $24 8 million during <unk> 2003 through <unk> 2004.
We will take these opportunities to install energy saving technologies. During these drydocks such as some of that is listed here.
And we have also guided on 2025 and 2026 dry docks for those that are interested in looking further ahead.
So thats the conclusion of the finance section for this third quarter and I will now pass the mic to oilfield.
Over to you.
Thank you Gary.
And good morning from Houston.
If you take a look at slide 13.
U S natural gas liquids production continues to grow surpassing the 200 million barrels per day production milestones reached in August.
The energy information administration predicts profit grow by end of the year. Please.
This strong production plan trend bolsters two key aspects for us.
<unk> pricing for American LPG, and ethane and increased throughput at various U S export terminals.
Notably LPG exports in August exceeded 60 million barrels per day, making a 10% increase from the same period in 2022.
During the third quarter U S. Handy size export cargo saw a slight increase compared to the second quarter.
Despite the typical inventory buildup during the pre winter months, we anticipate north American handy sized LPG volumes will continue exceeding 100000 metric tonnes per months.
In the amplifier segment LPG is an important.
<unk> story and talking about current North American shipping demand.
The primary focus is linked to ethane.
The largest component of the natural gas liquids production.
On slide 14.
Direct attention to the graph in the lower left.
Illustrating the market dynamics history shows, but as long as ethane prices remain below 400 metric ton dollar per ton.
Italy being ethane derivative continues to flow from the U S and international markets currently happening is priced around 200.
As per metric ton, leading ton ethylene sale price in the U S were $480 per ton. This ethylene can be sold in Europe, Our Asia Pacific region.
Approximately $900 per ton today, leaving ample margin, where terminal and marine transportation costs.
Our joint venture ethylene export terminal on our fleet both benefit from this reality.
Additionally, Brazil is important to keep in mind.
High oil price environment further enhances the attractiveness of U S ethane to ethylene production and exports as the alternative substitute oil to ethylene becomes more costly.
The distribution of ethylene export volumes is shifting back to a balance between European and Asia Pacific destinations as seen in the middle graph.
However, current challenges with the Panama Canal locks, causing disruptions enhances numbers are likely to temporarily shift more volumes towards Europe due to the shorter distance, we'll take a closer look at the impacts of the Panama Canal in a moment.
While the total U S volume of ethane has decreased slightly in recent months on the right hand graph the combined volume of ethane and ethylene for handy sized shipments have increased data on page 15.
Shows that 2020 team has been the highest level of ethane and ethylene exports volumes in the <unk> segment over the past five years.
It is also important to note that while U S. Ethylene export capacity is currently capped at around 100000 metric tons per month.
That is until our expansion is complete.
<unk> does not face the same infrastructure constraints.
250000 tons of ethane was exported on handy size vessels vessels in September compared to 100000 tons during September of 2022.
Therefore, navigator navigator gas strategically position not just in the ethylene market, but also in the ethane market.
All directly linked to the North American upstream natural gas liquids production.
Our vessels regularly navigate the all blocks of the Panama Canal.
Creating a vital link between the U S Gulf exports and demand centers across the Pacific Ocean on page 16.
We can see to date this year navigated has scheduled nearly hundred transits.
Through the Panama docks, where the average journey time of just over two days, regardless of whether the vessels are imbalanced.
This efficient transit process has facilitated a reliable and economical delivery service of both ethane and ethylene to our customers in the Asia Pacific region.
However, this situation is poised to change.
The water level in Gatun Lake, which provides essential fresh water to Panama City managed surroundings as well as for the canals lock operation is update historical loan clients.
To address this the Panama authorities have reduced the number of transits from both new and old locks until the onset of the monsoon season.
We've been informed that additional countries won't be permitted until at least April of 'twenty 'twenty four next year.
And at that point, the canal will provide transit transit at half capacity.
<unk>.
So what does this mean in practical terms.
The primary implication will be longer voyage times.
The duration of round trips from U S exports to Asia of LPG ethane and ethylene is expect expected to increase by 20 to 30 days.
On a round voyage.
Pending on weather derivatives, where Suez canal or Cape of good hope.
As a note the Suez Canal, which has spare capacity.
Other than pricing vessels traffic in this direction by offering discounts as you can imagine the trades are starting to ship.
The secondary implications does that have a vessel type preference through the Panama Canal.
Even those granted canal transit might not be able to travel truly laden due to the reduced draft limitations.
So on page 17.
Additionally, vessels able to transit will likely face severe delays being queued behind prioritize container ships LNG carriers and cruise ships.
For our ethane and ethylene trade and we anticipate two developments to happen.
We expect an increase in demand for handy sized vessels to transport ethane.
This uptick is likely as larger ethylene carriers faced challenges in filling their take or pay contracts.
At the <unk> ethane export terminals in the U S.
As the voyages are longer.
Second to facilitate the profitable arbitrage of ethylene to Asian markets midstream companies on upstream producers may need to manage their profit margins to allow the trade to continue at full tilt.
All things being equal there is about $75 per ton of additional freight cost to say least via Suez Cape Verde.
Versus the Panama Canal with operating base.
Despite these changes our third quarter performance remains largely unaffected as shown on page 18.
Our earnings composition has long has shifted slightly with an increase in petrochemical cargos at the expense of LPG.
Ammonia continues to account for nearly 20% of our earning days supporting other cargo segments, which all told resulting in our utilization around the 90% level.
Page 19 showcases the overall robust market across the various gas carrier segments. The time charter levels currently being discussed and extended a negotiated are higher than those presented on this page, indicating strong market fundamentals for LPG petrochemicals and ammonia.
Finally as indicated on page 20, the supply of Hunter sized tonnage remained steady from last quarter with only five vessels of 4% of the existing fleet on order within our segments.
Which is a manageable figure, especially considering the expected phasing out of older vessels nearing 30 years of age.
We will stand by for Q&A shortly as I'm sure. There are a few questions regarding the Panama Canal in particular, but first over to Randy for his update on recent announcements Randy.
Thank you Ivan so following up on several announcements we made in recent months, we want to provide additional details on updated developments regarding a few of those announcements. So slide 22, we are pleased to announce our return of capital for the third quarter of 2023 in line with our recently announced return of capital policy.
And the table below we're returning 25% of net income or $4 $8 million to shareholders. This quarter. The board has declared a cash dividend of five cents per share payable on December 21.
To all shareholders of record as of December shares equaling to a quarterly dividend payment of $3 7 million. Additionally.
Additionally, with <unk> shares trading well below our NAV of greater than $22 a share we will use the variable portion of the return of capital policy to repurchase additional shares.
As a reminder between December and May of 2023, we repurchased three 8 million shares at an average price of $13 12 per share for a total of $50 million. Subsequently the board authorized a new $25 million share repurchase program of which we used $3 million during the third quarter and looking ahead, we will repurchase.
At least $1 1 million of <unk> common shares between now and the quarter end.
Such that the dividend plus the share repurchases equaled 25% of net income.
Returning capital to shareholders is relatively new navigator, but something we see as a requirement for a shareholder friendly company turning to slide 23, and following up on a previous announcement regarding the expansion of our ethylene export terminal under the existing 50 50 joint venture with enterprise over at Morgan's point, we agreed to a capital project to increase the export capacity.
From around 1 million tons per year to at least 155 million tons and up to $3 2 million tons by converting an existing ethane refrigeration train.
You also refrigerated ethylene the projects is underway the long lead items have been ordered and the groundwork is progressing the irrigation and electricity prep underway and construction is expected to occur throughout 2024 to be completed by the end of next year.
The total capital contribution required from us through the joint venture for the project are expected to be around 120 $425 million.
The majority of which will be paid in 2024 to date, we have already made three progress payments totaling $27 million and the remaining capex is expected to be paid from cash on hand until new financing agreements are completed in early 2024.
As you can see on the bottom left chart. The terminal continues to run at or above nameplate capacity with <unk> throughput, reaching 250000 tonnes discussions are ongoing with current and new customers for multi year off take contracts and we expect the vast majority of the additional guaranteed capacity to be contracted during the construction phase again throughout 'twenty.
<unk> 24 on.
On slide 24 to further reduce our net interest expense, we opportunistically purchased $9 million of the 100 million unsecured notes maturing in September of 2025 at an average price of 153.
Assuming the call the bonds at par in March of 25% yield to maturity at these prices, a seven 6% well above the 5% or so we would earn for 12 months to 24 months Treasury notes.
Going forward, we have plenty of options for the current unsecured notes, including repaying them, a cash extending the notes or issuing new notes for less or more than the outstanding $100 million.
And this decision will be made based on the interest rate environment as potential uses of capital and other sources of capital.
Now as for our most recent announcement on slide 25, and as Mark mentioned earlier, we recently announced a new investment alongside Yarrow growth ventures to acquire a 14, 5% interest in a zane fuel solutions. The world's first provider of ammonia Bunkering solutions as you can see Zane already has grant financing secured.
And importantly, the company has a partnership with Yatra clean ammonia and a commercial agreement for the preorder of 15 units to be built over time.
It is likely in the first quarter of 'twenty four and the first screen ammonia Bunkering units are expected to be live to be delivered by the end of 2025. We continue to believe ammonia will be a key future fuel for the shipping industry. So we're putting our money where our mouth lease with their strategic investing now.
Now, finishing on slide 26, there is still time to make it down to Houston, Texas for upcoming 2023 analysts Investor day. This week on Wednesday, we'll be touring the Morgans point ethylene export terminal and climbing aboard one of our beautiful vessels loading ethylene followed by a dinner with management and some members of the board and then on Thursday, we'll host company in.
Industry presentations covering current market trends, a financial update as well as our medium term strategy will then have lunch followed by an appreciation event for analysts shareholders customers and partners. The outlet for the weather forecast is looking bright, but not as great as the outlook for navigator gas. So hopefully you can join us in the coming days to hear more about it.
With that I'll turn it back over to March for closing remarks.
Thanks, a lot Randy.
And as you can see him navigated staying strong and it's well positioned for the future I.
I do hope that you like the direction that we're heading we.
We are delivering a growing and consistent.
Revenues and earnings.
Utilization in the gas tank of each state's tight and it allow us both higher charter rates.
Now we are going into the typically strong winter months.
Our mid term outlook biogas tanker business is robust with a limited number handy size vessels on order and we've continued strong natural gas liquids production growth not least here in Houston.
Our balance sheet in its best shape ever with leverage and cash allows us to return capital and grow our business at the same time.
We remain strongly committed to growing navigators business.
The good progress in expanding our mortgage point terminal joint venture as well as our investment into our same showbiz.
The best the best is yet to come and with that I'll hand back to you.
Thank you much operator, we'll now open the lines for some Q&A so to raise your hand press star nine and then Youll have to on mute yourself by pressing star shakes or using zoom just use the raise hand function.
So first question your line should be open.
Okay.
Good morning team. This is Emily on for Omar. Thank you for taking our questions. My first wanted to ask for more detail on how the Panama Canal congestion is impacting demand in your business are you seeing higher demand as these issues have tightened VLCC availability are trickling into the midsize and smaller segments.
Wondering if you could please provide some more color there.
<unk>.
Thank you Emily Zohar topical question.
You're right I mean, the Panama Canal will by reducing capacity by 50%. We will obviously have an impact on the shipping trade lanes.
Longer voyages will be a result, which is generally good for shipping and also good for navigator.
We have seen immediate impact on ethane ethane demand for hundreds by ships.
We've seen some some examples of that.
The rates are high because there is a little availability of ethylene or ethane capable vessels in the spot market.
So that has an immediate positive impact on the ethylene trade the wages clearly will be longer.
There is room in the arbitrage today too to add the phrase of $75 as we mentioned in the prepared remarks to facilitate Houston connecting with Asia Pacific customers.
Through the Suez or cake.
The immediate changes we've had for which you will see on Paris, they've become to Houston Morgans corn flour for our Investor Day, We'll go onboard and navigator Oberon. She was scheduled to go via Panama.
However, she will now BVA tomorrow.
And go to Indonesia to discharge, so a longer voyages already so this will tighten the market generally Richard shipping speak is a positive.
Thank you for that explanation I wanted to follow up with a question on fleet utilization you started this year very strong with 96% utilization and it fell to 89% in Q2 and bounced up to 93%. This quarter. So nicely done your presentation revealed that <unk> utilization is expected to be around 90%.
But I'm wondering how should we think about modeling it in 2020 for any detail that you could provide there would be super helpful. Thank you.
And we actually just did.
Sorry, I can just say few commentary it before you.
Okay.
Thanks.
When we look at our utilization typically when it's 90% or slightly above that that's a good that's a good number.
And it's.
Market.
As we've indicated in the previous discussion here, we think that the supply demand situation overall, but navigator looks good with that.
Order book.
Ships that are coming in very limited and also with natural gas liquids production in particular in North America, continuing to grow so that means that that we see growing demands and the supply situation isn't really changing much in that overall is good for utilization.
So I think you should expect that there will be numbers going up and down.
When we are at 95, Oh, gosh, that's pretty exceptional and it's not something that you should count on us being the norm. So so looking at that.
90% of just over that it's a really good number and this is something that allows us also to to push the rates upwards, but arguably the and any color you got.
I think you hit the nail on the head.
That makes sense. Thank you I'll turn it over.
Thanks, So much Emily you sounded much better than Omar.
Next question your line is open.
Hey, guys. This is Ben Nolan hopefully you can hear me.
Actually I was going to follow up on <unk> question there.
You were it was over 93% in the third quarter on a utilization number which is as you said normally.
Little bit softer period as it relates to utilization.
Im curious why your.
I'm expecting a little bit of a dip or at least.
Not well I guess, a little bit of a dip in the fourth quarter and that utilization numbers are just sort of yes.
To be determined and maybe conservatism.
I think here that I don't think that we are guiding that that there will be a dip as such I think we are guiding that in the 90% neighborhood.
That probably being too so.
93 or so.
It's very difficult.
To forecast with a high level of precision.
90 or 92.
93, I think overall you should be left with the impression that we are relatively confident around the supply demand outlook and we think that the utilization is going to remain robust as you've seen in recent quarters. So thats probably more of a conclusion. Bother then you can say looking at one or two percentage points.
Up and down is it simply the the operating pattern.
Influenza season.
Sometimes having a little bit up a little bit of a downtime may not be it may be an opportunity for us to maybe sit back and be.
Holding back, let's say you would say to you for a little bit sooner.
Okay understood.
I was going to also ask on the Zain.
[noise] announcements.
Small here, but understandably.
Hopefully leading to bigger things.
I was curious, though as and when it does make its final investment decision.
Are there are there future cash calls or anything else that would be necessary on your part.
As and when it moves forward.
No the $3 million investment is for now the total investment write additional units will not be held at the company. They will pay us for the order pay us upon delivery and then we had the option of operating those assets, but in terms of additional investment dollars we.
We do not foresee that going forward.
Okay.
And and I was going to also ask on the JV the volumes are good.
<unk> contribution was a little bit lower than it was in the second quarter.
Was there anything specific around that or how should we think about the JV contribution.
Going forward, yes, higher in <unk> I think we mentioned that on one of the slides there but.
They had a very high electricity pricing in August here in Houston. It was extremely hot most summers, but especially this August so electricity really went up and then we had a little bit of deficiencies from accounting that will roll forward positively in the fourth quarter. So the fourth quarter contribution.
Certainly be higher than third quarter.
Alright.
Very good I appreciate it thanks guys.
Thank you Ben.
Okay.
Next question I see a hand there.
Good morning, <unk> Gremlin, some from an investor's edge. Thank you for taking my questions you brewing at Anvil commentary on Panama Canal congestion, but I was wondering whether you've seen cascading effects from sky high VLCC rates, we've seen over the past few months.
Hi, Kevin.
Youre correct.
When the larger ship segments above the 105 segments are doing well it does trickle down so.
It's very a mental game, we're buying when the largest ships are doing them better it is easier funnily enough for us to push rates also higher.
Because conceptually.
It is very difficult to to think about paying more for our ship that is half.
Half the size on a bigger ship so it helps and has a cascading effect.
Got it.
And that translates into for the handy size, that's a more difficult question.
Because we read the ethylene we do ethane with ammonia would you easily petrochemicals. In addition to LPG. So Matthew <unk> as you know the largest ships only do LPG larger.
But there is a positive effect uplift from the largest ships doing better.
Correct.
That's helpful. I was wondering about the nuances from that that's all for me. Thank you for taking my questions.
Thank you <unk>.
Oh I see another hand here from a Po.
Yes, sorry, emailed that clarification, but hey.
What's your long term plan for the Morgan point investment.
Is it a strategic asset for you over the next decade does apd have a buyout option sort of can you just give me an idea of what you're thinking longer term on that investment.
Yes, I can maybe start with you.
So yes, we are.
Super Happy with the joint venture and the partnerships that we have with enterprise.
It's a very stable, it's a very well functioning joint venture we have here and that's of course also evidenced by US now together expanding the terminal with.
Relative to large addition to it.
So we see it.
Stable relationship. It's a 50 50 joint venture we do not have a purchase option neither dose.
Enterprise. So we see this remaining at a 50 50 joint venture for the loan we.
We see it as a very cash generative assets. So it's it's good holding.
We see some very clear commercial synergies also for our shipping business in being part of the bigger part of the value chain and just the shipping part it gives us much better opportunity to to commercially manage all ships and understanding.
What the customers are doing and how the flows are materializing. So so it has tremendous value for it should be business that we are very pleased and would like to hold onto it.
Yes.
And then can you talk about are there any.
Enterprise 70 preferred terms on shipments or sort of how.
That.
That arrangement works with once you.
Once you're actually X 40, or.
Shipping out of that terminal.
So.
It is an open terminal.
And it should be like that but it's a little bit back into the George Bush International Airport here in Houston, whereby if you go to their board.
There's a lot of United Airlines.
Yes.
Same here, if we go to Morgan's point.
If you are joining on Thursday, youll hear navigate a ship and Theres a lot of navigator ships, calling that terminal. So that's the analogy I usually use product question.
Okay, great. Thank you so much.
Thank you Paul.
I believe that concludes our Q&A. So I just want to thank you again on behalf of the management team of navigator gas hopefully we will see a lot of you. This week and if not we'll certainly talk soon happy holidays.
Thanks.