Q4 2023 Frontline PLC Earnings Call
But still gave us decent returns. We also started to take delivery of our vlccs from euro not in December.
And we are very happy it's all being smooth sailing as they have come under from contract.
I would especially like to praise our project technical and operations team.
Ethically effortlessly Unprofessionally have incorporated these vessels into our fleet proving our companies very scalable business model.
Before I give the word to inger, let's look at RTC numbers on slide three in the deck.
In the fourth quarter frontline achieved $42300 per day on our VLCC fleet 45000, and $700 per day.
On the Suezmax.
At this time.
And for $2900 per day on our illustrious flush Aframax fleet.
Both suezmax and luxury markets performing well above the previous quarters after tenant.
As of year Kempton.
As our press release shows the full year 2023 came and firmly as we earned 50350 2600.
$46800 per day on our Vlccs, Suezmax and Aframax slash of luxury fleets respectively.
May I.
We made over $650 million in full year.
And this is deemed respectable in some circles in.
Talk to the best year with hub in 15 years.
So far in the first quarter of 2024, 81% of our VLCC days booked at $55100 per day simply choose the center of our Suezmax days since the $2800 per day.
69% of our luxury slasher much days after whooping six to $7800 per day again, all these 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 Q.
I will now now let the air you can take us through the financial highlights.
Thanks, Josh and good morning, and good afternoon, ladies and gentlemen.
Turn to slide four mm equipment.
And we've got some highlights.
<unk> achieved total operating revenues.
In.
First quarter or two.
Oh the.
NUCYNTA voyage expenses of 279 million and adjusted EBITDA of $198 million in the fourth quarter.
And we reported profits.
$18 4 million or Cisco for defense per share and adjusted profit of 100 to one 2 million.
46 cents per share in this quarter.
The profit in the fourth quarter increased by $21 4 million compared with the third well there and that was primarily due to an increase in electricity earnings due to higher TCE rates, partially offset by cash used in other income and expenses.
Then I think we should turn to slide five.
And you'll get some balance sheet highlights.
Sometimes have some liquidity of 416 million in cash and cash equivalents, including Undrawn amount of the senior unsecured revolving credit facility marketable securities and minimum cash requirements.
As of December 31, 2023.
We have no remaining new building for maintenance and no meaningful debt maturities until 2025th set them.
Then, let's turn to slide six.
And.
Feed competition cash breakeven on Opex.
Following the delivery of all the 2020, the quiet from you another unexpected sale.
Fix the older vessels in the first quarter assessment 24th the.
The fleet will consist of 41 thing to see.
20 horses <unk> tankers in aten allow two tankers.
We have an average age of five eight years and consistent 99% equaled ourselves the barrel at 57% will be scrubber fitted.
If we then look out to them graph at the right hand side, we estimate average cash breakeven rates for 2024 of approximately $28800 per day for Vlccs $23700 per day for Suezmax tankers, and 21 $200 per day for <unk> tankers.
With a fleet average estimates of about $25700 per day.
This takes into account with expected sale of the six older vehicles.
All the vessels for it and also the 2014 to seize acquired from you're now in the first quarter of 2024.
The fleet average estimate includes dry dock of tour Suezmax tankers in five years to six in 2024.
The two suezmax tankers and dry dock in the first quarter of 'twenty for two suezmax tankers and one needs to see in the second quarter. Two this season in the third quarter and then two vlccs in the fourth quarter.
We reported opex expenses, including dry dock in the fourth quarter or $9400 per day prevent disease 12.
$12500 per day for Suezmax tankers and $7100 per day for all of two tankers. This includes drydock or six suezmax tankers and two vlccs.
The Q4, 'twenty three feet Irish Opex, excluding dry dock was seven three.
$300 per day.
Then, let's turn to slide seven.
And then.
The financing of this acquisition on the 24 Vlccs.
When we entered into agreements with your Inaba to acquire the fleet till the 2004 equal citizens also in our Q3 23 presentations, we said that our ambition was to minimize the need for cash from the Hampden shareholder loan through frontline's capacity to really leverage the existing fleet due to the historically low loan to value and <unk>.
Sale of all the non eco vessels.
In January and in February 2024, we executed on this with the agreement to sell six older non eco vessels and the ongoing process of refinancing 24 vessels on the what we believe are attractive terms.
Shifting them to generate net cash proceeds of approximately $646 million.
This will enable us to fully repay the hyndman shareholder loan and the amount drawn under the 275 million senior unsecured revolving credit facility with an affiliate of having them in relation to the acquisition and also to maintain our competitive cash breakeven rates.
With this I leave the word to loss again.
Thank you very much inger.
So let's move to slide eight.
But to.
To look at the current market narratives.
So as you all know.
Those are the headlines.
So long or are colored by the middle East tension.
The situation in Israel.
In Palestine.
Following that the Red the Red Sea Agency Tracy.
Ton miles implications looking at Mccain.
Assets from a from a tracking perspective.
We're also seeing the U S are increasing the pressure on what's referred to on the rest of the dark fleet or the gray fleets and also increasing their focus on potential Russian price cap.
Yes.
It was quite interesting to read the earlier in the week.
And of course, that's on our list.
<unk> analyzed the tanker fleet and found that.
According to them the Great fleet now consists of 135 Vlccs mine. The Suezmax is 150 Aframax says.
These are the food.
Oh embark trading and Raymond.
Arabian barrels trading to North Korea, and doing all sorts of stuff.
Including the Russian fleet, roughly 375 elements in Tokyo in the segments that we work in.
As a total.
Brs came to 700 vessels involved in some sort of say the activity that kind of wants to 8% of the total tanker fleet. So these numbers are quite shocking.
Another thing that's kind of.
Played a part in the last few months has been the high activity on the contracted markets, especially so for Suezmax and Vlccs.
Actually to the extent, where Myrtle Street Maui.
<unk> 27 is starting to become somewhat tight.
Also another kind of important thing to notice we've been through a long period of OPEC voluntary cups.
Particularly so bye bye.
The Arabia.
This may be or potentially lead to.
Non OPEC production being allowed to grow quite remarkably year.
Year on year according to EIA.
One of them has grown by $2 9 million barrels per day.
US your listeners with no most of this OPEC production is not in the middle East of course, it's a further far on AR on the connected to the Atlantic Basin.
And this continues to confirm our Rd bus.
Trading lengths are gradually extending.
U S, Brazil and other countries are able to increase their production going forward in China and Asia.
Still is where demand growth is happening.
Looking at the Sharps on this slide two global old or tread halfway kind of paused a little bit.
Also global oil and trunk TUSK costs, a little bit.
But.
I'm kind of a more frequent indicators, we do see that in oil in transit is on the rise.
What we can we expect it to be due to the longer ton miles around the Cape of good hope.
<unk> Suez Canal.
On the bottom three shots youll see how kind of the market has been.
The volatility has increased in this market I like to look at this.
By drawing a line on the bottom and I think we are or hoped we are in what looks like a rising trend the territory.
Kind of real time, what we're experiencing right now, particularly so in the Vlccs is that we seem to find the bottom.
Marginally higher.
<unk>.
Let her own dark trading in an Iranian barrels trading to North Korea, I'm doing all sorts of stuff and including the Russian fleet. That's a 375 vessels in Tokyo in the segments that we work in.
Place that we were before and also there are indications that volatility is increasing in particular, so you've seen on the in the clean market, where the volatility has been violent.
So far in Q1.
Let's move to slide nine and dig a little bit further into the Red Sea situation.
As a total.
Okay.
So the strengths between Yemen LNG booster.
<unk> came to 700 vessels involved in some sort of say the activity that's what amounts to 8% of the total tanker fleet. So these numbers are quite shocking.
T.
It's very unsafe for passage.
At the start of this.
Okay.
Kind of conflict.
The thing that's the kind of you know.
Unrest.
Played a part in the last few months has been the high activity in the contractor market.
It's kind of a targeted we're predominantly Israeli but.
But the attacks are now round them land park targeting anyone even.
And especially so for Suezmax and Vlccs.
Russian linked.
Actually to the extent, where you no word on the street now that 2027 is starting to become somewhat tight.
Linked vessels, which we thought were kind of.
Safe for a disruption due to kind of Russia's support or for for some.
Also another kind of important thing to notice we have been through a long period of OPEC voluntary cups.
Due to some of these groups.
Have also been been targeted since I think on us.
Particularly by our by our Saudi Arabia.
We should categorize this as a random attacks.
This us maybe or potentially lead to.
I'm not a political analyst, but obviously not a lot over the last months.
Non OPEC production.
Being allowed to grow quite remarkably.
Around this conflict.
Year on year according to EIA.
The who T movement at.
London has grown by two 9 million barrels per day.
Also very fragmented is just is not one uniform groups.
And as your listeners with no. Most of this OPEC production is not in the middle East of course, it's a further far.
What we're understanding from the region is that they're also getting support from Somali pirate. So this is like a proper math I would say and creates extremely unsafe conditions for seafarers and also for for our assets. So frontline.
Connected to that basin.
And this continues to confirm our Rd that's.
Trading lines are gradually extending us U S. Brazil and other countries are able to increase their production going forward in China and Asia still is where demand growth is happening.
It's not.
This growing rates.
And we'll continue.
On that position as long as the security situation remains as it is.
Looking at the Sharps on this slide so global trade has kind of caused a little bit.
Cause the traffic through Suez Canal is now down 40% to 50% some months kind of expect it to be far more than that but you need to.
<unk> global oil and trunk touch cost a little bit.
The amendment also an export region.
But.
On kind of a more frequent indicators, we do see that in oil in transit is on the rise.
So it means that actually oil coming out of Saudi for instance, still pulse resistance can now because they avoid them. This barbell Monday.
What we can we expect it to be due to the longer ton miles around the Cape of good hope avoiding Suez Canal.
Traits into.
<unk>.
The Gulf of Aden.
We also see now that trade patterns are adjusting to Cape of good hope routing. This takes time, because basically arbs and oil price differentials have been based on Suezmax.
On the bottom three shots.
Youll see how kind of the market's been.
Volatility has increased in this market.
Speaker Change: I like to look at this.
Speaker Change: By drawing a line at the bottom and I think we are or hoped we are in what looks like a rising trend that territory.
Going through the Suez Canal will need to be readjusted to basically accounts for VLCC volumes coming going around Cape of good hope.
Kind of real time, what we're experiencing right now, particularly so in the Vlccs is that we seem to find the bottom up.
So when do we see more barrels already move on the VLCC.
The products sorry, the small kind of greater degree favoring the big lift we're seeing a lot truth.
Speaker Change: Marginally higher.
Speaker Change: Place that we were before and also there are indications that volatility is increasing in particular, so we've seen on the in the clean market, where the volatility has been violent.
M a luxury and for those listeners that are not welcome their luxury cars.
Basically a coated suezmax they are not that many of them in this world. It's about 19 according to Clarkson.
Speaker Change: So far in Q1.
Speaker Change: Let's move to slide nine and dig a little bit further into the Red Sea situation.
But we can also clean up the suezmax in order to get into this market.
So the strengths between Yemen LNG booster.
Just visiting the graphs is to look at if you look at the right hand side of this slide.
Speaker Change: T.
Speaker Change: Very unsafe for passage.
You basically see on top you see oil tankers that are going around.
Speaker Change: At the start of this.
Often you see it's been a.
Speaker Change: Kind of conflict or unrest.
Cost of a rapid increase since December 2023.
Speaker Change: The ships out of a targeted were predominantly in Israel links.
And you see the oil tankers in the many so basically not Suez, but more specifically the barbell among them straight.
Speaker Change: The attacks are now round them targeting anyone even Russian linked.
Speaker Change: Linked vessels, which we thought were kind of.
Have fallen sharply since December 2023, and what this creates for the tanker industry is widening trade lanes. So basically more oil is going around the Cape.
Speaker Change: Safe for disruption due to kind of Russia's support or for for some.
Speaker Change: Some of these groups have also been been targeted since I think kind of.
<unk> is going to shortcut, while the Suez Canal.
Speaker Change: We should categorize this as a random.
So let's move to slide 10.
Speaker Change: <unk>.
Look at the order books are mentioned in the introduction, but this has been one of the big themes.
Speaker Change: Hum.
Speaker Change: Not political analyst, but obviously lumped in October the last months.
For the last three months is that ordering is picking up.
Speaker Change: Around this conflict.
This new oldest new orders are not reflected in this slide because we use a very cautious.
Speaker Change: And the who T movement is.
Speaker Change: Also very fragmented it's just it's not one uniform groups.
Our conservative approach to new orders because in the shipping market. There are rumors on there or LOI on their options under all sorts of.
Speaker Change: What we're understanding from the region is that they are also getting support from Somali pirate. So this is like a proper math I would say.
Kind of discussion points around new orders.
Speaker Change: Great.
Dream unsafe condition for seafarers and also core four assets. So frontline is.
So we've chose to listen to firmly to register a kind of new builds when the oil MAU numbers issues. So that's basically what place regardless.
Speaker Change: No.
Speaker Change: This growing rates.
Confirmed order. So you should expect going forward that particularly on the VLCC and to some extent on the Suezmax. These orange columns to increase.
Speaker Change: And we will.
Speaker Change: <unk>.
Speaker Change: That position as long as the security situation remained subsidies.
Speaker Change: Cause the traffic through Suez Canal is now down 40% to 50% some might kind of expect it to be far more than that but you need to.
But we need to keep in mind. That's currently on the in.
In the VLCC fleet, 15% of existing fleets.
Speaker Change: The amendment also an export region. So it means that actually oil coming out of Saudi for instance, fill pulse resistance can now because they avoid them. This barbell Monday strikes.
Above 20 years old.
We have 133 Vlccs that are there are or will pass 20 years since when spent before.
If you also look at the generation three moving into here. So 29 Vlccs were built in 2004 I E, becoming 20 of this year.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: The Gulf of Aden.
Speaker Change: We also see now that trade patterns are adjusting to Cape of good hope routing. This takes time, because basically arbs and crude oil price differentials have been based on Suezmax.
And 31 wheels.
These deferred in 2005, becoming 20th next year.
Speaker Change: Going through the Suez Canal will need to be readjusted to basically accounts for VLCC volumes coming going around Cape of good hope.
So the total of 60 Russell just this year next year are pulsing. This plenty of threshold, if you add the 2007 deliveries as well.
Speaker Change: So as we see more barrels already move on the VLCC.
Get to 79 close to 18 vessels.
We'll increase this pink negative columns in the shop, and how we portray as suezmax more or less the same picture. We're hitting these generations, where you had deliveries of 'twenty five 'twenty three 'twenty five.
Speaker Change: The product side, a smile to greater degree favoring the big lift we're seeing a lot truth and even a luxury and for those placements I don't know what <unk> is basically a coated suezmax there not that many of them in this world. It's about 19 according to Clarkson.
<unk> vessels.
Activity in 2004, 2005 and 2006.
Speaker Change: But we can also clean up the suezmax in order to to get into this market.
So you are basically after the same numbers.
The VLCC 73 vessels below the knee.
Speaker Change: Just visiting the graph is to look at if you look at the right hand side of this slide.
Three years, we'll pass this magical threshold of 20 years.
Speaker Change: You basically see on top you will see oil tankers that are going around.
For the LR twos, that's where we kind of potentially could be worried about the order books and actually quite a significant amount of course.
Speaker Change: What can you see it has been.
Speaker Change: Kind of a rapid increase in December 2023, and.
Looking to be delivered in 2025, well again have a look.
Speaker Change: And you see the oil tankers in the many so basically not.
Left hand side of the graph and look at and also consider the fact that a lot chew becomes less effective as the product carrier when it reaches the age of 15.
Speaker Change: More specifically the barbell among them strengths.
Speaker Change: Have fallen sharply since December 2023, and what this creates for the tanker industry is widening trade lanes. So basically more oil is going around the Cape and less oil is going to shortcut, while Suez Canal.
And look at the generations, we're hitting now in 2000 from 2008 2009 2010 built there's actually more than 92, LR twos, that's well past the 15 year threshold.
Over the next three years.
Speaker Change: So let's move to slide 10.
Let's dig a little bit further into this because this is offshore all with all kind of regard a supply story rather than a demand story.
Speaker Change: Look at the order book I mentioned in my introduction that this has been one of the big thing.
Speaker Change: For the last three months is that ordering is picking up.
Hopefully it's more in the periods from 2004 until 2008.
Speaker Change: This all these new orders are not reflected in this slide because we use a very cautious.
This kind of what we hope to be a prolonged bull market is more related to supply so lets move to slide 11.
Speaker Change: Our conservative approach to new orders because in the shipping market. There are rumors and there are LOI on their options under all sorts of.
And they are at the top we're highlighting.
Putting the highlights.
Speaker Change: For a discussion points around new orders.
Okay.
So if you basically look at the VLCC fleet. The mellow month as was expected with the current delivery stops are confirmed in the order book, we see a gradual kind of increase of the fleet up to 900 vessels above 900 Russell.
Speaker Change: So we've chose to listen to firmly to register a kind of.
Speaker Change: New builds when the ironwood numbers issues. So that's basically what place regarding confirmed order. So you should expect going forward that particularly on the VLCC and to some extent on the Suezmax. These orange columns to increase.
If you adjust for the vessels that are turning 20 years, you'll get a completely different curve. Some of you might've seen us using sharp before erez just uptake.
Speaker Change: But we need to keep in mind that currently.
Speaker Change: The VLCC fleet, 15% of existing fleet is above 20 years old.
And then what implications does this have yeah. So if you look at the chart on the top price downside.
Speaker Change: We have 133 agencies that either are or will pass 20 years since I've been spent before.
You see our average Nielsen see utilization.
You also see.
So it is more half the time and then Dallas thing the other half of the time, but then you need to deduct some more utilization for positioning.
Speaker Change: If you also look at the generation three moving into here. So 29 Vlccs were built in 2004, I E becoming 20th.
During bunkering operations, so doing or all the other stuff that you do that is not really related to the voyage and also some waiting time.
Speaker Change: This year.
Speaker Change: And 31 meal.
Speaker Change: They were in 2005, becoming 20th next year.
Look cargos, so you get kind of close.
Speaker Change: So the total of 16 Russell just this year next year are passing this plenty of threshold. If you add the 2007 deliveries as well.
Close to 50 50 balanced ratio.
But when you look at this fall for the various generations of ships you see that already from 17 year olds.
Speaker Change: Get to 79 close to eight vessels that will increase this pink negative columns in the shop and how we portray as suezmax more or less the same picture. We're hitting this generation, where you had the deliveries of 'twenty five 'twenty three 'twenty five.
As the station of the VLCC start to diminish.
Some charterers have a hard stop at 15 years. This is namely the Chinese for instance.
Others are starting to the hesitant or withdraw the prefer a modern ship when they are facing a ship that 17, 18, and 19 years and obviously from 20 years Youre taking away most of your clients and in this and so even though the ships actually survive longer than 20 years that they used to station is full.
Speaker Change: Vessels.
Speaker Change: Activity in 2004, 2005 and 2006.
Speaker Change: So youre basically after the same numbers.
Speaker Change: The VLCC 73 vessels.
Speaker Change: Three years, we'll pass this magical threshold of 20 years.
<unk>.
Another interesting shot which is more general overall for tank is looking up the left hand side on the Carson observation. We wanted to show this time, yes.
Speaker Change: For the LR twos, that's where we kind of potentially could be worried about the order books and actually quite a significant amount of course.
If you plot kind of all the.
Speaker Change: Looking to be delivered in 2025, well again have a look at the left hand side of that graph and look at and also consider the fact that an ela chew becomes less effective as the product carrier when it reaches the age of 15.
Orders Thats been placed.
Look at the time from ordering until delivery Youll see that there is a linear look at growing trends for high.
With.
Speaker Change: And look at the generations, we're hitting now in 2000 from 2008 2009 2010 built there.
The lead times are getting longer.
Understood.
Specifically, so from the tankers, which is the blue dotted line in the <unk>.
Speaker Change: It's actually more than 9% to two LR twos that we'll pass the 15 year threshold.
Number 2020, it was on average one eight years from the order was placed in service at both delivered now we're actually closing in on three is this is a big change and also you need to keep that in the back of your head considering the orders being placed now.
Speaker Change: Over the next three years.
Speaker Change: Let's dig a little bit further into this because this is after all what I regard a supply story rather than a demand story.
Speaker Change: Hopefully it's more in the periods from 2004 until 2008.
There are large order backlogs, but not so much for tankers, which the bottom right on slide <unk>.
Speaker Change: This kind of what we hope to be a prolonged bull market is more related to supply so lets move to slide 11.
Short story is Australia, so basically.
Speaker Change: And they are at the top we're highlighting.
Most of the deliveries that are coming in 2024 insensitive prefer a related to bulk is in containers and crude tank is it's just a very very small portion of the overall deliveries coming in it's only in 2026th we can expect to see.
Speaker Change: I think the highlights.
Speaker Change: Okay.
Speaker Change: So if you basically look at the VLCC fleet development as is expected with the current deliveries that are kind of confirmed in the order book, we see a gradual increase of the fleet up to 900 vessels above 900 Russell.
Some kind of.
Deliveries of some magnitude looking at the crude oil tankers.
Speaker Change: If you adjust for the vessels that are turning 20 years, you'll get a completely different curve. Some of you might have seen us using sharp before Eric just update.
So with that let me wrap.
It up before we open up for questions on slide 12.
I think kind of the highlights of our presentation for Q4 is that we deliver on the long term financing of the 2.4.
Speaker Change: And then what implications does this have yes. So if you look at the chart on the top right hand side.
Speaker Change: You see our average VLCC utilization.
For build them after the transaction we did in Q4.
Speaker Change: We also see.
And mind you guys. This is probably the largest single pure tanker deal ever concluded.
Speaker Change: So it is not half the time and then Dallas thing the other half of the time, but then you need to deduct some more utilization for positioning.
We've sold.
The five non eco vlccs, some one normally equal suezmax.
Speaker Change: In Bunkering operations, so doing all the other stuff that you do that is not really related to the voyage and also some waiting time.
As we indicated in the last quarter.
Speaker Change: Cargoes, so you get kind of a.
And.
In your house, one is true to refinance a significant part of our fleet.
Speaker Change: Close to 50 50 balanced ratio.
Speaker Change: But when you look at this fall for the various generations of ships you see that already from 17 year olds.
Very competitive terms.
Without really moving the needle too much on our Ltvs were obviously been helped a little bit by the process.
Speaker Change: As the station of the VLCC start to diminish.
Rates are rising.
Speaker Change: Some charterers have a hard stop at 15 years. This is namely the Chinese for instance.
During the period as well.
And I think more importantly to you who are listening in here.
Speaker Change: Others are starting to be hesitant or withdraw the prefer a modern ship when they are facing a ship that 17, 18, and 19 years and obviously from 20 years Youre taking away most of your clients and in this and so even though the ships actually survived longer than 20 years that they used to station is full.
We have not printed one single shot.
So all vessels are delivered on this doubles, our VLCC footprint and increases our earnings by more than 30%.
I'd like to remind you earlier in the presentation of our Inger explained.
<unk>.
Our average cash breakeven on a fleet wide is $25700 per day every dollar above that number hits the bottom line.
Speaker Change: Another interesting shot which is more general overall for tank is looking at the left hand side on the customer observation. We wanted to show this time.
We have obviously, a great security situation and the Red Sea Gulf of Aden.
Speaker Change: If you plot kind of all the.
Speaker Change: Orders Thats been placed.
Seems to be adding to ton miles and it benefits the larger carriers that are offering greater economies of scale basically because they can lift.
Speaker Change: Look at the time from ordering until delivery Youll see that there is a linear look at growing trends are high.
Larger volumes.
We are seeing increased activity in contracting for especially for Suezmax and VLCC.
Speaker Change: The lead times are getting longer.
Speaker Change: Understood.
Speaker Change: Typically so from the tankers, which is the blue dotted line.
But it's actually sold the fleet age composition in the tanker fleet in the month.
Speaker Change: In December 2020, it was on average one eight years from the order was placed and Theresa both delivered now we're actually closing in on three this.
Otherwise.
Yeah.
Short term medium term oil demand remains firm.
Speaker Change: This is a big change and also we need to keep that in back of your hand, considering the orders being placed now.
On a non OPEC supply is growing.
And then again frontline scalable operational platform has digested this fleet expansion.
Speaker Change: There are large order backlogs, but not so much for tankers, which the bottom right on slide <unk>.
Quite easily as the market's positive ground continues and I also think it's important to put your eyes on the bottom chart here at this.
Speaker Change: Short story is showing it so basically.
Speaker Change: Most of the deliveries that are coming in 2024, and 25 are related to bulk is in containers and crude tankage. It's just a very very small portion of the overall deliveries coming in it's only in 'twenty to 'twenty six we can expect to see some kind of a day.
Summary, this our economy.
Earnings.
<unk> wait.
Wasted earnings averages for all tanker is.
Quite far back.
We do expect that we are nearing or or potentially all of already in something that resembles the 2004 to 2008 period.
Speaker Change: Deliveries of some magnitude looking at the crude oil tankers.
And at least in the numbers although.
Speaker Change: So with that let me wrap it up before we open up for questions on slide 12.
You know you get kind of pulled a bit by the fact that the vlccs underperforming.
Speaker Change: So I think kind of the highlights of our presentation for Q4.
It's not performing as prominently as normally would do we have actually had both 2022 and 2023 hasnt given remarkable returns to the tanker industry and.
Speaker Change: Is that we deliver on the long term financing of the $2 four.
Speaker Change: 4 billion after the transaction we did in Q4.
We're looking cost okay coming in to January of this year.
Speaker Change: And mind you guys. This is probably the largest single pure tanker deal ever concluded.
With that I will open up or ask the operator to open up for questions.
Speaker Change: We've sold them.
Speaker Change: Five non eco vlccs, one normally equal suezmax.
Thank you Sir as a reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced.
Speaker Change: As we indicated.
Speaker Change: In the last quarter.
Speaker Change: And.
Can we drill your question. Please press star one and one again once again, it's still one and one for any question at this time and wait for your name to be announced.
Speaker Change: In your house minus two to refinance a significant part of our fleet.
Speaker Change: Competitive terms and.
Speaker Change: Without really moving the needle too much on our Ltvs were obviously been helped a little bit by the prices.
We are now going to proceed with our first question.
Okay.
Another question comes from the line of Amit Mehrotra from Deutsche Bank. Please ask your question. Your line is open.
Speaker Change: Rates are rising.
Speaker Change: During the period as well.
Speaker Change: And I think more importantly, two to you who are listening in here.
Okay.
Hi, yes, thanks for taking our question and good morning. This has been more on for a minute here at Deutsche Bank can you talk about your.
Speaker Change: We have not printed one single shot.
Speaker Change: So all vessels are delivered and this doubles, our VLCC footprint and increases our earnings by more than 30%.
Conviction levels around the LCC segment now that we're.
Two months into 2022, how do you see the segment for the tanker market shaping up so far and what's your current thinking about the rest of the year.
I'd like to remind you earlier in the presentation of our Inger explained.
Speaker Change: Our average cash breakeven on a fleet wide is $25700 per day every dollar above that number hits the bottom line.
Well, we're quite confident.
But.
I'm pretty sure trade winds economic feel Diana.
Speaker Change: We have obviously, a great security situation and the Red Sea Gulf of Aden.
Explanation, but what we are observing is bucks.
Speaker Change: This seems to be adding to ton miles and it benefits the larger carriers that are offering greater economies of scale basically because they can lift.
The market is tight it is very tight but the owners are potentially competing against each other which we shouldn't really doing this economy.
Speaker Change: Larger volumes.
Okay.
Speaker Change: We are seeing increased activity in contracting for especially for Suezmax and VLCC.
So so the shockers are playing their cards extremely well.
Basically just seeding the market with cargoes.
Speaker Change: But it's actually so the fleet age composition in the tanker fleet in the month.
Pointing the owner and the schedule for that ship in order to.
Make it appear quiet.
Speaker Change: Otherwise.
Speaker Change: Yeah.
Whilst we have a significant position in this market. So we obviously pick up more information than most and we see that activity has actually been very good.
Speaker Change: Short term medium term oil demand remains firm.
Speaker Change: On a non OPEC supply is growing.
Speaker Change: And then again frontline scalable operational platform has digested this fleet expansion.
The activity is good but for the owners to translate that into significantly higher earnings has been very very hard.
Speaker Change: Quite easily as the market is positive growth continues and I also think it's important to put your eyes on the bottom chart here. It is.
But apart from that.
Use the word grind in this presentation.
I do believe.
Speaker Change: Summary, this arcana.
In affirming grind on utilization.
Speaker Change: Earnings.
Speaker Change: <unk> wait.
Speaker Change: Wasted earnings averages four oil tankers.
This is going to.
Continued I still think we're going to have the seasonal kind of slowed down some seasonal upward movements.
Speaker Change: Quite far back.
Speaker Change: We do expect that we are nearing or or potentially all of already in something that resembles the 2004 to 2008 period.
Normally as you come into the summer season with refinery turnarounds and so forth, but I think you know it's it's quiet.
Speaker Change: And at least in the numbers although.
Kind of positive to see how quickly the VLCC market per se from 75% to 40000 barrels per day.
Speaker Change: You know you get kind of pulled a bit by the fact that the vlccs underperforming.
Or at least not performing as prominently as normally would do.
Going all the way up to 90 North of 19000 Boes per day.
Speaker Change: We have actually had both 2022 and 2023 hasnt given remarkable returns to the tanker industry and we're looking quite okay coming into January of this year.
As for a G E switches.
And then obviously holding back.
Now this market.
When when the parents of certain type market comps.
This market is on fire. So so I think the general.
And with that I will open up or ask the operator to open up for questions.
We are receiving one VLCC this year potentially 5% to 60 open season next year it's.
Speaker Change: Thank you Sir as a reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced until we drill. Your question. Please press star one and one again once again, it's still one and one for any question at this time and wait for your name to be announced.
It's many many many years since we've had the tucano.
Our supply growth and were losing quite a few vessels to H. So I'm positive, but it's very difficult to kind of gauge.
Are we going to go straight into 100000 doors per end market or are we going to grind you know.
Speaker Change: We are now going to proceed with our first question.
50 60 $70000.
Speaker Change: Okay.
It's anybody's guess.
Speaker Change: Another question has come from the line of Amit Mehrotra from Deutsche Bank. Please ask your question. Your line is open.
Yeah.
Yeah.
Thanks, maybe as a follow up.
We've seen peak.
Speaker Change: Sure.
Accretion as it relates to the ship.
Amit Mehrotra: Hi, yes, thanks for taking our question and good morning. This has been more on for a minute here at Deutsche Bank can you talk about your conviction.
Already from the rest of the ore.
It's going to go.
I think there is more to go we're already seeing you know what normally used to be suezmax cargos going through.
Amit Mehrotra: Conviction levels around the LCC segment now that we're on.
Being put together and put on a VLCC passing cable could hope we've seen exactly the same happening in the med.
Amit Mehrotra: Two months into 2022, how do you see the segment for the tanker market shaping up so far and what's your current thinking about the rest of the year.
Eastern Med barrels that normally would go through Sirius is now being put together on the Vlccs. So we are actually seeing that or expecting that VLCC utilization is going to continue to go up and I think kind of in this slide deck you.
Speaker Change: Well, we're quite confident.
Speaker Change: But.
Speaker Change: I'm pretty sure.
Speaker Change: Trade winds economic feel Diana observation, but what we're observing is that.
You can look at the at the shot where we kind of measure the amount of ships going a pulsing capable could hope yes. It has kind of plateaued, there may be potentially correct, a little bit down, but I, but I believe this is going to just increase obviously assuming that.
Speaker Change: The market is tight it is very tight but the owners are potentially competing against each other which we shouldnt really doing this kind of.
Speaker Change: So so and the Shockers are playing their cards extremely well.
Speaker Change: Basically just seeding the market with cargoes.
The situation continues to.
Speaker Change: Pointing the owner and the schedule for that ship in order to.
Okay.
The security level continues to be a status that is now in.
Speaker Change: Make it appear quiet.
Speaker Change: Whilst we have a significant position in this market. So we obviously pick up more information than most and we see that activity has actually been very good.
In the Red Sea and the Gulf.
Great. Thank you.
Yeah.
Speaker Change: The activity is good but for the owners to translate that into significantly higher earnings has been very very hard.
Thank you we are now going to proceed with our next question.
And our question comes from the line of Jonathan Chappell from Evercore. Please ask your question. Your line is open.
Speaker Change: But apart from that.
Speaker Change: Use the word grind in this presentation.
Speaker Change: I do believe.
Thank you good afternoon.
Speaker Change: In.
Speaker Change: In affirming grind on utilization.
Inger you've accomplished a lot in a short period of time, both with modernizing the fleet and then doing that financing.
Hum.
Speaker Change: This is going to continue.
Speaker Change: I think we're going to have the seasonal kind of slowed down some seasonal upward movements.
Ambitiously and quickly and in a good way that you didn't change the LTV as we think about 2024 in the market that Lars is laid out pretty detailed the cash flow generation that's coming.
Speaker Change: Normally as we come into the summer season with refinery turnarounds and so forth, but I think as you know.
Speaker Change: Its quiet.
Is there a deleveraging that you'd like to see post this whole transaction of the 24, vlccs and the refinancing or are the terms favorable enough for you that you are just happy to let it kind of amortize and any cash flow generation would then be kind of the old frontline manner of a progressive dividend.
Speaker Change: Kind of positive to see how quickly the VLCC market per se from 75% to $40000 per day.
Speaker Change: Going all the way up to 90 North of 19000 Boes per day. This is for a G E switches.
Speaker Change: And then obviously falling back.
Speaker Change: Now this market when when the parents of certain type of market comps.
Yeah.
You said I mean.
We are happy with that and we argue that if anything the feet are there the depth and by our ordinary alignment are facing going public.
Speaker Change: This market is on fire. So so I think the general.
Speaker Change: Were only receiving one VLCC this year and potentially five to six Vlccs next year.
We are happy with its comfortable with is the loan to value that we have asked for this refinancing.
Speaker Change: Many men many since we've had the tucano supply growth and were losing quite a few vessels to H. So I'm I'm I'm positive, but it's very difficult to kind of gauge.
It is not clear at all it's about a 53, 5% something in that respect.
Oh like if that is so so I think we have.
Speaker Change: Are we going to go straight into 100000 doors per end market or are we going to grind.
And with that just.
And like I say that because I think that that's going forward on an OIBDA or negatively by the way.
Speaker Change: 50, 60, $70000, it's anybody's guess.
Okay, Great and then Lars.
Speaker Change: Yeah.
Speaker Change: Yeah.
Three months ago, and then you went ahead and sold six of your oldest vessels. How do you feel about some of the remaining older vessels in our fleet is there still a pretty decent arbitrage opportunity where do you think you can monetize some of your older non eco ships.
Speaker Change: Thanks.
Speaker Change: A follow up.
Speaker Change: Have we seen.
Speaker Change: Application as it relates to the ships converting from the rest of the <unk>.
Speaker Change: There's more to go.
Speaker Change: I think there is more to go we're already seeing what normally used to be suezmax cargos going through.
They may be.
Kind of help with the with the cash flow generation or do you feel like you're pretty content with the fleet as you enter this multiyear period of strength.
Speaker Change: Being put together and put on a VLCC passing cable could hope we've seen exactly the same happening in the med.
I'll say, we're where we're pretty content the way.
We see two requirement.
Speaker Change: Kind of eastern med barrels that normally would go through cirrhosis put together on the Vlccs. So we are actually seeing that or expecting that VLCC utilization is going to continue to go up and I think kind of in this slide deck.
It kind of equal.
Equals an arbitrage it is may be able to but I think kind of.
There is a lot of risk in the elevated prices, we're seeing on <unk>. So much so so.
Speaker Change: You can look at.
Speaker Change: At the shot where we kind of measure the amount of ships going a pulsing cable could hope yes. It has kind of plateaued, there may be potentially correct, a little bit down, but I, but I believe this is going to just increase obviously.
Kind of just looking at the book value. So we're able to.
Kind of take out here.
Sure.
The money, we were able to take them all Bukavu's Tulsa stop but we are at the very elevated the point in the car so.
Speaker Change: Assuming that.
Speaker Change: The situation continues to.
Almost account to account.
Speaker Change: Okay.
Speaker Change: The security level continues to be a status that is now in.
Anything, but we're very much pretty content now.
Great. Thanks, a lot thanks Inger.
Speaker Change: In the Red Sea on the Gulf.
Speaker Change: Yeah.
Great. Thank you.
Thank you we are now going to proceed with our next question.
Speaker Change: Sure.
Speaker Change: Thank you we are now going to proceed with our next question.
Yeah.
And the questions come from the line of Greg Lewis from <unk>. Please ask your question. Your line is open.
Speaker Change: And the questions come from the line of Jonathan Chappell from Evercore. Please ask your question. Your line is open.
Yeah. Thank you and good afternoon, everybody and thanks for taking my question I was hoping you could talk a little bit about.
Jonathan B. Chappell: Thank you good afternoon.
Jonathan B. Chappell: Inger you've accomplished a lot in a short period of time, both with modernizing the fleet and then doing that financing.
The dynamics around the Newbuild market I mean.
We saw a competitor order a couple about a couple of these.
Jonathan B. Chappell: Pretty ambitiously and quickly and in a good way that you didn't change the LTV as we think about 2024 in the market the largest laid out pretty detailed the cash flow generation that's coming.
I don't want to say last week.
Just kind of how you're thinking about it.
You kind of highlighted the outlook for the order book.
Really thereof.
Speaker Change: Is there a deleveraging that you'd like to see you know post this whole transaction of the 24, vlccs and the refinancing or are the terms favorable enough for you that you are just happy to let it kind of amortize and any cash flow generation would then be kind of the old frontline manner of a progressive dividends.
You laid out a bullish.
Outlook for the next few years.
I guess at this point, how have are cowards frontline thinking about the opportunities in the newbuild market.
That is a very good question.
So that.
Basically due to the cost of capital on the long lead times that the delivered price is kind of a bit higher than the number.
Speaker Change: Yeah, I thought you said I mean.
Speaker Change: We are happy with that and we argue languishing here or there.
Oh actually significantly higher than the list price that you pay.
Speaker Change: Ordinary alignment are facing going public.
Speaker Change: I mean, we are happy with it we're comfortable with is the loan to value that we have asked for a certain financing.
Obviously and also the one of our competitors ordering quite a few vessels recently.
Speaker Change: It's not clear at all it's about a three 5% something in that respect at all like if that is so so I think we don't really have.
Our extremely high numbers have numbers historically, I think kind of the dynamics in shifting on this is probably what makes shifting from is stopped.
Speaker Change: And with that just then.
Speaker Change: And like I say, I'm, emphasizing that but that's going public on enrollment or negatively by the way.
One one.
After he gets his feet wet and suddenly aerial director is competing to get their feet with as well.
Speaker Change: Okay, Great and then Lars.
I think kind of the.
Speaker Change: Three months ago, and then you went ahead and sold six of your oldest vessels. How do you feel about some of the remaining older vessels in our fleet is there still a pretty decent arbitrage opportunity where do you think you can monetize some of your older non eco ships.
Numerous end market has been a little bit muted for the bigger sciences for awhile.
<unk> and <unk>.
It's almost like who's going to go.
Okay.
Establish the new level of Korean built on and on.
Speaker Change: They may be.
Speaker Change: Kind of help with the with the cash flow generation or do you feel like you're pretty content with the fleet as you enter this multiyear period of strength.
Chinese mills.
Been quite a lot of transactions that come through now, but seemingly it's happening on kind of.
Speaker Change: I will say, we were pretty content the way.
Aspen at all some levels you know, you'll see China in new builds being done between $150 and $120 million and then you'll see Korea, which is actually for the first time in the very long time.
Speaker Change: We seek to mcdonalds.
Speaker Change:
Speaker Change: It kind of equal.
Speaker Change: You called an arbitrage it is may be able to I think kind of.
Establishing the $128 million to $130 million for conventional.
Speaker Change: There is a lot of risk in the elevated prices, we're seeing on second hand tonnage. So so.
<unk>.
So.
We're obviously watching this.
Speaker Change: Kind of just looking at the book value. So we're able to.
With a little bit from this slide along with <unk>.
Kind of a stand Craig we did a little bit busy the last quarter and a half.
Speaker Change: Kind of take out here.
Speaker Change: Sure.
Speaker Change: The money, we were able to take them all book values Tulsa stop but we are very.
Although we monitor this we havent taken an active role yet.
Okay.
Speaker Change: A very elevated.
Great and then I know you mentioned that the.
Speaker Change: And in the car so.
Speaker Change: What was that comp accounts.
The dark blue or the Shadow fleet.
Speaker Change: Exclude anything, but we're very much pretty content now.
You know I'm kind of curious realizing you see a lot more data than we though is there any kind of way to.
Speaker Change: Great. Thanks, Thanks singer.
Speaker Change: Yes.
Got the Subsectors in that fleet I mean, I've heard 700 vessels in the fleet.
Speaker Change: Thank you we are now going to proceed with our next question.
I don't know I mean, I think you said that earlier in the prepared remarks, but any kind of any kind of color around that.
Speaker Change: And that question has come from the line of Greg Lewis from <unk>. Please ask your question. Your line is open.
Gregory Robert Lewis: Yeah. Thank you and good afternoon, everybody and thanks for taking my question I was hoping you could talk a little bit about.
If you had the kind of best guess what types of vessels are in that fleet, because I think a lot of people are trying to figure out hey, there in that fleet and that means going forward.
Gregory Robert Lewis: The dynamics around the Newbuild market I mean.
Efficiency or utilization of those vessels is gonna be permanently constrained regardless of what happens so any kind of views around that what actually is in that dark shadow fleet.
Gregory Robert Lewis: We saw a competitor order a couple about a couple of beef.
I want to say last week.
Gregory Robert Lewis: Just kind of how youre thinking about it.
Gregory Robert Lewis: You kind of highlighted the outlook for the order book or the lack of really thereof.
I think you can just start with just the <unk>.
Gregory Robert Lewis: You laid out a bullish.
Assuming originally for about 20 years is one way or another apart from very very few exceptions are storage units.
Gregory Robert Lewis: Outlook for the next few years.
Speaker Change: Yes at this point, how how we're cowards frontline thinking about the opportunities in the Newbuild market.
Our.
Speaker Change: That has a very good question.
Playing a part in the dark or the grave fleet.
Speaker Change: So that.
So.
But that doesn't add up to 700 ships. So you need to kind of move into the 17 and a half year category as well I think to ask them to stand up even though we we do make quite a bit of money and tankers. These days.
Speaker Change: Basically due to the cost of capital on the long lead times that the delivered price is kind of a bit higher than the number.
Speaker Change: Actually significantly higher than the trough.
Speaker Change: List price that you pay.
I'm just making this so it means that when you have a 15 year old ship overseas will take you through cross then you need to do a <unk> 17 on a half year class. Then you start to think how much is just kind of cosmic <unk> and you know how many how many million dollars then it kind of.
Speaker Change: And also the one of our competitors ordering quite a few vessels recently.
Speaker Change: Our extremely high numbers have numbers historically, I think kind of the dynamics in shifting on this is probably what makes shipping some is stopped.
One one.
Speaker Change: Actor he gets his feet wet and suddenly area director is competing to get their feet with as well.
In.
So kind of trading at least in their own fleet or you start to look out to the second hand market.
Speaker Change: I think kind of the.
Speaker Change: The nuclear market has been a little bit muted for the bigger sciences for awhile.
I think also the doors closing a little bit for those.
Who's.
Speaker Change: And it's.
Ben.
Speaker Change: It's almost like who's going to go.
Amidst frivolous and.
Speaker Change: Yeah.
Speaker Change: Establishing the new level of Korean built on on and on.
Considering either selling their tonnage too.
Hum.
I kind of applaud.
Speaker Change: China's belt, and it's actually been quite a lot of transactions that come through now, but seemingly it's happening on kind.
The recent efforts by about USD, four tests and how they're really now tracking down on penalizing access that are dealing with either directly or indirectly with ships start to disappear into the darker the grave fleet.
Speaker Change: Aspen at all some levels, you see China, Newbuild being done between $150 $120 million and then you'll see Korea, which is actually for the first time in a very long time.
Also.
The latest.
Regulations Pro E from EU have also kind of puts a pressure on this.
Speaker Change: Establishing the $128 million to $130 million for conventional.
So.
Speaker Change: <unk>.
It's kind of identifying these ships is it.
Speaker Change: So we're obviously watching this.
Actually fairly easy.
Speaker Change: The numbers from this high in line with.
Obviously, they use all the tricks in the books in order to avoid getting detected.
Speaker Change: Kind of a star Craig we've been a little bit busy the last quarter and a half.
Speaker Change: Although we monitor this we havent taken an active role yet.
Where we will see.
And again with this is when we start to see extended scrapping.
Speaker Change: Okay.
Craig: Great and then I know you mentioned that the.
To this day, we have not seen that we've seen one or two ships.
Craig: The dark fully or the Shadow fleet.
Cough being sold for scrap, but it's been extremely muted in that industry and that's kind of what I would look for.
You know I'm kind of curious realizing you see a lot more data than we though is there any kind of way to.
To say that okay. So this market is now gradually cough common consensus again.
Without this sub sectors in that fleet I mean, I've heard 700 vessels in the fleet.
Also a trigger in this market would obviously be a couple of strophic environmental impact event, we already have that actually in the Caribbean.
Craig: I don't know I mean, I think you said that earlier in the prepared remarks, any kind of any kind of color around that.
Craig: If you had the kind of best guess what types of vessels are in that fleet, because I think a lot of people are trying to figure out hey, there in that fleet and that means going forward.
It's obviously not been well not obviously, but it's maybe not been covered enough by the media, but there you know nobody actually knows.
<unk> also who it was owned by whatever it was but you just have a massive shift of oil.
Craig: Efficiency or utilization of those vessels is going to be permanently constrained regardless of what happens so any kind of views around that what actually is in that dark shadow sweep.
Drifting into toboggan items that was.
So so but it's.
I think this is sort of identifying the ships is basically.
Craig: I think you can spot win.
A portion of the house.
It doesn't actually have normally been taken to trade anymore, which is just 20 year threshold.
Craig: Assuming and reshape about 'twenty is one way or another apart from very very few exceptions that are in storage units.
Okay.
Okay Super helpful. Thank you for your time everybody.
Craig: Uh huh.
Thank you.
Craig: Playing a part in the dark called the great food.
As a final reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced.
Craig: So but that doesn't add up to 700 ships. So you need to kind of move into the 17 and a half year category as well I think to ask them to stand up even though we we do make quite a bit of money and tankers. These days.
Youre not going to proceed with our next question.
And the question is come from the line of Sam Bland from JP Morgan. Please ask your question. Your line is open.
Oh, Thanks for taking my question first one is.
Craig: I'm just making this so it means that when you have a 15 year old ship, obviously it will take you through cross then you need to do a <unk> 17 on a half year class. Then you start to think how much is just kind of cosmic harmony, how many million dollar started to put.
We look at the order book on Slide 10, it looks very high.
<unk> 22 per cent do you do tend to look at that number.
Just for the LR twos or do you somehow rapid in with crude Aframax and get one order book.
Craig: Kind of.
Craig: In.
Across the two of them given that you've kind of gets you can try to add a lot to Jesse what's the best way to think of looking at it.
Craig: So kind of trading at least in their own fleet or you start to look out to the second hand market.
Hum.
Craig: I think also the doors closing a little bit for those.
Good question, something we've actually been followed.
Craig: Who could have.
Craig: Ben.
Our presentations over some years, we've actually been a little bit kind of confused ourselves of how are we going to do that.
Craig: Amidst frivolous in.
Craig: Considering either selling their tonnage too.
Craig: Hum.
The things that the Aframax order book for for like non coated.
Speaker Change: I kind of applaud.
Speaker Change: The recent efforts by by U S authorities and how they are really now tracking down on penalizing access that are dealing with either directly or indirectly with ships start to disappear into the dark autograph it.
Tankers is extremely limited almost negligible so so so.
Since.
Luxury is kind of what career training.
Speaker Change: Also you know kind of the latest.
Just decided to focus on that.
Speaker Change: Regulations Pro E.
I mentioned that 15 year kind of.
Speaker Change: From EU have also kind of puts a pressure on this.
No it's not the limit.
Speaker Change: So.
Charters tend to prefer.
Speaker Change: It's kind of identifying these ships.
More than 15 year old ship, because as the precious cargo and the <unk> coating will actually be.
Speaker Change: Actually fairly easy, but obviously they use all the tricks in the books in order to avoid getting detected.
Introduce.
Speaker Change: Okay.
Quality of the coating Liberty if somebody is.
Speaker Change: Where we were.
Speaker Change: We'll see.
So the way I think about this is not.
Speaker Change: And again with this is when we start to see extended scrapping and to this day, we have not seen that we've seen one or two ships.
A cough this vessels, leaving the LR two fleets they become aframax size. So that's that's the.
Speaker Change: <unk> being sold for scrap but it has been extremely muted in that industry and that's kind of what I would look for.
Aframax fleet growth for you kind of you can almost say.
And I lost you. That's pulsing 17 years is for sure not trading clean anymore.
Speaker Change: To say that okay. So in this market is now gradually cost common consensus again and also a trigger in this market would obviously be a coupla strophic environmental impact event, we already have that actually in the Caribbean.
In most cases.
So that's the vessels kind of why we've just.
Focus on the LR twos, the Aframax fleet is with large.
Speaker Change: It's obviously not been well not obviously, but it's maybe not been covered enough by the media, but there nobody actually knows the shape also who it was owned by whatever it was but you just have a massive shift of oil.
There's a lot of barriers.
Levels of call it through their various levels of trade they're engaged in.
We tend to focus on the LR twos, there's a bit north of 300, and the low twos and then we'd rather monitor.
Speaker Change: Drifting into toboggan items that was.
<unk> kind of trading clean on the euro trading dirty.
Speaker Change: So but.
And right now at least the last intelligence I saw were about.
Speaker Change: But it's you know.
Speaker Change: This is sort of identifying the ships.
Speaker Change: I see.
Speaker Change: A portion of the Pizza hut.
300, plus fleets.
Speaker Change: And actually have normally been ticket to trade anymore, which is a 20 year threshold.
Where I'm.
At least in the 80% trading clean.
Speaker Change: Okay Super helpful. Thank you for your time everybody.
Okay understood.
Speaker Change: Thank you.
The other one was you made a comment earlier in the presentation around how.
Speaker Change: As a final reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced.
Rates sort of around.
Red seal locations may have some sort of.
I'm not sure you phrase it like some kind of reset a.
Speaker Change: And now going to proceed with our next question.
Needed to kind of.
Reflecting the new trading patterns and route is it like some of the disruption linked to the Red Sea some hasn't it hasn't caught up in and rates yet.
Speaker Change: And the question comes from the line of Sam Bland from Jpmorgan. Please ask your question. Your line is open.
Samuel James Bland: Oh, Thanks for taking my question.
Yes.
Samuel James Bland: The first one is.
Okay.
Samuel James Bland: We look at the order book on Slide 10, it looks very high. So they are allowed to <unk> 22 per cent do you do tend to look at that number.
I know, it's a year after I thought it was probably little player, but the other thing is that when they when they were trade under your booking your cargoes going forward.
Samuel James Bland: Just for the LR twos or do you somehow rapid in with them sort of crude aframax and get one order book.
It constitutes ending of shorts or.
Lifting along so whatever you do.
It's almost everything is quite a few days Poland is.
Samuel James Bland: Across the two of them given that you've kind of gets you can try to add a lot to Jesse what's the best way to think of looking at it.
There's not much.
And then suddenly you need to adjust to the fact that you can pass through through the Suez Canal on your freight cost will increase so basically and freight cost will suddenly shot they are so so.
Speaker Change: Uh huh.
Speaker Change: That's a good question Sam.
Ben: Actually Ben.
Ben: Hello.
Speaker Change: Presentations over some years, we've actually been a little bit kind of confused ourselves of how are we going to do that.
Oil will stay in the west or stay in the east is.
Last element is not accounted for in whatever kind of.
Speaker Change: The things that the Aframax order book for for like non coated.
Structure, you have setup, California training.
Speaker Change: Kind of tankers is extremely limited almost negligible. So so so.
So that takes a little bit of time before it comes together.
Speaker Change: Since you know.
And also you have to some extent logistical constraints because obviously, it's easy to take a VLCC for industrial too cheeky, Europe, but which part are you gonna discharged barrels into then you need to start to think that well have a VLCC now not the suezmax suezmax is far more nimble and eastern took place as far more.
Speaker Change: Luxury is kind of what we're trading we've just decided to focus on that.
Speaker Change: Uh huh.
Speaker Change: And the 15 year kind of.
Speaker Change: No it's not the limit.
Speaker Change: Charters tend to not prefer.
More than 15 year old ship, because it's the precious cargo and the <unk> coating will actually be.
More options on the port side.
And the same goes for clean although none of you would love to fill up the suezmax with with a product well you cant really discharged uptake into Rotterdam, because the birth doesn't fit a suezmax. So so that's just an example.
Speaker Change: Introduce.
Speaker Change: Quality of the coating Liberty if somebody is.
So the way I think about this is not you know.
Speaker Change: <unk>.
Speaker Change: No cough this vessels, leaving the LR two fleets they become aframax.
So all these things take time before you.
Speaker Change: So that's that's the.
Speaker Change: The Aframax fleet growth for you kind of you can almost say.
Okay.
Kind of pursue it so I think the initial woman, which you saw on the clean side when the Red rockets. It was basically there were no ships coming from west to east because they're trading well constrained basically on these long Orange and then suddenly you were empty with ships in the Middle East region.
Speaker Change: And I lost you that's the pulsing 17 years is for sure not trading clean anymore.
Speaker Change: At least in most cases.
Speaker Change: So that's the vessels kind of why we've just.
Speaker Change: Focus on the LR twos, the Aframax fleet is with large.
Speaker Change: There's a lot of barriers.
And.
Got to price for France at a price to a level where ships production eagle empty from Europe to Q2 to the middle East.
Speaker Change: Levels of call it in there.
Speaker Change: Levels of trade they're engaged in.
Speaker Change: We tend to focus on the LR twos, there's a bit north of 300, and the low twos and then we'd rather monitor.
But obviously, we see now that that's now kind of normalized one correct.
Speaker Change: You are kind of trading clean on the euro trading Dirty and right now at least the last intelligence I saw where about <unk> of that 300 plus fleets.
I think on this.
This is just me thinking.
Yes.
We have limited visibility to their trading books of the various kind of major some traders but.
What we at least looks like is that we see these studies now being collected.
Speaker Change: Where.
Speaker Change: At least up in the 80% trading clean in this space.
Put together.
Speaker Change: Yes.
And.
The product moving from the east to the west from the West to east in larger bulk.
Speaker Change: Okay understood and the other one was you made a comment earlier in the presentation around how rates sort of around.
Yeah.
And that will change.
Speaker Change: Red seal locations may have some sort of.
So did you get a little bit more strength in the larger ships.
Speaker Change: I'm not sure you phrase it like some kind of a reset are needed to kind of.
Yes.
Okay understood. Thank you.
Thank you Sam.
Speaker Change: Reflecting the new trading patterns and route is it like some of the disruption linked to the Red sea somehow hasn't caught up in and rates yet.
Thank you.
We have no further questions at this time I will now hand back to you to a closing remark. Thank you.
Oh, Thank you very much for dialing in.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: No no its ear after thorough I thought it was probably an a player but the other thing is that when they when they were trained on the year.
It's an exciting market, where it made me too exciting.
Pumps, but again I would like to highlight.
I think we are in a grind and gradual grind going in the right direction.
Speaker Change: Booking your cargoes going forward.
Speaker Change: Comps attending a shorts or.
There are comps the science and the staff will have volatility going forward.
Speaker Change: Lifting along so whatever you do.
Speaker Change:
With that thank you very much.
Speaker Change: It's almost everything is quite a few days forward if.
Speaker Change: It's not months.
Speaker Change: And then suddenly you need to adjust to the fact that you can pass through through the Suez Canal on your freight cost will increase so basically trade cost will suddenly shot they are so so.
Speaker Change: Oil will stay in the west or stay in the east is.
Speaker Change: Last element is not accounted for in whatever kind of.
Structure, you have setup, California training.
Speaker Change: So that takes a little bit of time before it comes together.
Speaker Change: And also you have to some extent logistical constraints because obviously, it's easy to take a VLCC for industrial too cheeky, Europe, but which part are you gonna discharged barrels into then you need to start to think that well island Nielsen C&I not suezmax Suezmax is far more nimble and eastern took place and as far more.
Speaker Change: More options on the port side.
Speaker Change: And the same goes for clean although none of you would love to fill up the Suezmax Smith with a product well you cant really discharged that say into Rotterdam, because the birth doesn't fit a suezmax. So so that's just an example.
Speaker Change: So all these things take time before you.
Speaker Change: Okay.
Speaker Change: Kind of pursue it so I think the initial women, which you saw on the clean side when the Red rockets. It was basically there were no ships coming from west to east because the trading was constrained basically on these long Orange and then suddenly you were empty with ships in the Middle East region.
Speaker Change: And.
Speaker Change: Got to price for France at a price to a level where ships production eagle empty from Europe to Q2 into the middle East.
Speaker Change: <unk>.
But obviously, we see now that that's now kind of normalized one correct.
Speaker Change: I think on this.
Speaker Change: This is just me thinking.
Speaker Change: Yes.
Speaker Change: Limited miscibility to their trading books of the various kind of major some traders but.
Speaker Change: What we at least looks like is that we see these systems now being collected.
Put together.
Speaker Change: And.
Speaker Change: Product moving from the east to the west from the West to east in larger bulk.
Speaker Change: Yeah.
Speaker Change: And that will change.
Speaker Change: So you get a little bit more strength in the larger ships.
Speaker Change: Yes.
Speaker Change: Okay understood. Thank you.
Speaker Change: Thank you Sam.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: We have no further questions at this time I will now hand back to you to a closing remark. Thank you.
Speaker Change: Oh, Thank you very much for dialing in.
Speaker Change: It's an exciting market where in mainly two exciting.
Speaker Change: Humps.
Speaker Change: Again, I would like to highlight that I think we are in a grind and gradual grind going in the right direction.
Speaker Change: There are accomplished the science and the staff will have volatility going forward. So with that thank you very much.
Speaker Change: Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect your lines. Thank you.
Speaker Change: Hmm.
Speaker Change: [music].