Q4 2023 Scorpio Tankers Inc Earnings Call

Speaker Change: [music].

Hello, and welcome today's Scorpio Tankers, Inc. Fourth quarter 223 conference call I would now like to turn the call over to James dialed.

Operator: Hello, and welcome to the Scorpio Tankers Inc. fourth quarter 2023 conference call. I would now like to turn the call over to James Doyle, head of corporate development and IR. Please go ahead, sir.

James: There's a lot and I are where you go ahead sir.

James Doyle: Thank you for joining us today. Welcome to the Scorpio Tankers fourth quarter 2023 earnings conference call. On the call with me today are Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; and Chris Avella, Chief Financial Officer. Earlier today, we issued our fourth-quarter earnings press release, which is available on our website, scorpiotankers.com. The information discussed on this call is based on information as of today, February 14, 2024, and may contain forward-looking statements that involve risk and uncertainty. actual results may differ materially from those set forth in such statements.

James: Thank you for joining us today welcome to the Scorpio tankers fourth quarter 2023 earnings conference call on the call with me today are Emmanuel a war out Chief Executive Officer, Robert Bugbee, President Cameron Mackey, Chief operating Officer, Chris <unk>, Chief Financial Officer.

James: Today, we issued our fourth quarter earnings press release, which is available on our website Scorpio tankers dot com.

James: The information discussed on this call is based on information as of today February 14th 2024, and May contain forward looking statements that involve risk and uncertainty.

James: Actual results may differ materially from those set forth in such statements for a discussion of these risks and uncertainties you should review the forward looking statements disclosure in the earnings press release.

James Doyle: For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release, as well as Scorpio Tankers' SEC filings, which are available at scorpiotankers.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcast live on the internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the investor relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at scorpiotankers.com on the investor relations page under reports and presentations. The slides will also be available during the webcast.

James: Well as Scorpio tankers, SEC filings, which are available at Scorpio tankers dot com.

James: C C dot Gov.

James: Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days.

James: We will be giving a short presentation today. The presentation is available at Scorpio tankers dot com on the Investor Relations page under reports and presentations.

James: It will also be available on the webcast after.

James Doyle: After the presentation, we will go to Q&A. For those asking questions, please limit the number of questions to two. If you have an additional question, please rejoin the queue. Now, I'd like to introduce our Chief Executive Officer, Emanuele Lauro.

After the presentation, we will go to Q&A. So those asking questions. Please limit the number of questions to two do you have an additional question. Please rejoin the queue now I'd like to introduce our Chief Executive Officer Emmanuel anywhere else.

Emmanuel War: Thank you James and thank you everybody for joining yesterday, we appreciate your time.

Emanuele A. Lauro: Thank you, James. And thank you, everybody, for joining us today. We appreciate your time. We're pleased to report another quarter and another year of strong financial results. In the fourth quarter of 2023, the company generated $237 million in adjusted EBITDA and more than $142 million in adjusted net income.

Emmanuel War: We're pleased to report another quarter and then I'll go to Europe strong financial results.

Emmanuel War: In the fourth quarter of 2023, the company generated $237 million in adjusted EBITDA and.

Emmanuel War: And more than a 142 million and adjusted net income.

Emanuele A. Lauro: For the full year 2023, the company generated $959 million in adjusted EBITDA and more than $570 million in adjusted net income. The fundamentals which have created a strong and great environment over the last few years remain intact, a dislocated refining capacity and a constrained maritime supply curve. In addition to this, we've seen low water levels in the Panama Canal, attacks in the Red Sea, and sanctions on Russia, which have led to the rerouting of vessels. This has made the fleet more inefficient and further tightened supply against strong demand. The cash flow from the elevated rate environments is significant. They have also been transformative for our company.

Emmanuel War: For the full year 2023, the company generated.

Emmanuel War: $969 million and adjusted EBITDA.

Emmanuel War: More than $570 million and adjusted net income.

Emmanuel War: The fundamentals, which have created a strong rate environment over the last few years remain intact.

Emmanuel War: Those are still are an increasing global demand for refined products, a dislocated refining capacity and a constrained maritime supply cars.

Emmanuel War: In addition to these.

Emmanuel War: We've seen low water levels in the Panama Canal.

Emmanuel War: It's actually in the Red Sea and sanctions on Russia, which had led to the rerouting of vessels.

Emmanuel War: This has made the fleets more inefficient and further tightened supply against a strong demand courage.

Emmanuel War: The cash flow from the elevated rate environments are significant.

Emmanuel War: They are also being transformative for our company.

Emanuele A. Lauro: The balance sheet and the quality of Scorpio Tankers as an investment have become stronger and continue to improve. Leveraging has been and remains our primary focus. Over the last two years, the company has reduced lease financing by almost $2 billion and our total debt by $1.6 billion. In the first quarter of 2024, we will repay $316 million in debt.

The balance sheets and the quality of Scorpio tankers is an investment has become stronger and continues to improve.

Emmanuel War: Deleveraging has been and remains our primary focus over the last two years. The company has reduced lease financing by almost $2 billion.

Emmanuel War: Our total.

Emmanuel War: Total debt by.

Emmanuel War: By $1 6 billion.

Emmanuel War: In the first quarter of 'twenty 'twenty, four we will repay 216 million in debt.

Emmanuel War: And today, our net debt stands at just a shade below $1.1 billion and we feel very well positioned at these levels.

Emanuele A. Lauro: Over the last few years, we have returned $732 million to shareholders, and this has been returned through share repurchases and through dividends, which include $548 million, or roughly $10 per share, in 2023 alone. Today, we have announced another increase in our quarterly dividend, which is now 40% per share. This is our fourth increase since 2022. I'd just like to thank you for your continued support, and I would now like to turn the call over to James for a brief presentation. Thank you. James, please.

Emmanuel War: Over the last two years, we have returned $732 million to shareholders has been returned through share repurchases and dividends.

Emmanuel War: Which includes 548 million or roughly $10 per share in 2023 alone.

Emmanuel War: Today, we have announced another increase in our quarterly dividend.

Emmanuel War: Which is now 40 cents per share.

Emmanuel War: This is our fourth increase since 2022.

Emmanuel War: Looking forward, we expect low global inventories robust demand and limited street quotes to supports the strong product tanker fundamentals, which we've experienced in the last two years.

Emmanuel War: I just like to thank you for your continued support and I would like to now I'll turn the call to James for a great presentation. Thank you James.

James: Thank you Emmanuel I, but southern piece.

James Doyle: Thank you, Emanuele. Slide seven, please. For the last two years, increasing demand, low inventories, refining capacity changes, and limited fleet growth have led to a robust rate environment. In the fourth quarter, this continued. LR2 rates improved to the end of December as Middle East refining runs increased after an early maintenance season, moving from $36,000 up to $50,000 per day before any disruptions in the Red Sea. MR rates were lifted by the strength of the U.S. golf market, which offset slightly lower rates in Europe and Asia.

James: Yeah.

James: For the last two years, increasing demand low inventories refining capacity changes and eliminate fleet growth has led to a robust rate environment.

James: The fourth quarter. This continued.

James: Our two rates improve to the end of December that's middle East refining runs increased after an early maintenance season, moving from 36000 up to $50000 per day before any disruptions in the Red Sea.

James: Our rates were lifted by the strength in the U S golf market, which offset slightly lower rates in Europe and Asia.

James Doyle: Today, Asia and Europe are lifting rates for MRs as peak refinery maintenance in the U.S. starts to wind down this month. With low global inventories, Middle East maintenance behind us, and the U.S. working through peak maintenance now, the outlook for product tankers remains very constructive. As Emanuele mentioned, disruptions have led to new trade flows and rerouting of vessels, which has further tightened supply. However, this would not be possible without strong headline demand for refined products. Slide eight, please.

James: Asia and Europe are lifting rates for Mr's, that's peak refinery maintenance in the U S starts to wind down this month with low global inventories middle East maintenance behind us in the U S. Working through peak maintenance now the outlook for product tankers remains very constructive.

And you already mentioned disruptions have led to new trade flows and rerouting of vessels, which has further tightened supply. However.

James: This would not be possible without strong headline demand for refined products slide eight place.

James Doyle: Global demand for refined products has been extremely strong, and we expect this to continue. 2024 refined product demand, on average, is expected to surpass 2023 by 1.4 million barrels per day and will be driven by increases in jet fuel, NAFTA, diesel, and gasoline. As global demand has increased, so have seaborne exports. January refined product exports averaged 20.6 million barrels per day, which is 1.3 million barrels per day higher than the January 2019 level.

James: Global demand for refined products has been extremely strong and we expect this to continue two.

James: Only 24 refined product demand on average is expected to surpass 2023 by $1 4 million barrels per day and will be driven by increases in jet fuel naphtha and diesel and gasoline.

James: As global demand has increased so if seaborne exports January refined product exports averaged $20 6 million barrels per day, which is one 3 million barrels per day higher than January 2019 levels.

James: Given the low global inventories increased consumption will continue to be met through higher imports and not only on imports increase but barrels are traveling longer distances slide nine please.

James Doyle: While demand is above pre-COVID levels, refining capacity is more dislocated. One of the biggest challenges has been diesel. Europe, Latin America, and Africa all have a diesel deficit of one million barrels per day.

James: While demand is above pre COVID-19 levels refining capacity, it's more dislocated one of the biggest challenges has been diesel Europe, Latin America and Africa, all had the diesel deficit of 1 million barrels per day.

James Doyle: Capacity closures in Europe, North America, and certain parts of Asia have been offset by increases in export-oriented capacity in the Middle East and India. The opening of new export-oriented refineries and the closing of older, less efficient refineries has led to an increase in seaborne exports, ton miles, and Tone Mile. We've seen this in Australia, where imports have increased, and this is already above the lost production after closing two large refineries in 2020. Last week it was announced that a 150,000 barrel per day refinery in Scotland is expected to close and will be converted into a fuel oil terminal.

James: Capacity closures in Europe, North America, and certain parts of Asia have been offset by increases in export oriented capacity in the middle East and India.

James: Opening of new export oriented refineries in closing of older less efficient refineries have led to an increase in seaborne exports ton miles.

James: And ton miles.

James: We have seen this in Australia, where imports have increased.

James: As you are already above the loss production after closing two large refineries in 2020.

James: Last week, it was announced about a 150000 barrel per day refinery.

And Scott one is expected to close them all being converted into a few oil terminal.

James: Excluding the impact of Russian exports in ton miles ton mile demand has increased over 7% compared to 2019 levels.

James Doyle: Excluding the impact of Russian exports in ton miles, ton mile demand has increased over 7% compared to the 2019 level. In other words, the structural changes in refining capacity have and continue to reshape flows and increase ton-miles. As ton-mile demand increases, vessel capacity is reduced, and supply tightens. Slide 10, please.

James: Their words, the structural changes in refining capacity have and continue to reshape plus an increased ton miles.

James: One mile demand increases vessel capacity is reduced and supply tightens.

James: Slide 10 please.

James: Yeah.

Disruptions have exacerbated the strong supply and demand fundamentals in our market.

James Doyle: Disruptions have exacerbated the strong supply and demand fundamentals in our market. First, 485 product tankers have carried Russian refined product, many of which are older vessels that will have a difficult time returning to the premium trades given their age and trading history. This has and will continue to benefit the supply of vessels servicing non-sanctioned trades. Second, lower water levels in Gatton Lake, which feeds the Panama Canal, have led to a reduction in the number of ships allowed to transit the canal from 36 to 24 per day.

James: 485 product tankers that carry brushing refined product many of which are older vessels that will have a difficult time returning to the premium trades given their age and trading history. This has and will continue to benefit the supply of vessels servicing on sanction trades.

James: Second lower water levels in the <unk> Lake, which feeds the Panama Canal has led to a reduction in the number of ships a lot to transit the canal from 36% to 24 per day in the fourth quarter. This resulted in a reduction of 200000 barrels a day of refined product moving through the Panama canal and needing to travel longer distances.

James Doyle: In the fourth quarter, this resulted in a reduction of 200,000 barrels a day of refined product moving through the Panama Canal and needing to travel a longer distance. Third, the attacks in the Red Sea have reduced volumes going through the Suez Canal. Before the attacks on commercial vessels in the Red Sea, 2 to 3 million barrels of refined product were transiting the Suez Canal each day, roughly 10 to 15 percent of the global seaborne product tanker trade. And this was about 1 million barrels a day higher than prior years because of the increase in distillate coming from the Middle East to supply Europe given sanctions on Russia. Many vessels are going around the Cape of Good Hope today, with the canal volume dropping to around 200,000 barrels a day for the first week of February. Depending on the route, this can increase the voyage length by 30 to 70 percent. Rerouting of vessels has made the fleet more inefficient, tightening supply and leading to higher rates. 512, please.

James: Third the attacks in the Red Sea have reduced volumes going through the Suez Canal.

James: Quite a lot in place.

James: Before the attacks on commercial that says you know wed say two to 3 million barrels of refined product with strengthening the Suez Canal each day.

James: Roughly 10% to 15% of the global seaborne product tanker trade.

James: And this was about 1 million barrels a day higher than prior years because of the increase in distillate coming from the middle East to supply Europe, given sanctions on Russia. Many.

James: Many vessels are going around the Cape of good help today, but the canal volume dropping to around 200000 barrels per day for the first week of February.

James: Depending on the route this can increase the voyage length by 30% to 70%.

James: Rerouting of vessels since made the fleet more inefficient tightening supply and leading to higher rates slide 12. Please.

James: The order book is 12% of the current fleet.

James Doyle: The order book is 12% of the current fleet, and new orders have started as well, given expensive new building prices, long lead times for delivery, and uncertainty about propulsion systems to satisfy future environmental regulations. In addition, the majority of the order book is for LR2 vessels. And with 52% of the LR2 fleet trading in clean products today, the effective order book for vessels trading in clean is going to be less than the current 12%. Also, the fleet is aging. The average age of the product tanker fleet today is 13 years, with 9% of the fleet 20 years and older.

James: Owners and starting to swell given expensive new building prices long lead times for delivery and uncertainty about propulsion systems to satisfy future environmental regulation.

James: In addition, the majority of the order book is all our two vessels and was 50, 352% of the L. R. Two fleet trading clean products a day effective order book for vessels trading in claim that's going to be less than the current 12%.

James: Also the fleet is aging the average age of the product tanker fleet today is 13 years with 9% of the fleet 20 years older.

James: Starting this year 8 million dead weight tons of product tankers will turn 20 years old each year, the equivalent of 160 mris per year.

James: By 2026, 21% of the fleet will be 20 years and older.

James Doyle: Starting this year, 8 million deadweight tons of product tankers will turn 20 years old each year, the equivalent of 160 MRs per year. By 2026, 21% of the fleet will be 20 years and older. 513, please. This year's fleet growth is expected to be the lowest fleet growth since 2000 at less than 1%.

James: Slide 13 please.

James: This year's fleet growth is expected to be the lowest since 2000 and less than 1%.

James: People aren't exports in ton mile demand are expected to increase 2.8, and seven 3%, respectively vastly outpacing supply using.

James: Using minimal scrapping assumptions relative to the age of the fleet on average if we don't grow around 3% in 2025, and 2026 and close to zero in 2027. In addition, one and three year time charter rates remain at high level evidence that our customers outwork as one of increasing export and ton miles against our constraints. So.

James Doyle: Keyboard exports and ton-mile demand are expected to increase 2.8% and 7.3%, respectively, vastly outpacing supply. Using minimal scrapping assumptions relative to the age of the fleet, on average, the fleet will grow around 3% in 2025 and 2026 and close to zero in 2027. In addition, one in three year time charter rates remain at high levels, evidence that our customer's outlook is one of increasing export and ton-miles against a constrained supply curve. The confluence of factors in today's market are constructive individually, low inventories, increasing demand, exports, and time miles, structural dislocations in the refinery system, rerouting of global product flows, limited fleet growth, upcoming environmental regulation, and Collectively, they are unprecedented.

James: Like her.

James: The confluence of factors in today's market are constructive individually, so inventories increasing demand exports in ton miles structural dislocations in our refinery system rerouting of global product flows when do they play crouse upcoming environment upcoming environmental regulations.

James: Collectively their unprecedented.

James: That I would like to turn it over to Chris to go through the financial slides.

Chris: Thank you James and good morning, good afternoon, everyone.

Chris: Slide 15 please.

Chris: As we've highlighted cash flows from a strong rate environment have been significant and transformative for the company.

Over the last two years product tanker rates have been resilient.

Chris: 2023 was a reflection of a strong market that found equilibrium after the events of 2022.

Chris: As the chart in the upper left illustrates the fourth quarter of 2023 was marked by a normalized seasonal uptick in demand heading into the winter months.

Chris: The impact of the recent events in the Red Sea will largely be seen in our first quarter results.

Chris Avella: With that, I would like to turn it over to Chris to go through the financial slides. Thank you, James, and good morning, good afternoon, everyone. Slide 15, please.

Chris: Over the last two years, we have generated over $2 billion in EBITDA and reduced our gross outstanding debt by $1.6 billion.

Chris: In addition to that since the fourth quarter of 2022, we have increased our quarterly dividend by 300%.

Chris Avella: As we have highlighted, cash flows from a strong rate environment have been significant and transformative for the company. Over the last two years, product tanker rates have been resilient. 2023 was a reflection of a strong market that found equilibrium after the events of 2022. As the chart in the upper left illustrates, the fourth quarter of 2023 was marked by a normalized seasonal uptick in demand heading into the winter months.

Chris: During 2023 alone, we have returned $548 million or approximately $10 per share to shareholders in the form of dividends and share repurchases.

Chris: Slide 16 please.

Chris: As we have stated in the past deleveraging remains our primary focus and we have made meaningful meaningful progress in this respect.

Chris: As the chart on the left illustrates our gross outstanding debt at December 31, 2021 stood at $3 $2 billion.

Chris: As of today this balance is $1 $5 billion.

The chart on the right shows the same progression, but more importantly highlights the shift in the mix and composition of our debt transitioning away from expensive lease financing into more traditional bank financing with lower costs and greater flexibility.

Chris Avella: The impact of the recent events in the Red Sea will largely be seen in our first quarter results. Over the last two years, we have generated over $2 billion in EBITDA and reduced our gross outstanding debt by $1.6 billion. In addition to that, since the fourth quarter of 2022, we have increased our quarterly dividend by 300%. And during 2023 alone, we have returned $548 million, or approximately $10 per share, to shareholders in the form of dividends and share repurchase. Slide 16, please.

Chris: Looking back $1 $7 billion of our outstanding debt at December 31, 2022 consisted of lease financing obligations bearing margins of over 350 basis points on average.

Chris: Today, our lease financing obligations stand at just $294 million and we've committed to repurchasing 12 more leased vessels between now and the end of the second quarter.

Chris: Once complete these repurchases will bring our obligations under lease financing arrangements down to approximately $80 million.

Chris Avella: As we have stated in the past, deleveraging remains our primary focus, and we have made meaningful progress in this respect. As the chart on the left illustrates, our gross outstanding debt at December 31st, 2021 stood at $3.2 billion. As of today, this balance is $1.5 billion.

Chris: We have refinanced a considerable portion of our lease obligations at the more traditional and lower cost of secured bank debt, which carries margins of less than 200 basis points on average.

Chris: We also want to highlight that the terms and conditions of this newer that provide the company with greater flexibility.

Chris: The ability to repay these loans at anytime and $500 million of revolving credit of which $288 million available today.

Chris Avella: The chart on the right shows this same progression but more importantly highlights the shift in the mix and composition of our debt, transitioning away from expensive lease financing into more traditional bank financing with lower costs and greater flexibility. Looking back, $1.7 billion of our outstanding debt at December 31, 2022 consisted of lease financing obligations, bearing margins of over 350 basis points on average. Once complete, these repurchases will bring our obligations under lease financing arrangements down to approximately $80 million.

Chris: In some we have not only reduced our leverage but we've also simplified our balance sheet through more traditional forms of financing at lower cost and more flexible terms.

Chris: Slide 17 please.

Chris: Yeah.

Chris: Looking ahead, we still have more work to do as we are committed to repurchasing $209 million of lease obligations between now and the end of the second quarter.

Chris: This comes on the heels of $497 $1 million in unscheduled debt and lease repayments in the fourth quarter of 2023.

Chris: And $171 $1 million of unscheduled debt and lease repayments, thus far in the first quarter of 2024.

Chris: Over the same period, we drew $423 $6 million from our $1 billion credit facility and $52 million from our $94 million credit facility.

Chris Avella: We have refinanced a considerable portion of our lease obligations into more traditional and lower-cost secure bank debt, which carries margins of less than 200 basis points on average. We also want to highlight that the terms and conditions of this newer debt provide the company with greater flexibility. In sum, we have not only reduced our leverage, but we've also simplified our balance sheet through more traditional forms of financing at lower costs and more flexibility. Slide 17, please.

Chris: Each carrying margins below 200 basis points.

Chris: On a pro forma basis after considering our committed lease repurchases, our gross and net debt.

Chris: And at $1.3 billion and $1 $1 billion respectively.

Chris: Moreover, with no new buildings on order and the exploration of options to purchase and install scrubbers on 11 of our vessels, we have manageable capex requirements.

Chris: Slide 18 please.

Chris: The company has significant operating leverage our first quarter of 2024 coverage across the fleet, including time charter is averaging close to $39000 per day.

Chris Avella: Looking ahead, we still have more work to do, as we have committed to repurchasing $209 million of lease obligations between now and the end of the second quarter. This comes on the heels of $497.1 million in unscheduled debt and lease repayments in the fourth quarter of 2023 and $171.1 million of unscheduled debt and lease repayments thus far in the first quarter of 2020, each carrying margins below 200 basis points. On a pro forma basis, after considering our committed lease repurchases, our gross and net debt stand at $1.3 billion and $1.1 billion, respectively. Moreover, with no new buildings on order and the expiration of options to purchase and install scrubbers on 11 of our vessels, we have manageable CAPEX requirements. Flight A Team.

Chris: At $30000 per day, the company can generate over $750 million in free cash flow per year and that $40000 per day almost $1.2 billion.

Chris: Additionally, our cash breakeven rate has declined and we continue to seek ways to reduce it in a balanced and prudent manner.

Speaker Change: And with that I'd like to turn the call over to Q&A.

Speaker Change: Okay.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press star one on your thoughts on if you're using a speakerphone. Please pick up your handset before pressing the key to remove your question lease crap.

Speaker Change: To our first question comes from Jon Chappell with Evercore.

Jonathan Chappell: Please proceed.

Jonathan Chappell: Thank you good morning.

Jonathan Chappell: I don't know who wants to take this one kind of open up to the group, but you know clearly as Chris just laid out the targets on that debt are gonna be achieved at some point in the early part of this year, it's not the end of the first quarter.

Chris Avella: The company has significant operating leverage. For example, our first quarter of 2024 coverage across the fleet, including Time Charters, is averaging close to $39,000 per day. Additionally, our cash breakeven rate has declined, and we continue to seek ways to reduce it in a balanced and prudent way.

Jonathan Chappell: There's a lot more uncertainty in the world right now obviously, so you know there's been some turbocharge in rates. That's helped you kind of accelerate that debt repayment, but I think a lot of uncertainty on how the world plays out from here. So you know versus where we were three six months ago, and you talked about target net debt levels and maybe shift in capital allocation how do you.

Jonathan Chappell: See attaining those targets earlier versus maybe continuing to deleverage further just given a lot of the volatility in the markets today.

Operator: And with that, I'd like to turn the call over to Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key.

Speaker Change: Well Robert.

Speaker Change: I think that's a great question.

Speaker Change: A question that we always see.

Speaker Change: So I think that the.

Speaker Change: In a fortunate position.

Speaker Change: As management and shareholders than that.

Speaker Change: Right now you know this.

Jonathan Chappell: To remove your question, please press star 2. Our first question comes from John Chappell with Evercore. Please proceed. Thank you. Good morning.

Speaker Change: Market is providing extraordinary returns.

Speaker Change: And so the one thing we know is.

Speaker Change: This coming year and our balance sheet is improving.

Speaker Change: We have.

Speaker Change: Really no idea of cool.

Robert L. Bugbee: I don't know who wants to take this one, kind of open it up to the group. But, you know, clearly, as Chris just laid out, the targets on net debt are going to be achieved at some point in the early part of this year, if not at the end of the first quarter. There's a lot more uncertainty in the world right now, obviously. So, you know, there's been some turbocharging rates that've helped you kind of accelerate the debt repayment, but I think there is a lot of uncertainty about how the world plays out from here. So, you know, versus where we were three, six months ago, and you talked about target net debt levels and maybe a shift in capital allocation, how do you see attaining those targets earlier versus maybe continuing to de-leverage further, just given a lot of the volatility in the markets today? John, Robert, I think that's a great question. And it's, you know, it's a question that we're obviously asking ourselves.

Speaker Change: Yeah.

Speaker Change: We'll continue.

Speaker Change: So you will continue to be effectively close to them helping.

Speaker Change: Extra ordinary earnings.

Speaker Change: Oh no.

Speaker Change: And so.

Speaker Change: So I think the.

Speaker Change: We haven't we haven't reached our target yet.

Speaker Change: And we don't intend to comment on.

Speaker Change: On what we would do in return and with regard to capital return and reaching the target. We're happy to say that we are not looking to do your building.

Speaker Change:

Speaker Change: And I think that it is.

Speaker Change: A difficult situation to make.

Speaker Change: A lot of decisions.

Speaker Change: The market environment that you have right now.

Speaker Change: So but at the same time, we are confident as James has pointed out in the long term fundamentals for the way I don't care at the moment is.

Speaker Change: The basic operation the basic operational position of the company at the moment.

Speaker Change: Is that how long of a unrealistic that might be we are running the company as if the red Sea where to open tomorrow.

Speaker Change: And on that basis, we still think that the market will be very strong and it will take the time to <unk>.

Speaker Change: Wind down from where we ought to lets say put the shipping routes together and we.

Speaker Change: We are happy to share with everybody, what we would call our base case of what we would think open days would be for the rest of the quarter.

Speaker Change: And so we would we were intending on a base case out there that assumption working assumption are giving you as we'd expect.

Robert L. Bugbee: I think that we're all in a fortunate position as management, as shareholders, and right now, you know, this market is providing extraordinary returns. And so the one thing we know is that as cash is coming in, our balance sheet is improving. We have really no idea as to whether or not this will continue, whether the Red Sea will continue to be effectively closed and helping. So I think the. We haven't we haven't reached our target yet.

Speaker Change: Kind of a malls to be.

Speaker Change: Around $35000 a day six days a L O twos around.

Speaker Change: $60000 for them six days, so that's healthy.

Speaker Change: I think the best thing to say is yes, we are moving very fast towards a deleverage state where the company can.

Speaker Change: And then have a lot of choices.

Speaker Change: With with certainly Mark.

Speaker Change: Distracting ourselves right now I'm thinking what those what the best choices would be at that time.

Robert L. Bugbee: We don't intend to comment on what we would do with regard to capital return. When reaching the target, we're happy to say that we're not looking to do new buildings, um, and I think that it is a difficult situation to get into. A lot of decisions in the market environment that you have right now, but at the same time, we're confident, as James has pointed out, in the long-term fundamentals. So, the way I'd answer at the moment is... The basic operational position of the company at the moment is that, however unrealistic that might be, we are running the company as if the Red Sea were to open tomorrow. And on that basis, we still think that the market will be very strong.

Speaker Change: Whether you know whenever you do and we just want to keep our eye on the go right in Holland, Michigan.

Speaker Change: Taking the debt down.

Speaker Change: Okay that makes sense for my follow up this may seem like pretty small, but maybe it helps us shape your thoughts on strategy going forward as well letting those scrubber options expire you know you guys were one of the first to implement scrubbers are very much behind that technology implemented on 86 of your vessels by letting those.

Speaker Change: Options expire or do we read that to believe that you have enough exposure to the scrubbers in and maybe the returns start to diminish going forward do you read that to believe that you would just rather have those 355 days in this type of spot market environment and thank the returns from operating those shifts are much better than any scrubber premium or maybe are those just older ships.

Speaker Change: You may look to monetize it.

Speaker Change: In the secondhand market as they don't fit the core fleet going forward.

Robert L. Bugbee: It'll take time to wind down from where we are to, let's say, put the shipping routes together. And you know, we're happy to share with everybody what we would call our base case of what we would think open days would be for the rest of the quarter. So we were internally on our base case under that assumption, the working assumption I've given you is that we would expect product MRs to be around $35,000 a day for the M6 days, and LR2 is around $60,000 for the M6 days, so that's healthy.

Speaker Change: That's a good question Cameron you do you like to start.

Speaker Change: Sure.

Cameron: Thanks, John It is yes to all.

Cameron: So it's obviously a number of considerations that go into us I'm not.

Cameron: Not declaring those options and they had an expiration date. So it's not like we could further extend that optionality, but its yes to all of the opportunity cost of installing scrubbers here is extremely high.

Cameron: The spreads have come down and are rather muted and are expected to stay that way and obviously, we have a keen eye to the age of the fleet and the potential asset values here in potentially monetizing some more vessels through sale. So it really is yes to all your points.

Robert L. Bugbee: So I think the best thing to say is, yes, we are moving very fast towards a deleveraged state where the company can then have a lot of choices, but we're certainly not distracting ourselves right now. I'm thinking about what those, you know, what the best choices would be at that time, whether you know, whatever you do, and we just want to keep our eye on the goal right now and the mission of taking the deck down. Okay, that makes sense. For my follow-up, this may seem pretty small, but maybe it helps us shape your thoughts on strategy going forward as well. Let those scrubber options expire. You know, you guys were one of the first to implement scrubbers.

Speaker Change: Okay, great. Thanks, Dan Thanks, Robert.

Cameron: Okay.

Speaker Change: Thank you. Our next question comes from Martin Auster with Jefferies. Please proceed.

Martin Auster: Thank you Hey, guys. Good morning, and good afternoon, Robert just maybe just real quick wanted to ask if you wouldn't mind just clarifying what you were just saying I think to John about how you. Your your operating assumption is for the rest of the perhaps quarter or for the rest of the year, you're you're assuming basically in your day to day that the Suez Canal.

Martin Auster: The Red Sea situation resolve itself tomorrow.

Martin Auster: And in that assumption do you believe that for the rest of the quarter beyond what you've guided but for the rest of the quarter, you think LR twos could earn 60000.

Martin Auster: <unk> thousand and the end market around 35 is that a is that right.

Martin Auster: That's above what you've learned thus far.

Martin Auster: Correct.

Robert L. Bugbee: You were very much behind that technology implemented on 86 of your vessels. By letting those options expire, do we read that to believe that you have had enough exposure to the scrubbers, and maybe the returns will start to diminish going forward? Do you read that to believe that you'd just rather have those 355 days in this type of spot market environment and think the returns from operating those ships are, you know, much better than any scrubber premium? Or maybe those are just older ships that you may look to monetize in the secondhand market as they don't fit the core fleet going forward? That's a good question Cameron, would you like to start?

Martin Auster: Okay.

Martin Auster: Honeywell and he has.

Martin Auster: A third of the quota left.

Martin Auster: So that's good.

Martin Auster: 40% so.

Martin Auster: Why are you weighted it that way and we know where the rates are right now and the rates right now are above.

Martin Auster: Above mode.

Martin Auster: But those numbers are a little too.

Martin Auster: Oh yeah.

Martin Auster: Yeah.

Martin Auster: That's how we.

Martin Auster: It's not perfect science.

Martin Auster: But that's the way we would comfortable come out.

Speaker Change: Yeah, I guess I'm just looking at it from the perspective that those are above what you've guided thus far which I guess the implication is that.

Martin Auster: What you have booked thus far has seen a limited impact from.

Martin Auster: Well.

Martin Auster: Yes, the first three or four weeks there was no impact at all.

Cameron K. Mackey: Sure. Thanks, John. It's yes to all. So there are obviously a number of considerations that go into us not declaring those options, and they had an expiration date.

Martin Auster: Every day, we would answer the question.

Martin Auster: It's all shareholders.

Martin Auster: Oh are we reading that they.

Cameron K. Mackey: So it's not like we could further extend that optionality, but it's yes to all. The opportunity cost of installing scrubbers here is extremely high. The spreads have come down and are rather muted and are expected to stay that way. And obviously, we have a keen eye on the age of the fleet and the potential asset values here and are potentially monetizing some more vessels through sale. So it really is yes to all your points. Okay, great. Thanks, Cam.

Martin Auster: The closure of the Red Sea and Suez Canal would affect product market by X why isn't that happening we would answer because it takes a little time.

Speaker Change: Yeah, just because you are you.

Martin Auster: You get an obstacle in Hawaii.

Martin Auster: Going to a ball and.

Martin Auster: And they have to take the longer route to doesn't mean it changes.

Martin Auster: The number of people standing at the ball waiting for drinks to begin with.

Martin Auster: So it took a little time with the same sense, we're saying that is if you stopped at the Red Sea will open tomorrow.

Omar Nokta: Thanks, Robert. Thank you. Our next question comes from Omar Nokta with JetBrains. Thank you. Hey, guys, good morning and good afternoon.

Martin Auster: Again, it would take a little time. So all we're doing is saying what did we are in the let's say the trailing.

Martin Auster: Four weeks.

Martin Auster: So what do we think we could earn at a minimum.

Robert L. Bugbee: Robert, just maybe, just real quick, wanted to ask if you wouldn't mind just clarifying what you were just saying, I think, to John about how your operating assumption is for the rest of the perhaps quarter or for the rest of the year. You're assuming basically in your day to day that the Suez Canal or the Red Sea situation resolves itself tomorrow. And in that assumption, you believe that for the rest of the quarter, beyond what you've guided, but for the rest of the quarter, you think LR2s could earn $60,000, and the MRs could earn $35,000. Is that right? And that's above what you've earned thus far.

Martin Auster: The next four weeks if you.

Martin Auster: Open the Red Sea Tomorrow, that's more or less how that's calculated.

Speaker Change: Okay, Thanks, Rob, but that that makes sense and I guess, then just a follow up just off of that sticking with the Red Sea and we've been seeing the diversions accelerate here and in recent weeks after a bit of a slower start.

Speaker Change: A phase Scorpios fleet deployments I know James you highlighted.

Speaker Change: The broader market how impactful are the threats. He is but just in terms of state Scorpio. How active is that of a region for you for Scorpio itself. And then is that is that an area I guess currently that you're avoiding given all the risks. Thank you.

Robert L. Bugbee: Correct. We only have a third of the court to let, so go to, https://www.youtube.com or the link in the description below to make those numbers a lot too. That's how we. No, it's not the perfect sign. But that's where we would come in. Yeah, I guess I'm just looking at it from the perspective that those are above what you've guided thus far, which I guess the implication is that what you have booked thus far has seen a limited impact on the Red Sea. Yes, the first three, four weeks, there was no impact at all.

Speaker Change: Do that back to front maybe.

Speaker Change: The last question was more operational so maybe kind of if you like to take that one.

Speaker Change: Sure happy to them.

Speaker Change: So we avoid having a rigid policy with regards to the Red sea, but it goes without saying that the risks.

Speaker Change: There today are unacceptable for our vessels cargo in our particularly our personnel.

Speaker Change: So we are not fixing any vessels nor are we transiting the southern red sea or the western Gulf of Aden, two day, and that's been true for about a month now.

Speaker Change: That being said two observations, we don't avoid the northern or middle Red Sea, because it's obviously, a very active area for our vessels to trade with Saudi Arabia.

Robert L. Bugbee: You know, every day we answer questions from either analysts or shareholders. Just because you put an obstacle in the way of a group going to a bar and they have to take a longer route, it doesn't mean it changes the number of people standing at the bar waiting for drinks to begin with.

Speaker Change: And in addition, we cannot predict what conditions would change our posture of those of the market with regards to resuming transit through the southern Red Sea. We just don't know I don't think anybody knows.

Robert L. Bugbee: So it took a little time. So in the same sense, we're saying that if you stopped it, if the Red Sea was open tomorrow, Again, it would take a little time. So all we're doing is saying, what did we earn? in the, let's say, the trailing, forward. So what do we think we could earn as a minimum?

Speaker Change: So every day, we wake up we look at the best and latest information we have.

Speaker Change: And.

Speaker Change: We expect that to continue for the foreseeable future, but there is no policy per se. It's just assessing risk as we go and as of today and the answer is no we're not changing southern metric.

Robert L. Bugbee: For the next four weeks, if you open the Red Sea tomorrow, that's more or less how that's calculated. Okay. Thanks, Robert. That makes sense.

Speaker Change: But oh my goodness.

Speaker Change: Go back to the first part of your question I don't want people to get this wrong, but it would be very bullish I'd say these market Super strong the cash flow is.

Omar Nokta: And I guess then just a follow-up just off of that, you know, sticking with the Red Sea, you know, we've been seeing the diversions accelerate here in recent weeks after a bit of a slower start. You know, in terms of, say, Scorpio's fleet deployment, James, you highlighted for the broader market how impactful the Red Sea is. But just in terms of, say, Scorpio, how active is that region for you, for Scorpio itself?

Speaker Change: Is enormous and the other thing that you have to put in context here is that.

Speaker Change: You know the last couple of weeks. The you know the market has had a negative.

Speaker Change: Overhang on them as we go with regard to U S. U S gulfs with tight refinery turnarounds.

Speaker Change: And Chinese new year. So if you talk to a trading desk if the conditions. They may they would expect that.

Operator: And then is that an area, I guess, currently, that you're avoiding given all the risks? Thank you. We do that back to front. So maybe the last question was more operational. So maybe, Cam, if you'd like to take that one.

Speaker Change: Rates, we would start to sign them up you know stopped funding next week, we have some very unusual situations going on this isn't this is not like a light switch the other day when they would stop tweet, saying that you know there could be peace and between Palestine in it.

Cameron K. Mackey: Sure, happy to. So we avoid having a rigid policy with regard to the Red Sea, but it goes without saying that the risk there today is unacceptable for our best, cargo, and particularly our personnel. So we are not fixing any vessels, nor are we transiting the southern Red Sea or the western Gulf of Aden today. And that's been true for about a month now.

Speaker Change: Boston Israel.

Speaker Change: We sold the stock sort of trend down to 10% down it was like what they are doing well.

Speaker Change: These people are doing out there because the market will not react like a light switch.

Speaker Change: It will take time.

Speaker Change: The fleet itself is all over the place you think really big changes where are you in bookings from second quarter revenue right. Now we've had two M ores that we set for them, we're not going to be any different. This is not the specials that scorpio tankers very sure that.

Cameron K. Mackey: That being said, two observations. We don't avoid the northern or middle Red Sea because it's obviously a very active area for our vessels to trade with Saudi Arabia. And, in addition, we cannot predict what conditions would change our posture, those of the market, with regard to resuming transit to the Southern Red Sea. We just don't know.

Speaker Change: All of the leading product tanker companies will have the same type of profile of that fixing.

Speaker Change: And that is we fixed two product tankers from the U S Gulf.

Speaker Change: All the way to Japan.

Speaker Change: That is an awful long voyage.

Cameron K. Mackey: I don't think anybody knows. So every day we wake up, we look at the best and latest information we have, and we expect that to continue for the foreseeable future, but there is no policy per se. It's just assessing risk as we go, and as of today, the answer is no, we're not transiting the Southern Red Sea. So, Omar, then I'll go back to the first part of your question. I don't want people to get it wrong.

Speaker Change: We have six product tankers from Singapore to Argentina from China to Anchorage.

Speaker Change: We have six product tankers just earlier this week and this is mind blowing from Singapore to New York.

Speaker Change: Both vessels are buried for a long time for all intents and purposes for the balance of the school to those vessels might as well be scrapped they are not going to be on any position with the rest of this quarter.

Speaker Change: So.

Robert L. Bugbee: Look, we're very bullish. It's a, you know, these markets are super strong. The cash flow is, is enormous.

Speaker Change: Got it.

Speaker Change: So the position I'm, taking an assumption on taking is it.

Speaker Change: It's going to be closed tomorrow, but if it's not closed tomorrow and next week.

Robert L. Bugbee: And the other thing that you have to put in context here is that, you know, the last couple of weeks, the markets have had a negative overhang on them as we go with regard to the U.S. Gulf refinery turnaround and Chinese New Year. So if you were to talk to our trading desk, if the conditions remain, they would expect that. It will take time. The fleet itself is all over the place. You have really big changes. We're even booking some second quarter revenue, right? We've had two MRs that we fixed, and we're not going to be any different.

Speaker Change: I mean open tomorrow.

Speaker Change: So it's it's Susan Red it's still.

Speaker Change: Oh Shucks, we're trying to getting to the product market next week.

Speaker Change: And refinery turnarounds go away and Chinese new year's finished.

Speaker Change: Should expect on balance to the market straight up.

Speaker Change: Even from where they are now.

Speaker Change: So this is certainly not a we're not trying to be negative here, we're trying to show how strong this market is under almost.

Speaker Change: Many of the circumstances because of the fundamentals.

Speaker Change: The niche.

Speaker Change: And we are trying to show that we will finish our mission.

Robert L. Bugbee: This is not special to Scorpio Tankers. I'm very sure that all of the leading product tanker companies will have the same type of profile in their fixed anchors, and that is the WeFix2 product anchors from the US Gulf, all the way to... That is an awfully long voice. We have fixed product tankers from Singapore to Argentina, from China to Anchorage. We have six product tankers just, you know, earlier this week, and this is mind-blowing, from Singapore to New York. Those vessels will be buried for a long time, for all intents and purposes, for the balance of this quarter. Those vessels may as well be scrapped. They're not going to be on any position lists for the rest of this quarter.

Speaker Change: To deleverage the balance sheet employee from enormous strunk from that point.

Speaker Change: Thanks, Robert that's a great place to be that's it for me. Thanks, Thanks, Robert I'll turn it over and thanks Kim.

Speaker Change: Next question comes from Greg really Weird B G E re foresee.

Greg: Yeah. Thank you and good morning, and afternoon, everybody and thanks for taking my questions.

Greg: I guess you you kind of started alluding to it Robert in terms of you know.

Greg: Some of the longer voyages you know obviously this is an exciting interesting.

Greg: Disruptive time for rates, where they are what is kind of been the appetite or is there any appetite from some customers looking to maybe go longer.

Greg: Whats kind of the the the opportunities and maybe the time charter market.

Robert L. Bugbee: That, you know, so the position I'm taking, the assumption I'm taking is, it's going to be closed tomorrow. But if it's not closed tomorrow and next week, it's, it's, I mean, open tomorrow, if the sewers and Red Sea are still shut for transiting to the product market next week, and refinery turnarounds go away, and Chinese New Year is finished. You should expect, on balance, that the markets trade up, even from where they are now. So this is certainly not a we're not trying to be negative here.

Greg: Maybe not six months, but like maybe longer term or what any kind of adapting the two plus year charter market or anything like that.

Speaker Change: Oh, I think that the depth of the market their charters out there wanting to do things that are definitely yesterday grapes of course.

Speaker Change: And you know even at two years the present front than you would have to discount your right. So much that's simply because we haven't had this.

Speaker Change: But this seems a very long run.

Speaker Change: They themselves don't know, what's going to happen out there. So you have a situation where oh.

Robert L. Bugbee: We're trying to show how strong this market is under almost any circumstances because of the fundamentals. Funded by the U.S. Department of State, and we're trying to show that we will finish our mission to deleverage the balance sheet and play from enormous strength from that. Thanks, Robert. That's a great place to be.

Speaker Change: The charterer wants to get on yesterday's market.

Speaker Change: Well I need some recognition for where the market is right now because there's no point in me picking our spot chip.

Speaker Change: The the you know.

Speaker Change: If you could if you could fix that 70 to $80000 a day for an L O two for.

Speaker Change: No Q2, and a half months.

Greg: It's gonna be a little bit tough to fix away at AR.

Greg: Yeah, 13, 30, 40000 dollar discounts straight out of the gun.

Gregory Lewis: That's it for me. Thanks, Robert. I'll turn it over to Cam. The next question comes from Greg Lewis with BGID. Yeah, hey, thank you. And good morning and afternoon, everybody.

Greg: For two year charter.

Greg: Unless they liked it properly in a in a raised charter rate from where it was before.

Greg: I think though okay liquidity with liquidity.

Gregory Lewis: Thanks for taking my questions. Um, you know, I guess you kind of started alluding to it, Robert, in terms of some of the longer voyages, obviously this has been exciting, interesting, and a disruptive time for rates where they are. What is kind of in the appetite, or is there any appetite from some customers looking to maybe go longer?

Greg: Ironically, a lot ironically, the S&P market is different.

Greg: The market is.

Greg: Prices have gone up prices are reflecting that.

Greg: Market itself as well.

Greg: It can be liquid.

Greg: Yeah.

Speaker Change: Okay Super helpful and I know, we've been talking a lot about the Suez Canal here.

Robert L. Bugbee: I mean, what's kind of the opportunities and maybe the time charter market and maybe not six months, but maybe longer term or any kind of depth in the two plus year charter market or anything like that? I think that there's depth in the market. There are charters out there wanting to do things. They're there for yesterday's breaks, of course. And, you know, even at two years, the present front end, you'd have to discount your rate so much. And that's simply because we haven't had this physician for very long. You know, they themselves don't know what's going to happen out there.

Speaker Change: Could you could you talk a little bit.

Speaker Change: Cam or or or James or what what you guys are seeing kind of in the pet and the Panama Canal I mean, it seems like water still low there and it seems like that could be more maybe a longer term issue that that could be impacting rates in the Atlantic.

Speaker Change: Yeah.

Speaker Change: Ken would you like to take this.

Ken: Sure. Thanks.

Ken: Thanks, Greg It absolutely is affecting our rate structures in the Atlantic.

Ken: You know.

Ken: Our analysis of the situation is it's it's exacerbated by El Nino the panamanians are trying to redirect water into the lake.

Ken: The earliest we can see any improvement is later in the second quarter, but that is an educated guess in and not something that we can we can plan on or forecast with any certainty. So.

Gregory Lewis: So you have a situation where, you know, the charter wants to get on yesterday's market, and the owner says, well, I need some recognition for where the market is right now because, you know, there's no point in me fixing a spot chip that, you know, if you could, if you could fix it $70,000, $80,000 a day for an LR2 for know, two, two and a half months. It's going to be a little bit tough to fix the way it is, 30,000, 40,000 dollars in discounts straight out of the gun for a two-year charter. Unless that's reflected properly in a raised charter rate from where it was before. I think those, you know, there's liquidity. Okay, super helpful, and I know we've been talking a lot about the Suez Canal here. Could you talk a little bit, maybe Cam or James, about what you guys are seeing kind of in the Panama Canal? I mean, it seems like water's still low there. It seems like that could be more of maybe a longer-term issue that could be impacting rates in the Atlantic. Cam, would you like to take this?

Ken: We just don't know what it would take for the between the rainfall and the redirection of.

Ken: Other water into the lake to allow the pen means to increase transit.

Ken: Uh huh.

Ken: But that's our best guess.

Speaker Change: Okay great.

Speaker Change: Thank you for the time.

Speaker Change: Yeah.

Speaker Change: We proceeded with Shanghai land with JP Morgan.

Speaker Change: Alright, Thanks for your question Brian.

Brian: The first question is I guess on this.

Speaker Change: The Red Sea disruption, we've seen your very big reaction in.

Speaker Change: It ought to rates, but less of one and.

Brian: Is that is that what you would expect to see given the trading patterns of H O. Although it could be I'm always go up.

Speaker Change: In the coming weeks and.

Speaker Change: Let's maybe take that one and then I'll ask a second one after that.

Speaker Change: I think I think it happened exactly as we would expect closed to all that.

Speaker Change: Yeah, there are less.

Cameron K. Mackey: Sure. Thanks, Greg. It absolutely is affecting rate structures in the Atlantic, you know. Our analysis of the situation is that it's exacerbated by El Nino; the Panamanians are trying to redirect water into the lake. The earliest we can see any improvement is later in the second quarter, but that is an educated guess and not something that we can plan on or forecast with any certainty. So we just don't know what it would take between the rainfall and the redirection of other water into the lake to allow the Panamanians to increase transit. But that's our best.

Speaker Change: They're less sell off to them. They know when this thing when it first strikes everybody wants to go to that vessel carries a maximum cargo.

Speaker Change: And then what what what happens after that it starts getting absorbed around and we've seen the MRO market actually move up now in the last couple of weeks and that's moved up against the U S Gulf refineries situation plus the PREPA.

Speaker Change: Preparation for Chinese new year, so that's like a very bullish sign.

Speaker Change: And you're starting to see cargos getting split so in the same way as it took a little time for the LR twos to actually move.

Operator: We proceed with Stan Island with J.P. Morgan. Hi, thanks for taking the question. It's Sam Bland.

Speaker Change: But it takes a little time for the space to be filled but want to another way between you know yeah Maas in the low twos.

Operator: The first question is, I guess on this, on the Red Sea disruption, we've seen a very big reaction in LR2 rates, but less of one in... Yeah, I think it's happened exactly as we would expect. You know, there are fewer. You know, there are fewer LR2s and, you know, when this thing first strikes, everybody wants to go to that vessel that carries the maximum cargo. And then what happens after that, it starts getting, you know, absorbed around, and we've seen the MR market actually move up now in the last couple of weeks. And that's moved up against the U.S. Gulf refinery situation, plus the preparation for Chinese New Year. So that's like a very bullish sign. And you're starting to see cargoes getting split. So, in the same way, it took a little time for the LR2s to actually move. It takes a little time for the space to be filled in one way or another between the MRs and the LR2s.

Speaker Change: Okay understood and the second question is on on the net fleet growth graph on slide 13.

Speaker Change: So in the footnote.

Speaker Change: This assumption of.

Speaker Change: 30%.

Speaker Change: Slippage across 2024 to 2027, which I guess, we're expecting those used to be.

Speaker Change: Goodyear is.

Speaker Change: So to see why you might guess slippage in a bad period.

Speaker Change: Why would we expect some slippage.

Speaker Change: And what is going to be a strong market.

Speaker Change: Thank you.

Speaker Change: Sam you always get slippage at the end of the year are on certain vessels, but there's a lot of vessels in the order book that don't have firm delivery dates. So there were a lot of vessels ordered.

Sam: Maybe promising a Q4 delivery date in 'twenty, five or you know in Q2 or something like that in the later years and we just don't have the specifics on it.

Sam: So it's our best our best estimate of when these vessels will deliver.

Sam: Yeah.

Sam: Okay understood. Thank you.

Sam: Our next question comes from Ken <unk> with Bank of America.

Robert L. Bugbee: Okay, understood. And the second question is on the net fleet growth graph on slide 13. I just saw in the footnote there's this assumption of... 30% slippage across 2024 to 2027, which I guess we're expecting those years to be good years. I can sort of see why you might get slippage in a bad period, but why would we expect 30% slippage in what, hopefully, is going to be a strong market? Thank you. Sam, well, you always get slippage at the end of the year on certain vessels, but there's a lot of vessels in the order book that don't have firm delivery dates, so there were a lot of vessels ordered, you know, maybe promising a Q4 delivery date in 25 or, you know, a Q2 or something like that in later years, and we just don't have the specifics on it.

Ken: Hey, great good.

Ken: Good morning.

Ken: Robert or Jim can you talk about kind of breakeven levels now right. So you've gone down to 16000, a day from 17000 last quarter.

Ken: I guess, where do you see that trending you you've talked before about kind of getting that a little bit lower maybe just talk about what do you think it is now.

Speaker Change: I think that I think we're happy to give the 16.

Speaker Change: And.

Jim: Well, we'll not talk about where we want to go I think we will just we will say that we are focused on.

Speaker Change: Reducing our breakeven.

Ken: Break even levels.

Ken: And to the extent that you are paying down debt and reducing your amortization debt amortization and interest cost then.

James Doyle: So this is our best estimate of when these vessels will deliver. Okay, understood. Thank you. Our next question comes from Ken Hoexter with Bank of America. Hey, great. Good morning.

Ken: That should happen they exactly I think it's better that we just stay where they are rather than say.

Ken: Where they're going to.

Ken: Yeah.

Speaker Change: Okay, I, just a lot of Red Sea discussion, maybe talk a bit about a I guess it is the impact of rates now.

Kenneth Scott Hoexter: Robert or Gene, can you talk about kind of break even levels now, right? So you've gone down to 16,000 a day from 17,000 last quarter. I guess, where do you see that trending? You've talked before about kind of getting that a little bit lower, maybe just talk about where you think it is. I think that I think we're happy to give the 16.

Ken: It's still somewhat isolated and on certain lanes as it is it just rates globally you have.

Ken: Adjusted I don't understand the process on on kind of timing and how well.

Ken: Spread out that the rate adjustment is now.

Ken: All routes.

Robert L. Bugbee: You know, we'll not talk about where we want to go. I think we'll just say that we're focused on. You know, reducing our breakeven levels and to the extent that you are paying down debt and reducing your amortization, debt amortization, and interest cost, then, Okay. And just a lot on this Red Sea discussion. Maybe talk a bit about, I guess, the impact to rates now, is it still somewhat isolated in certain lanes? Is it just rates globally have, you know, adjusted? I just want to understand the process on timing and how well the rate adjustment is spread out.

Ken: It's a that's what so strongly that the depth and breadth.

Ken: Across the product space is very strong.

Ken: Okay.

Ken: There's many many many many different routes.

Ken: <unk>, some really crazy roots are.

Ken: But inside of that.

Ken: Obviously, the Asia market has been stronger on the M odds in the U S. Gulf is let's say being the one that's not so strong even though it is still very strong, but that's because of the refinery turnarounds in Asia, even though it's going through Chinese new year is being assisted because tonnage is being drawn to Europe.

Ken: You know because of Europe situation and.

Ken: Frankly, I think we're getting a little help from the U S.

Kenneth Scott Hoexter: All right, sir. It's a that's what's so strong that the depth and breadth is across the product space is very, Okay, and then many, many, many, many different routes. I mean, I've described some really crazy routes, the MRs, but inside of that, obviously, the Asian market has been stronger on the MRs and the US Gulf, let's say, being the one that's not so strong, even though it's still very strong, but that's because of the, you know, refinery turnarounds in Asia, even though it's going through Chinese New Year, it's been assisted because talent is being drawn to Europe, um you know because of Europe's situation and you know frankly I think we're getting a little help from U.S, finally being tough on the sanctioned, you know, Russian oil and Russian trading ships.

Ken: Finally, being tough on the functioned in a Russian oil in Russian trading ships.

Speaker Change: I think that's good too.

Ken: Yeah.

Ken: I guess, Robert if we thought forward and you you you were talking about the Red Sea reopening kind of in your base model right in terms of our assumption on pricing.

Ken: What happens in terms of if if Russia and Ukraine at some point the war will end in and you'll you'll get.

Ken: What happens to those vessels how quickly do they get reabsorbed into the market just want to understand the timing.

Ken: Because there's no state has in it.

Robert: Yeah of course, but I mean, if you are looking for excuses to maintain you'll hold because you're not worried about Russia, I doubt, whether Russia, Panama Middle East will get sold together very shortly.

Kenneth Scott Hoexter: I think that's good, too. I guess, Robert, if we thought forward and you were talking about the Red Sea reopening kind of in your base model, right, in terms of assumption on price. What happens in terms of if Russia and Ukraine, at some point, the war will end, and you'll, you'll get, you know, what happens to those vessels? How quickly do they get reabsorbed into the market? I just want to understand the timing, because obviously, the state has it.

Robert: And there is you know Russia, we can be slightly more you know shutting them because it's a phenomena that should've been embedded.

Robert: That position just doesn't seem to be getting any easier.

Robert: The U S is getting tougher related to the sanctions.

Robert: You know Pizza me showing no interest in slowing down on the crane at the moment is showing no interest in.

Robert L. Bugbee: Yeah, of course. But I mean, if you're looking for excuses to maintain your hold because you're now worried about Russia, I doubt whether Russia, Panama, and the Middle East will all get solved together very shortly. And there is, you know, Russia, we can be slightly more certain on because it's a phenomenon that should have been embedded, just doesn't seem to be getting any easier. You know, as I said, the US is getting, you know, tougher related to the sanctions, uh, you know Putin is showing no interest in slowing down, and Ukraine, at the moment, is showing no interest in giving up. So, you know, we also still have to accept that the longer we go through the curve, time. But I don't think that it starts to affect things so much because you've got this aging of the fleet coming through, and then you've got, you know, the growth in other trades in the product market that have taken over.

Ken: In giving up so.

Ken: We also still have to except the longer we go through the curve.

Ken: Time here.

Ken: More the anyway, a Russian this going back.

Ken: I don't see how you go back to how it was before anyway and even if you go back a little bit.

Ken: I don't think it.

Ken: It starts to affecting so much because you've got this aging of the fleet coming through and then you've got the.

Ken: Gross then in other trades in the product market that have taken over.

Ken: And I just cannot imagine that youre going to go back to Oh, Yeah, that's great. Thanks, Russia will.

Ken: <unk> Europe will just take it with them again.

Speaker Change: So just help me understand the last the last part of your your kind of argument right is if you are assuming a base case or returning in your rate assumption.

Robert L. Bugbee: And I just cannot imagine that you're going to go back to, oh, yeah, that's great. Thanks, Russia. We'll, Europe will just take everything again. So just to help me understand the last part of your kind of argument, right, is if you are assuming a base case or return in your rate assumption, um, at elevated rates, tell me again why you would not want to start locking in, Um, any, any turner out contracts? Is it that they just don't adjust to where the market is in any relation?

Ken: At elevated rates tell me again, why why you would not want to start locking in.

Ken: Any any charter out contracts.

Ken: Is it that they just don't adjust to where the market is in any relation, though you're you're you're you're you're assuming it took only talk about elevated rates related to the middle East.

Ken: I think that the market is that elevated any longer than if it was related to the Russian thing I think that would put a little bit overextended.

Robert L. Bugbee: No, you're assuming, and I've only talked about elevated rates related to the Middle East. I don't think that the market is that elevated anymore and ever was related to the Russian thing. I think that was sort of a little bit overextended. Yeah, and the reason is that interest rates are very, very high right now. The charter is sitting there saying, so these are not the rates, but let's say before all this happened, a ship would have been $20,000 a day charter, for example. And right now, that vessel could earn, let's say 30, 35, $40,000 a day because of the elevated rate. The Chakra hasn't really moved.

Ken: And the.

Ken: Yeah.

Ken: The reason I say this because.

Ken: But the rates up very very high right now.

Ken: The charter is sitting there, saying so these are not the right, but let's say before all this happened they ship would be $20000 a day charter for example.

Ken: And right now there.

Ken: That's so could let's say 30 35, $40000 a day because of the elevated right.

Ken: The charterer.

Ken: Hasn't really moved so now the calculation would be for a two year charter.

Ken: You know the owner would want to have more rather than give the ship away at the front, it's such a big discounts, where the charterer isn't yet ready to pay that rate.

Robert L. Bugbee: So now the calculation would be for a two-year charter because the Charter does not have the certainty, with all the different changes in the news and announcements every 10 minutes, of whether those very heightened rates will continue for a long time, the same as nobody does. So therefore, it's almost like no trade in, let's say, stock market language; the bid offer is just too wide. Yeah, but that'll settle down at some point over the course of the, You know, she's weak.

Ken: Because the charter does not have the certainty.

Ken: With all the different changes in the news that now so once every 10 minutes of whether those very high rates will continue.

Ken: For a long time.

Speaker Change: There's nobody does.

Speaker Change: Therefore, it's almost like no trade in and lets say stock market lags a bit offers just too wide right now.

Speaker Change: Yeah.

Speaker Change: But that'll settle down at some point over the next year.

Speaker Change: Can wait three four weeks I would expect.

Robert L. Bugbee: Three, four weeks, I would expect. Helpful. Thanks for your thoughts, Robert. Our next question comes from Frode Morkadel with Clarkstown Security. Thank you, bye guys. Congratulations on the strong quarter. Uh, even better first quarter.

Speaker Change: Okay. That's great. Thanks, Rob appreciate it.

Speaker Change: No problem.

Speaker Change: Our next question comes from frozen market out with Clarksons Securities.

Frozen Market: Thank you.

Clarksons Securities: Congrats on a strong quarter.

Clarksons Securities: Or even better first quarter.

Frozen Market: I guess coming back to the rents you talked.

Frozen Market: Talked a lot about it but and I appreciate that.

Espen Landmark: The 60,000 figure if it opens up tomorrow, but I'm curious. To hear your upside case, uh, should, continue, right? I guess we haven't seen all the shits that worked.

Frozen Market: The fix this awesome I'll say girls.

Frozen Market: Opens up tomorrow.

Speaker Change: I'm curious.

Speaker Change: So Harry our upside case.

Speaker Change: This.

Speaker Change: Continue right.

Speaker Change: I guess, we haven't seen all ship direct so do you have any idea of what potentially could be how high rates could go.

Espen Landmark: Do you have any idea what the potential impact could be, how high rates could go to this slot? Well, you know, I know this guy in Norway who's an analyst for this company called Clarkson. This Norwegian guy, his name's Frode.

Harry: So this is not well you know I know this guy in Norway.

Speaker Change: As an analyst.

Speaker Change: This company called Clarkson Norwegian boy named quota.

Robert L. Bugbee: And, you know, he sort of said very early in the piece at the end of last year that, you know, we could see LR2 rates at over $100,000 a day and certain fixtures, and that person has been right, Frodo. So... The upside can take care of itself. Fair enough. Oh, good, good, good. I guess you mentioned... Back, back, back.

Speaker Change: And you know he sort of said very early in the piece or the end of last year that you know, we could see a lot to rates of over $100000, a day and certain fixtures than.

Speaker Change: That person has been right photo.

Speaker Change: So thank you.

Speaker Change: Well you know we've done quite well following your guidance right. So I don't think we're going to comment on the movie upside.

Speaker Change: Upside it can take care of itself.

Speaker Change: Fair enough.

Speaker Change: Oh good.

Speaker Change: I guess, you mentioned about I couldn't put my congratulations on your coal quota.

Espen Landmark: Congratulations on your call Friday. Thanks. My final question is just on the new trade lens you mentioned. We all observe these standard routes, so I'm curious to hear what type of new routes you see, on the LR2s, for example, which are emerging.

Speaker Change: Thanks, Thank you.

Speaker Change: My final question is just on the new trade Nancy you mentioned.

Speaker Change:

Speaker Change: We all observed as standards routes.

Speaker Change: So I'm just curious to hear what type of new routes D C.

Nancy: Oh on the Ela choose for example.

Nancy: Yeah.

Nancy: Emerging.

Espen Landmark: Wait. You've just seen some. You've seen some, you know, very... The other two are slightly more in order.

Nancy: Great.

Nancy: You just can't comp let's.

Nancy: We're seeing some very.

Nancy: Yeah, a lot to the slightly more in order.

Robert L. Bugbee: You've just seen some weird things that are very, very cool. You know, so you've seen, for example, vessels that are discharging in Europe from, So we have one ship, for example, that's gone from the Aegean, loaded in the Aegean, gone around the Cape, going to Europe, and it's about to... It was discharged in Hamburg. It's going to reload in Amsterdam and then go all the way back around the Cape and discharge in East Africa, six days away from loading in the Aegean. Da-da-dee, really kind of Wow, okay. You know, and then you've seen, you know, routes that are related, out in Asia too, where you're able to bring vessels back to the Aegean or voyages to Australia and things that are out of the indexes, that are very lucrative.

Nancy: You've just seen some.

Nancy: Weird things that are very very cool.

Nancy: You've seen for example.

Nancy: Vessels that are discharging game.

Nancy: Europe.

Nancy: From.

Nancy: So we will have one ship for example, that's gone from the O G.

Nancy: During the a G going around the Cape going to Europe, I mean, it's about too.

Nancy: Discharging humbug, it's been a reloading Amsterdam, and then come all the way background, the Cape and discharged in East Africa, six days away from loading in AG.

Speaker Change: But that is.

Speaker Change: Really kind of Wow okay.

Nancy: Hum.

Nancy: And then even seeing a.

Nancy: That are related.

Nancy: Asking Asia T, where you were able to bring vessels back.

Nancy: Towards the a G R O voyages to Australia and things that are out there in that case.

Robert L. Bugbee: Thank you for joining us. Thank you. Thank you. That's very interesting.

Nancy: That's a very lucrative voyages.

Speaker Change: That's very interesting Greg.

Espen Landmark: Great. Thank you. Thank you, guys. Yeah, thank you. Our next question comes from Liam Burke with B Riley FBR.

Greg: Great. Thank you. Thank you guys.

Speaker Change: Yep. Thank you.

Nancy: Our next question comes from Liam Burke with B Riley FBR.

Liam Burke: Yes. Thank you.

Liam Burke: Your dividend payout has been steadily increasing from quarter to quarter. How much of that is a part of your capital allocation strategy as your debt levels start coming down? And how are you going to balance that between your buybacks, where you have sort of a stated target as a percent of NAV? are great.

Liam Burke: Your dividend payout has been steadily increasing from quarter to quarter.

Liam Burke: How much of that is it part of your capital allocation strategy as your debt level start coming down and how are you going to balance that between your buybacks.

Liam Burke: What do you have sort of a stated target as a percent of in a vague.

Speaker Change: Hi, Brett.

Robert L. Bugbee: We're simply not going to comment on capital allocation strategy until we achieve our goal, and The commute permutations of, of what you would do just between stock buybacks and dividends. Um, you know, right now, we do, we've always believed in regular dividends. And I think that the dividend increases are a sign of or a recognition of the really improved underlying strengths of the company. I wouldn't say it is.

Brett: It's simply not going to comment to the capital allocation strategy until we've achieved that goal.

Brett: And.

Speaker Change: The teammates by mutations of.

Speaker Change: But what you would do just between stock buybacks.

Speaker Change: Dividend so.

Speaker Change: You know right now the.

Speaker Change: We do we've always believed in regular dividends.

Speaker Change: And I think that the dividend increases.

Speaker Change:

Speaker Change: We'd like them.

Speaker Change: Not too or recognition really improved underlying strengths of the company.

Speaker Change: No I wouldn't say it is.

Speaker Change: Yeah.

Liam Burke: Anything other than that, you know, we've just been regularly increasing that dividend all through last year, and we're just adding it again to it now. Okay, thank you. Obviously, there's been a lot of talk about the Red Sea. How much has India, as it's stepped up as both an importer and exporter, importer of crude oil and exporter of product tankers, been to your advantage? And how do you see that shaking out over time? Robert, do you want me to take this?

Speaker Change: The other than that no.

Speaker Change: We regularly increasing that dividend all through last year, and we're just adding it again to it now.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Speaker Change: There's been a lot of talk about the Red Sea, how much is India.

Speaker Change: Stepped up as a both a importer in export or import of crude and export of product tankers.

Speaker Change: I've been to your advantage and how do you see that shaking out over time.

Speaker Change: Robert You want me to take this yes of course.

James Doyle: Yeah, of course. Liam, a great question. I think the answer is it's had a positive impact. We often focus just on the Middle East, and depending on the region, sometimes people will include India in that. But they have added very advanced refining capacity. Yamnagar is probably the most advanced refinery in the world, one of the most complex refiners in the world, and they export around 1 to 1.5 million barrels a day of product.

Robert: Great question right I think the answer is it's had a positive impact we often focus just on the middle east and depending on the region. Sometimes people will include India in that but they have added very advanced refining capacity.

Speaker Change: <unk> is probably the most advanced refinery in the world one of the most complex refineries in the world and they export around one to one and a half million barrels a day of product.

James Doyle: And they're planning to add a fair bit of capacity. So, similar to the impact of the Middle East, which has expanded 10 miles, we have seen a similar impact in India, and it's probably the next growth region. Great. Thank you, Robert. Thank you, James. Thanks, Sam. Our next question comes from Chris Robertson with Deutsche Bank. Hi, yes, good morning.

Speaker Change: And they're planning to add a fair bit of capacity so similar to the to the impact of the middle East, which has expanded ton miles we have seen a similar impact in India and it's probably the next growth region.

Speaker Change: Great. Thank you Robert Thank you James.

Speaker Change: Thanks Sam.

Speaker Change: Our next question comes with Crazy Robert's son with Deutsche Bank.

Ben Moore: Hi, Yes. Good morning. This is been more calling on for Chris Robertson here at Deutsche Bank, Thanks for taking our questions.

Chris Robertson: This is Ben Moore calling on behalf of Chris Robertson here at Deutsche Bank. Thanks for taking our questions. You've outlined very strong fundamentals in the market, and given the latest disruptions in the Red Sea, it's put upward pressure on tanker rates. We wanted to ask, what are your thoughts, especially on prioritizing maybe a special dividend over share repurchases, cap backs, or debt pay-down? I'm really sorry, Chris. I missed the question. I'm really sorry. Oh, I'm sorry.

Ben Moore: You've outlined very strong fundamentals of the market and given the latest disruptions in the Red Sea.

Bernie: It's put upward pressure on tanker rates, we wanted to ask what are your thoughts.

Speaker Change: Especially on prioritizing maybe a special dividend.

Speaker Change: Over share repurchases capex or debt pay down.

Speaker Change: I'm really sorry, Chris.

Speaker Change: I missed the question I'm really sorry.

Speaker Change: Oh, I'm, sorry, we wanted to ask Uh huh.

Operator: We wanted to ask you've outlined very strong fundamentals in the market, and yes, given the latest disruptions in the Red Sea that's put upward pressure on tanker rates, we wanted to ask especially how you might be thinking about prioritizing a special dividend over other things like share repurchases, CapEx, and debt pay-down. Yeah, I will sort of restate this until we get to, you know, until we get to where we want, you know, we've finished the mission of paying down debt, then we're really not going to..., really think about it ourselves. We'd have to see what the set of opportunities are. And secondly, we're never going to telegraph it. It's not a possible way.

Speaker Change: You've outlined a very strong fundamentals in the market, yet and yes, given the latest disruptions of the Red Sea. That's put upward pressure on tanker rates, we wanted to ask a especially how you might be thinking about prioritizing a special dividend.

Speaker Change: Over other things like share repurchases capex and debt pay down.

Ben Moore: So until we get to.

Ben Moore:

Ben Moore: You know until till we get to where we want in a weak finish the mission for paying down debt that we're really not going to.

Ben Moore: Really thinking about it ourselves no we'd have to see what the sector.

Ben Moore: Uh huh.

Ben Moore: Opportunity.

Ben Moore: And secondly, we're never Gonna Telegraaf.

Ben Moore: Possible ways. So I didn't say to everybody. There is no way, we're going to come out and say Oh, we're going to buy back as much stock.

Robert L. Bugbee: I refer to everybody. There is no way that we are going to come out and say, oh, we're going to buy back this much stuff, or we're going to pay out, you know, intend to pay out this much extraordinary dividend, or we intend to raise the regular dividend to x. We're just going to act on whatever we've done. You know, we've already got the stock buyback in place, so we're not going to, you know. We're not going to wake up one day and say, hey, you know, guys, we're happy now. This is going to be, you know, this is what we're going to do. Thanks. And maybe as a follow-up, can you please discuss just your thoughts, looking forward, whether we've reached peak disruption in terms of product tankers and how it might play out throughout the year, at least from what you're seeing and hearing?

Ben Moore: Well, we're going to play out you know tend to pay out this much extraordinary dividend, though we intend to raise the regular dividend tax would go it's going to act on whether we've done you know we've already got the stock buyback in place so we're not going to.

Ben Moore: You know.

Ben Moore: We're not going to wake up one day and say Hey, you know guys were happy now this is going to be that this is what we're going to do.

Speaker Change: Thanks, and maybe as a follow up.

Speaker Change: Can you please.

Speaker Change: Please discuss just your thoughts looking forward, whether we've reached peak disruption in terms of product tankers and how it might play out throughout the year at just at least from what you're seeing and hearing.

Robert L. Bugbee: I think that's a wonderful, wonderful, wonderful question. You know, when we were through two years ago, you know, we, you know, two years ago, or three years ago, we wake up one morning in late February and see absolutely no cars on the road and no planes in the sky. And then we are sitting in a situation now where we've got, you know, a long-term war between, you know, Ukraine and Russia, the Panama Canal transit inhibited, Red Sea transit inhibited. And, you know, some argue that the Palestine-Israel situation, that whole Middle East situation, is getting worse, not better, and you know. No one talks about the risk of it spilling over into other areas, so I think it...

Speaker Change: That's a wonderful wonderful wonderful question you know when we've been through.

Ben Moore: Two years ago.

Ben Moore: We are you know two years ago three years ago, we wake up one morning, and late February and see absolutely no cars on the road and no claims in the Sky.

Ben Moore: And then we are sitting in a situation now where we've got long term walk between the crane in Russia, with Panama Canal Transits inhibited Red sea trends that inhibited and.

Ben Moore: Some argue that the the.

Ben Moore: The Palestine, Israel situation that whole middle East situation is getting worse not better.

Ben Moore: And you know no one talks about the risk of it spilling over into other areas. So.

Ben Moore: I think it's.

Ben Moore: It's.

Ben Moore: Impossible to say that we've reached the peak.

Robert L. Bugbee: It's impossible to say that we've reached the peak of the disruption because, you know, we're now way beyond three standard deviations of disruption anyway, right? So it's not, you know, Wall Street's bent on all these new things, and there's a complacency in the whole oil space as we look at price. And it's like, you know, Wall Street is really, you know, wishing, hoping all the time for every announcement that's relatively, you know, dullish. But the facts are, if we go back since October the 7th, virtually on a bi-weekly basis, the situation has got worse, not better. It's hard for me to say, yeah, we've reached the peak of dislocation. We don't know.

Ben Moore: The disruption.

Ben Moore: Because you know we know.

Ben Moore: Beyond three standard deviations of disruption anyway right now.

Ben Moore: So it's not you know wall street's been till when all these news thing is there's the complacency in the whole of oil space as we look at sprouts.

Ben Moore: And it's like you know Wall Street is really you know wishing hoping all the time every announcement.

Ben Moore: That's relatively you know dovish, but the facts are if we go back.

Ben Moore: Oh, seven virtually on a biweekly basis.

Ben Moore: The situation has got worse not better.

Ben Moore: It's hard for me to say, yeah, we'd reached the peak of dislocation.

Speaker Change: We don't wonderful thank you for you.

Operator: Wonderful. Great. Thanks for your insight.

Speaker Change: Great. Thanks for your insights.

David Doyle: This concludes our question and answer session. I would now like to turn the conference back over to David Doyle for any closing remarks. Thank you all for listening. Hope you all have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: This concludes our question and answer session out about like distributor to conference back over to James Doyle for any closing remarks.

James Doyle: Thank you all for listening hope you all have a great day.

James Doyle: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Uh huh.

Speaker Change: [music].

Ben Moore: Uh huh.

Ben Moore: Yeah.