Q4 2023 Overseas Shipholding Group Inc Earnings Call

Operator: Good morning everyone, and welcome to the Q4 2023 Overseas Shipholding Group, Inc. Earnings Conference Call. All participants will be in a listen-only mode.

Good morning, everyone and welcome to the Q4 2023 overseas Shipholding Group, Inc Earnings Conference call.

All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star followed by zero.

Operator: Should you need assistance, please email a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key and then one on your touch-tone telephone.

After todays presentation, there will be an opportunity to ask questions to ask a question you May press Star and then one on your Touchtone telephone.

Operator: To withdraw your questions, you may press the star and then one on your touch-tone telephones. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Sam Norton, President and CEO of Overseas Shipholding Group. Sir, please go ahead.

So draw your questions you May press star two.

Please also note today's event is being recorded.

At this time I'd like to turn the floor over to Sam Norton, President and CEO of overseas Shipholding Group. Sir. Please go ahead. Thank.

Samuel H. Norton: Thank you, Jamie. Welcome and thank you for joining us for our presentation of OSG's fourth quarter and full year 2023 financial results, for allowing us to provide commentary on those results and additional color as to the current state of our business and the opportunities and challenges in life. As usual, I am joined on this presentation by our CFO, Dick Trueblood. To start, I would like to direct everyone to the narrative on pages two and three of the PowerPoint presentation available on our website, regarding forward-looking statements, estimates, and other information that may be provided during the course of this call. The contents of that narrative are an important part of this presentation, and I urge everyone to read and consider them carefully.

Thank you Jamie.

Welcome and thank you for joining our presentation of <unk> fourth quarter and full year 2023 financial results.

For allowing us to provide commentary on those results and additional color as to the current state of our business and the opportunities and challenges that lie ahead.

As usual I am joined in this presentation by our CFO <expletive> Trueblood.

Start I would like to direct everyone to the narrative on pages, two and three of the Powerpoint presentation available on our website.

Forward looking statements estimates and other information that may be provided during the course of this call.

Contents of that narrative are an important part of this presentation and I urge everyone to read and consider them carefully.

Samuel H. Norton: We will be offering you more than just a historical perspective on OSG today, and our presentation includes forward-looking statements, including statements about anticipated future results. These statements are subject to uncertainties and risk. actual results may differ materially from those contemplated by our forward-looking statements and could be affected by a variety of factors, including factors beyond our control.

We will be offering you more than just a historical perspective on <unk> today and our presentation includes forward looking statements, including statements about anticipated future results. These.

These statements are subject to uncertainties and risks.

Actual results may differ materially from those contemplated by our forward looking statements could be affected by a variety of factors, including factors beyond our control.

Samuel H. Norton: For a discussion of these factors, we refer you to our SEC file, particularly our Form 10-K for 2023, which we anticipate filing later today, and which can be found at the SEC's internet site, www.sec.gov, as well as on our own website, www.osg.gov. Forward-looking statements in this presentation speak only as of today, and we do not assume any obligation to update any forward-looking statements, except as may In addition, our presentation today includes certain non-GAAP financial measures, which we define and reconcile to the most closely comparable gap measure in our earnings release, which is posted on our website.

For a discussion of these factors, we refer you to our SEC filings, particularly our Form 10-K for 2023, which we anticipate filing later today and which can be found at the Sec's Internet site Www Dot FCC dot Gov as well as our own website Www Dot O.

<unk> Dot com.

Forward looking statements in this presentation speak only as of today and we do not assume any obligation to update any forward looking statements, except as may be legally required.

In addition, our presentation today includes certain non-GAAP financial measures, which we defined and reconciled to the most closely.

Comparable GAAP measure in our earnings release, which is posted on our website.

Samuel H. Norton: Before discussing our 2023 performance and offering a perspective on how we see 2024 shaping up, I would like to comment briefly on the unsolicited, non-binding indication of interest submitted to our board by Salt Shuck Resources to acquire the OSG shares it does not already own for $6.25 per share in cash. As we have previously disclosed, our board is carefully considering Salt Shack's indication of interest in consultation with our outside financial and legal advisors and is committed to acting in the best interests of our stock. Because the board's work is ongoing, we do not intend to comment further on this matter during this call or to respond to questions regarding Salt Shack's indication of interest or the possibility of any potential transaction. We respectfully ask that your questions be focused on the company's financial results and ongoing business activities. We couldn't be more pleased with our 2023 results. Following the positive results reported in prior quarters, it would be appropriate to state that we have stopped the landing for our fourth quarter performance.

Before discussing our 2023 performance and offering a perspective on how we see 2024 shaping up.

I'd like to comment briefly on the unsolicited non binding indications of interest submitted to our board by Saltchuck resources to acquire the O S. T shares it does not already on for $6.25 per share in cash.

As we have previously disclosed our board has carefully considering salt checks indication of interest consultation with our outside financial and legal advisors and is committed to acting in the best interests of our stockholders.

Because of the Board's work is ongoing we do not intend to comment further on this matter during this call or to respond to questions regarding salt Chuck's indication of interest.

Possibility of any potential transaction.

We respectfully ask that your questions focused on the company's financial results and the ongoing business activities.

We couldn't be more pleased with our 2023 results.

Following the positive results reported in prior quarters, it would be appropriate to state that we have stopped the landing for our fourth quarter performance.

Samuel H. Norton: The quarter's contribution led to meeting our adjusted EBITDA target of $175 million for the full year, a 23.1% gain over 2022 results despite having three fewer vessels in operation in 2023. The benefits of charter parties fixed at escalating rates over the past several quarters are now being re-eliminated, producing strong cash flow and providing the means to make continued progress in meeting our key capital allocation goals. Previously announced capital investments in our Alaskan tanker assets, purchase of 1.425 million shares during the quarter, and the declaration of our first dividend payment in many years underscore this point. Strong fundamentals have continued to support charter interest in our vessels and allowed us to maintain and expand our preferred contract profile of predominantly medium-term charters.

The quarters contribution led to meeting our adjusted EBITDA target of $175 million for the full year, a 23, 1% gain over 2022 results. Despite having three fewer vessels in operation in 2023.

The benefits of charter parties fix that escalating rates over the past several quarters are now being realized producing strong cash flow and providing the means to make continued progress in meeting our key capital allocation goals.

Previous previously announced capital investments on our Alaskan tanker assets the purchase of one point or two 5 million shares during the quarter and the declaration of our first dividend payment in many years underscore this point.

Strong fundamentals have continued to support charter interest in our vessels and allowed us to maintain and extend our preferred contract profile are predominantly medium term charters.

Samuel H. Norton: As has been the case for most of the past year, healthy refining margins and robust international tanker rates have supported strong performance across our. Cash Flow from Operations continues to meet or exceed our expectations, giving us continued confidence that our business plan is working. Significantly, at year end, we entered into an employment contract for the Alaskan Explorer to transport U.S. Gulf Coast crude oil to one of our Delaware Bay refining customers, demonstrating the existence of employment opportunities for this class of vessel outside its traditional Alaskan market, taken together with three other vessel fixtures concluded in early 2024. We have added 116 months of forward charter cover since our last report, which has increased the value of our forward charter book to over $860 million in time charter equivalent earnings as of the end of March, 2024. Also of note on the charter in front has been our exercise of extension options allowed for under the terms of the bare boat agreement with the owner of the overseas camp. The charter period has been extended for five years, commencing in June 2025, with this as a background.

As has been the case for most of the past year healthy refining margins and robust international tanker rates have supported strong performance across our fleet.

Cash flow from operations continues to meet or exceed our expectations, giving us continued confidence that our business plan is working.

Significantly at year end, we have entered into an employment contract for the Alaskan explorer to transport U S. Gulf Coast crude oil to one of our Delaware Bay refining customers demonstrating the existence of employment options for this class of vessel outside its traditional Alaskan market.

Taken together with three other vessel fixtures concluded in early 2024.

We have added 116 months of forward charter cover since our last report, which has increased the value of our forward charter book to over $860 million in time charter equivalent earnings as of the end of March 2024.

Also of note on the chartering front has been our exercise of extension options allowed for under the terms of the bareboat agreement with the owner of the overseas Tampa.

The charter period has been extended for five years commencing in June 2025.

Given this backdrop.

Samuel H. Norton: We consider OSG to be well positioned now and over the long term to generate strong cash flows in what we expect to be a durably balanced market characterized by stable demand and constrained supply. Several key developments during 2023 have served to bolster our confidence in our current business. The most visible to even a casual observer of shipping markets has been the persistent influence of geopolitical tensions outside of the US that have severely disrupted historical trading patterns for crude oil and its refined products. Since December 2022, the EU has, in response to the war in Ukraine, banned waterborne crude imports from Russia, and the G7 nations have implemented price caps limiting the global price paid for Russian oil and its refined products.

We consider always seem to be well positioned now and over the long term to generate strong cash flows and what we expect to be a durably balanced market characterized by stable demand and constrained supply.

Several key developments during 2023 have served to bolster our confidence in our current business plan.

Most visible even casual observer of shipping markets.

The persistent influence of geopolitical tensions outside of the U S that have.

Severely disrupted historical trading patterns for crude oil and its refined products.

Since December 2022, the EU has in response to the war in Ukraine band Waterborne crude imports from Russia, and the G. Seven nations have implemented price caps limiting the global price paid for Russian oil that's refined products.

Samuel H. Norton: Other countries have stepped in to purchase these commodities at a discount to the world price. More recently, the conflict in the Middle East has impacted vessels transiting the Red Sea, where vessels have been the target of Houthi missile and drone attacks, causing many vessels to avoid the Red Sea transit and to instead make longer voyages around the Cape of Good Hope. These circumstances have collectively resulted in the redirection of crude oil and refined product trade flows and increased aggregate ton-mile demand. Although the United States was not a major importer of Russian or Persian Gulf oil, its markets have nonetheless been impacted by these global events. Although historically high international freight costs have resulted from disrupted trade paths, supply constraints now exist in markets that were alternative sources of supply competing against domestic products shipped on Jones Act tonnage. As a result, traders now seem to favor domestic product sources over overseas alternatives, giving strong support to the use of Jones Act vessels.

Other countries have stepped in to purchase these commodities at a discount to world prices.

More recently the conflict in the Middle East has impacted vessels transiting the red Sea, where vessels have been the target of routine missile and drone attacks, causing many vessels to avoid the red sea transits and to instead make longer voyages around the Cape of good hope.

These circumstances have collectively resulted in the redirection of crude oil and refined product trade flows and increased aggregate ton mile demand.

Although the United States was not a major importer of Russian or Persian Gulf oil its markets have nonetheless been impacted by these global events.

Historically high international freight costs have resulted from disrupted trade patterns supply constraints now exist in the markets that were alternative sources of supply competing against domestic product shipped on Jones Act tonnage.

As a result.

<unk> now seem to favor domestic product sources over overseas alternatives, giving strong support for the use of Jones Act vessels.

Samuel H. Norton: This increase in demand has resulted in higher utilization levels and higher rates for Jones Act vessels. Domestically, the continued impact of government policies encouraging the use of renewable fuels has driven strong demand growth for transporting renewable diesel and its feedstock components from production sources along the Gold Coast to markets along the US West Coast. California's low carbon fuel standard regulations, in particular, have stimulated the use of renewable diesel, which is chemically identical to regular diesel, can be used on its own or blended with conventional diesel, and produces less carbon dioxide and nitrogen oxide than conventional diesel.

This increase in demand has resulted in higher utilization levels and higher rates for Jones Act vessels.

Domestically the continued impact of government policies encouraging encouraging the use of renewable fuels.

It's driven strong demand growth for transporting renewable diesel and its feedstock components from production sources, along the Gulf coast to markets, along the U S West coast.

California's low carbon fuel standard regulations in particular.

Related to the use of renewable diesel which is chemically identical to regular diesel can be used on its own or blended with conventional diesel produces less carbon dioxide and nitrogen oxide than conventional diesel.

The Gulf Coast currently produces a significant portion of renewable diesel in California is the largest customer.

Marine Transportation is the most cost effective solution to move finished product to the west coast.

Samuel H. Norton: The Gulf Coast currently produces a significant portion of renewable diesel, and California is the largest customer. Marine transportation is the most cost-effective solution to move finished products to the West Coast. The length of the trip to California creates a significant increase in ton-mile demand and has created an important new market for Jones Act tankers that is expected to expand further in the years ahead. Of equal importance was the Biden administration's approval last year of ConocoPhillips' Willow project in Alaska. This project, together with an earlier permitted project to develop the PICA Discovery operated by Santos, is expected to bring nearly 250,000 barrels per day The promise of significantly increased future production bodes well for the prospective demand for OSG's Elastica-class tankers, which provide the most cost-effective means for delivery of North Slope crude oil to refineries located in California and Washington State.

The length of the trip to California creates a significant increase in ton mile demand and that's created an important new market for Jones Act tankers.

To expand further in the years ahead.

Of equal significance was the by the administration's approval last year of Conocophillips Willow project in Alaska.

This project together with an earlier permitted project to develop the peak of discovery operated by Santos is expected to bring nearly 250000 barrels per day of new crude oil production in Alaska by 2027.

The promise of significant increased future production bodes well for the prospective demand for overseas, Alaska class tankers, which provide the most cost effective means for delivery of north slope crude oil to refineries located in California, and Washington State.

Anticipating this increase in demand O S. T acquired in late 2023, the Alaskan frontier sister to our other three ATC operated crude oil tankers and contracted with engine manufacturer man BMW to perform lifecycle upgrades on each of the engines on all for ATC vessels.

The lifestyle lifecycle upgrades will improve performance and fuel efficiency and also prepare the answers for possible use of methanol fuel in the future.

Samuel H. Norton: Anticipating this increase in demand, OSG acquired in late 2023 the Alaskan Frontier, sister to our other three ATC-operated crude oil tankers, and contracted with engine manufacturer MAN B&W to perform life cycle upgrades on each of the engines on all four ATC vessels. The life cycle upgrades will improve performance and fuel efficiency and also prepare the engines for possible use of methanol fuel in the future. It is expected that the fuel efficiency gain will result in 15 to 20% fuel savings as compared to the original engine design, leading to a meaningful reduction in carbon output.

It is expected that the fuel efficiency gain will result in a 15% to 20% fuel savings as compared to the original engine design.

Leading to a meaningful reduction in carbon output.

Significant capital investment into four Alaskan class tankers should permit you to operate these vessels for a longer period of time and with lower maintenance costs for the remaining ones.

Another development of significance. During 2023 was the transaction transferring ownership of the seven veteran class tankers that always she operates under bareboat charters from edge entities previously owned by a M. S. C. A S E to new owners owned by a private fund managed by Maritime partners LLC.

Samuel H. Norton: A significant capital investment in the four Alaskan-class tankers should permit OHT to operate these vessels for a longer period of time and with lower maintenance costs for the remaining ones. Another development of significance during 2023 was the transaction transferring ownership of the seven veteran class tankers that OSG operates under bare boat charter from entities previously owned by AMSA to new owners owned by a private fund managed by Maritime Partners LLC. In conjunction with this transaction, OSG entered into a new bare voter group.

In conjunction with this transaction I wish she entered into new bareboat agreements and simplified the underlying arrangements that govern the relationship between the O S T and now Maritime partners, a Jones Act qualified company.

Maritime partners transaction presented with an opportunity to prepay all of its remaining deferred payment obligations on two of the seven bareboat chartered vessels and a 14% discount to the aggregate outstanding liability of $6 $5 million.

Other material commercial terms of the revised everybody who views remain unchanged from the original agreements.

Looking ahead for the longer term or she is actively engaged in pursuing opportunities in the emerging market for transporting carbon dioxide. It may be captured from industrial sites in the future.

Samuel H. Norton: Simplified the underlying arrangements that govern the relationship between OSG and now Maritime Partners, a Jones Act qualified company. The Maritime Partners transaction presented OSG with an opportunity to prepay all of its remaining deferred payment obligations on two of the seven bareboat chartered vessels at a 14% discount to the aggregate outstanding liability of $6.5 million. Other material commercial terms of the revised Fairbody agreements remain unchanged from the original agreement.

December <unk> was awarded a $400000 grant from the U S Department of energy to study the development of its proposed Tampa regional intermodal cargo carbon hub for T rich.

The study is an important step towards realizing the potential for participating in emerging markets and manage the transport and sequestration of captured C O two.

The study will evaluate the commercial feasibility of developing intermediate storage hub at Port Tampa Bay for C. O two captured from industrial emitters across the state of Florida.

Samuel H. Norton: Looking ahead for the longer term, OSG is actively engaged in pursuing opportunities in the emerging market for transporting carbon dioxide that may be captured from industrial sites in the future. In December, OSG was awarded a $400,000 grant from the U.S. Department of Energy to study the development of its proposed Tampa Regional Intermodal Carbon Hub, or T-RIC. This study is an important step towards realizing the potential to participate in an emerging market to manage the transport and sequestration of captured CO2.

As you can see T rich would receive store and process. Initially 2 million metric tons of C. O two per year, which will be transported by OSV vessels across the Gulf of Mexico.

Permanent underground storage.

Rich will be the first of its kind in the nation and could be scaled in the future to meet expanded volumes have captured C O two.

It bears repeating that given the restored health of our core businesses decisions regarding allocation of capital remains the most important of those regularly considered by board and management of always G.

When considering this question the following topics featured prominently.

Samuel H. Norton: The study will evaluate the commercial feasibility of developing an intermediate storage hub at Port Tampa Bay for CO2 captured from industrial emitters across the state of Florida. As conceived, TRICH would initially receive, store, and process initially 2 million metric tons of CO2 per year, which would be transported by OSG vessels across the Gulf of Mexico for permanent underground storage. Key Rich will be the first of its kind in the nation and could be scaled in the future to meet expanded volumes of captured CO2. It bears repeating that given the restored health of our core businesses, decisions regarding the allocation of capital remain the most important of those regularly considered by the board and management of OSG. When considering this question, the following topics feature commonly.

First we are interested in investing opportunistically in incremental U S flag tanker and ATB assets, Both Jones Act and internationally trading U S flag tankers, where we expect long term cash flow returns to provide value to our stakeholders.

Second the board considers apply peak cycle cash flows to reduce the overall financial leverage in our business while at the same time, they just considering ways to sustained access to liquidity.

Through creating a pool of unencumbered assets against which future perhaps it could be added if needed.

We're establishing new financing facilities, which would offer contingent liquidity at an acceptable cost.

Third the board engages in discussions regarding continuing its ongoing efforts to return capital to our shareholders and fourth we seek opportunities to invest judiciously in gaining and sustaining a first mover advantage and participating in the emerging market for transporting liquid bulk commodities that are not currently in the mix of products being shipped on them.

Richard L. Trueblood: First, we are interested in investing opportunistically in incremental U.S. flag tankers and ATB assets, both Jones Act and internationally trading U.S. flag tankers, where we expect long-term cash flow returns to provide value to our stakeholders. Second, the board is considering applying peak cycle cash flows to reduce the overall financial leverage in our business, while at the same time, it is considering ways to sustain access to liquidity, either through creating a pool of unencumbered assets against which future financing could be added if needed, or through establishing new financing facilities, which would offer contingent liquidity at an acceptable cost. Third, the board engages in discussions regarding continuing its ongoing efforts to return capital to our shareholders. And fourth, we seek opportunities to invest judiciously in gaining and sustaining a first mover advantage in participating in the emerging market for transporting liquid bulk commodities that are not currently in the mix of products being shipped on our vessels. In this category, we see the most interesting opportunities to be the transportation of liquid carbon dioxide generated in a value chain seeking to capture and sequester industrial emissions of carbon dioxide. I will now turn the call over to Dick to provide you with further details on our fourth quarter and full year results for 2023. Thanks, Sam.

Vessels.

In this category, we see the most interesting opportunities in the transportation of liquid carbon dioxide generated into value chain seeking to capture and sequester industrial emissions of carbon dioxide.

I will now turn the call over to <expletive> to provide you with further details on our fourth quarter and full year results for 2023.

Thanks, Sam please.

Please turn to slide seven.

That's the demand continues to be strong with no additions to supply.

Customers continue to show interest in longer term time charters and entering into new contracts.

Direct continuation of their existing contracts often well in advance of the scheduled maturity.

Rates reflect this demand strength with recent rates now exceeding $80000 per day for Jones Act tankers.

This resulted in a strong 2023 performance significant visibility into 'twenty 'twenty four and thereafter.

We continued our share repurchase efforts with board authorized a $45 million for this purpose in 2023.

During the year, we purchased $8 6 million shares, including one 4 million shares in the fourth quarter, bringing the total purchases.

Which began in 2022 to $18 6 million shares, but the cumulative expenditure of $64.8 million.

The average share price paid for all of these shares was $3 46 per share.

Earlier in 2023.

Purchased 75% of our outstanding warrants for $11.4 million.

Richard L. Trueblood: Please turn to slide 7. Vessel demand continues to be strong with no additions to supply. Customers continue to show interest in longer-term time charters and enter into new contracts and direct continuation of their existing contracts, often well in advance of the scheduled maturity. Rates reflect this demand strength, with recent rates now exceeding $80,000 per day for Jones Act MR tanks. This resulted in a strong 2023 performance and significant visibility into 2024 and thereafter. We continued our share repurchase efforts, with the board authorizing $45 million for this purpose in 2023. During the year, we purchased 8.6 million shares, including 1.4 million shares in the fourth quarter, bringing the total purchases, which began in 2022, to 18.6 million shares, with a cumulative expenditure of $64.8 million. The average share price paid for all of these shares was $3.46 per share.

Reduce.

Potential dilution by 2.6 billion shares.

Warrants were canceled after acquisition.

The remaining outstanding warrants or convertible into 859000 shares.

At this time, we have remaining authority for further share repurchases of $25 million.

Please turn to slide eight.

We have continued to extend the maturities of our book of business as our customers desire to lock in their transportation requirements.

2024 is essentially fully booked with some variability for internationally trading vessels.

Looking at the chart in 2024, we have two vessels with charters ending before 12 31 24.

One of these two vessels the Beacon OS.

As a series of one year options with the military Sealift command, which if all exercised.

We will keep her on chartered through August 2028.

The two vessels, becoming available at the end of 2024 participate in the tanker security program and by design. The majority of their voyages are in the spot market.

Richard L. Trueblood: Earlier in 2023, we purchased 75% of our outstanding warrants for $11.4 million. This reduces potential dilution by 2.6 million shares. The warrants were canceled after acquisition.

The Alaska legend, and Alaskan navigator is subject to extension options.

If they exercise will continue their charter.

For years into the future.

Looking at our contracted book of business on a revenue basis without considering any business currently under negotiation.

Richard L. Trueblood: The remaining outstanding warrants are convertible into 859,000 shares. At this time, we have remaining authority for further share repurchases of $25 million. Please turn to slide eight. We have continued to extend the maturities of our book of business as our customers desire to lock in their transportation requirements. 2024 is essentially fully booked with some variability for our internationally trading vessel. Looking at this chart, in 2024, we have two vessels with charters ending before 1231-24. One of these two vessels, the Mykonos, has a series of one-year options with the Military SEALIT command, which, if all exercises, will keep her on charter through August 2028. The two vessels becoming available at the end of 2024 participate in the tanker security program, and by design, the majority of their voyages are in the slot market. Alaskan legend and Alaskan navigator are subject to extension options, that, if exercised, will continue their charter for years into the future. Looking at our contracted book of business on a revenue basis without considering any business currently under negotiation and not assuming the exercise of any contractual option.

And not assuming the exercise of any contractual options.

Our future book of business at March 31, 2024 exceeds $860 million over the remaining why some of those contracts.

In arriving at this estimate we have factored out estimated off hire days due to future required dry dock periods.

We completed the purchase of the frontier in the fourth quarter, a sister ship to rollout three Alaskan tankers.

She's been in cold lay up since 2019, and we are now actively planning the lengthy shipyard period.

During which we will also perform engine lifecycle upgrades and installation of a.

Ballast water treatment system.

We expect her to tomorrow commenced commercial alpha operations.

Fourth quarter of 2024.

Our total resource commitment, including the purchase price is expected to approximate $50 million.

Please turn to slide nine.

We've got 7391 available days in 2023 of which 96% were contracted.

This rate represents a continuous improvement although a 2021 during the pandemic as well as a high point for the last five years.

Available and contracted days decreased with the re charter three vessels to a M. S. C. At the end of their bareboat charters in December 2023.

Richard L. Trueblood: Our future book of business at March 31, 2024 exceeds $860 million over the remaining lives of those contracts. In arriving at this estimate, we have factored out estimated on-fire days due to future required dry dock periods. We completed the purchase of the Frontier in the fourth quarter, a sister ship to our three Alaskan tankers. It's been in cold layup since 2019, and we are now actively planning a lengthy shipyard period during which we will also perform engine life cycle upgrades and installation of ballast water treatment.

Please turn to slide 10.

We're very pleased with our fourth quarter and full year results all elements of our fleet continue to perform well.

We did have some fluctuations due to scheduled drydock days.

Fourth quarter revenues decreased modestly to 110.1 billion from $108 6 million.

An increase in off hire days.

Due to dry dock schedule has moderated the increase.

Rates and utilization remain high.

Revenue declines from the year ago quarter result from the return of three vessels.

Richard L. Trueblood: We expect it to commence commercial operations in the fourth quarter of 2024. Our total resource commitment, including the purchase price, is expected to approximate $50 million. Please turn to slide nine. We had 7,391 available days in 2023, of which 96% were contracted. This represents a continuous improvement from the low of 2021 during the pandemic as well as a high point for the last five years. However, available and contracted days decreased with the return of three vessels to AMSC at the end of their bare boat charters in December 2022. Please turn to slide 10.

<unk> 2022 at the expiration of their bareboat charters.

Increased rates and higher utilization from the remaining fleet offset much of this decrease.

Full year time charter equivalent revenues were $423 5 million.

Italy flat to 2022 time charter equivalent revenues of $426 3 million.

Fourth quarter, adjusted EBITDA was $47 3 million compared to the prior year's quarter.

48 to the prior quarter's $48 1 million.

Full year adjusted EBITDA was 175.7, million% to 23% increase from 2022.

Richard L. Trueblood: We're very pleased with our fourth quarter and full year results. All elements of our fleet continue to perform well. We did have some fluctuations due to schedule dry dock. Fourth quarter revenues increased modestly to $110.1 million from $108.6 million, an increase in off-wire days. However, dry dock schedules moderated the increase. Rates and utilization remain high.

The reduction in operating expenses and charter higher associated with return vessels.

Offset the revenue decline.

From those vessels.

Please turn to slide 11.

John Jack Handy size tanker revenues increased 2.2 million from the prior quarter.

While the ATB revenues increased 900000.

Specialized business revenues decreased one 6 million.

Please turn to slide 12.

Richard L. Trueblood: Revenue declines from the year-ago quarter result from the return of three vessels in December 2022 at the expiration of their bare boat charter. However, increased rates and higher utilization from the remaining fleet offset much of this decrease. Full year time charter equivalent revenues were $423.5 million, essentially flat to 2022 time charter equivalent revenues of $426.3 million. Fourth quarter adjusted EBITDA was $47.3 million compared to the prior quarter's $48.1 million.

<unk> volumes increased slightly from the third quarter with a corresponding increase in revenues.

Non Jones Act tanker revenues decreased model modestly from the third quarter, resulting from lower quarterly use the utilization.

Jones Act shuttle tanker revenues declined due to a scheduled dry dock period.

Alaska tanker revenues were essentially flat compared to the third quarter as Joe asking legend under what her schedule dry dock period.

Each of the third and fourth quarters saw one vessel and dry dock.

Please turn to slide 13.

Fourth quarter vessel operating contribution declined 2.2 million due to the lower contribution from the specialized businesses, resulting from their specialized or they're scheduled dry dock periods.

Richard L. Trueblood: Full-year adjusted EBITDA was $175.7 million, a 23% increase from 2022. The reduction in operating expenses and charter hire associated with the return vessels offset the revenue decline from those vessels. Please turn to slide 11. Jones Act, handy-sized tanker revenues increased $2.2 million from the prior quarter, while ATB revenues increased $900,000. Specialized business revenues decreased $1.6 million.

Yeah.

Jones Act candy sized tankers contribution increased $1 million.

Rate increases due to new contract to provide the impetus for this increase.

The contribution from our ATB increased $1 2 billion.

This increase was moderated slightly but the completion of a scheduled dry dock.

Please turn to slide 14.

Richard L. Trueblood: Please turn to slide 12. Lightery volumes increased slightly from the third quarter with a corresponding increase in revenue. However, non-Jones Act TANCR revenues decreased modestly from the third quarter, resulting from lower quarterly utilization.

Fourth quarter, adjusted EBITDA was $47.3 million and adjusted EBITDA.

For 2023 full year was 175.7, a $32 9 million dollar increase from 2022.

Yeah.

Richard L. Trueblood: Jones Act shuttle tanker revenues declined due to a scheduled dry dock period. Alaskan tanker revenues were essentially flat compared to the third quarter as the Alaskan legend underwent its scheduled write-off period. Each of the third and fourth quarters saw one vessel in dry dock; please turn to page 13. In the fourth quarter, vessel operating contribution declined $2.2 million due to the lower contribution from the specialized businesses resulting from their scheduled dry dock period. Jones Act candy-sized tankers contribution increased $1 million. Rate increases due to new contracts provided the impetus for this increase. The contribution from our ATVs increased $1.2 million, and this increase was moderated slightly by the completion of a scheduled ride-on. Please turn to slide 14. Fourth quarter adjusted EBITDA was $47.3 million; adjusted EBITDA for the full year 2023 was $175.7, a $32.9 million increase from 2022. Please turn to slide 15.

Please turn to slide 15.

2023, net income was 62 and a half million dollars compared to 2022, when net income was $26 6 million.

The continuing impact of higher rates increased contract duration and increased utilization contributed to these positive results.

Please turn to slide 16.

I thought it might be instructive to quantify how adjusted EBITDA is used.

The difference between adjusted EBITDA and this table.

Proximate, our free cash flow generation.

During 2024, we expect to expand $28 million of interest expense.

Reduce our outstanding indebtedness by $43 million.

This includes the repayment of the Suncoast law.

Turing in September with an outstanding balance of $18 million.

Our capex for planned maintenance this year is $30 million.

We will expand an additional $32 billion to reactivate the frontier Completer lifecycle engine upgrades and make progress payments towards the lifecycle engine upgrades for the three Alaskan vessels.

Richard L. Trueblood: 2023 net income was $62.5 million compared to 2022, when net income was $26.6 million. The continuing impact of higher rates, increased contract duration, and increased utilization contributed to these positive results; please turn to slide 16. I thought it might be instructive to quantify how adjusted EBITDA is used. The difference between just a diva and this table.

Finally.

In the first quarter.

Agent for the ATC 7 million deferred compensation obligations.

One more 2024 note.

We are currently projecting that we will not pay any profit share with respect to our seven bareboat chartered vessels from a S C.

We anticipate considering vessel performance that in future years, we will begin to pay profit sharing.

Richard L. Trueblood: Approximate our free cash flow generation. During 2024, we expect to expend $28 million in interest expenses and reduce our outstanding indebtedness by $43 million. This includes the repayment of the Suncoast loan maturing in September with a then outstanding balance of $18 million.

Please turn to slide 17.

At September 32023, we had total cash of $98 million.

During the fourth quarter, we generated $47 million and adjusted EBITDA.

Working capital use $10 million.

We invested $39 million in vessel dry dock and other capital costs.

As mentioned before we repurchased four 1.4 million shares for $7 million.

Richard L. Trueblood: Our CapEx for planned maintenance this year is $30 million. We will expend an additional $32 million to reactivate the frontier, complete our lifecycle engine upgrades, and make progress payments towards the lifecycle engine upgrades for our other three Alaskan vessels. Finally, in the first quarter, we paid in full the ATC $7 million deferred compensation obligation. One more 2024 note. We are currently projecting that we will not pay any profit share with respect to our seven bareboat chartered vessels from ASC.

Additionally, we paid $13 million debt service.

As a result, we ended the quarter was $76 million of cash plus $15 million of liquid investments.

Resulting in total liquidity of $91 million.

Please turn to slide 18.

Continuing our discussion of cash and liquidity as mentioned on the previous slide we had $76 million of cash.

Our total debt was $404 million, which represents a decrease of $6 million in outstanding indebtedness since September.

Richard L. Trueblood: We anticipate, considering vessel performance, that in future years we will begin to pay a profit share. Please turn to slide 17. At September 30, 2023, we had total cash of $98 million. During the fourth quarter, we generated $47 million in adjusted EBITDA, and working capital used $10 million. We invest $39 million in Bessel-Drydak and other capital costs. As mentioned before, we repurchased 1.4 million shares for $7 million. Additionally, we paid $13 million in debt service. As a result, we ended the quarter with $76 million of cash plus $15 million of liquid investments, resulting in total liquidity of $91 million. Please turn to slide 18. Continuing our discussion of cash and liquidity, as mentioned on the previous slide, we had $76 million in cash. Our total debt was $404 million, which represents a decrease of $6 million in outstanding indebtedness since September.

With $354 million of equity our net debt to equity ratio at this 0.9 times.

This concludes my comments on the financial statements I'd like to turn the call back to Sam Sam.

Thank you Nick.

Turning to our expectations for 2024.

High level of forward contract coverage has now become a feature of our business profile.

The markets within which we operate continue to firm, allowing us to succeed in concluding new or extended time charters, which taken together with our existing book of business provide us with time charter coverage for our Jones Act vessels are over 95% of available vessel trading days for all of 2024.

Recent fixtures of conventional Jones Act tankers have been in the mid $80000 per day range for periods of three years fixed.

Fixtures for comparable periods for larger Atvs are now approaching $60000 per day.

We evaluate the market time charter equivalent for our ATC vessels at levels exceeding six figures on a daily basis.

Since we now have clear visibility of both charter rates and fixed contract coverage for 2020 for changes in our expectations for 2024 should occur solely as a result of changes in lighter volumes and then the right conditions experienced in the international MRO market in which currently only two of our Jones.

Richard L. Trueblood: With $354 million of equity, our net debt to equity ratio is 0.9 times. This concludes my comments on the financial statements. I'd like to turn the call back to Sam.

Samuel H. Norton: Thank you very much. Thank you. Turning to our expectations for 2024, a high level of forward contract coverage has now become a feature of our business profile. The markets within which we operate have continued to firm, allowing us to succeed in concluding new or extended time targets, which taken together with our existing book of business provide us with time charter coverage for our Jones Act vessels for over 95% of available vessel trading days for all of 2024. Recent fixtures of conventional Jones Act tankers have been in the mid $80,000 per day range for periods of three years. Fixtures for comparable periods for larger ATBs are now approaching $60,000 per day.

Zack on non Jones Act vessels trade.

Available trading days for the year remain.

Only for the fourth quarter for both the Alaskan explore and the Alaskan frontier.

For both of those vessels we're currently.

Inquiries for employment.

And we are optimistic that we will fix these ships well in advance of their open availability dates.

We anticipate continued strength in all important financial metrics and a sustained build and our available cash balances over the next several quarters as profitable time charters at high utilization rates are realized.

Given all of this we are in position today to provide guidance of our expectation of time charter equivalent earnings for the full year of approximately $450 million.

Attaining this top line result should generate a growth and adjusted EBITDA of between 10, and 15% as compared with full year results for 2023 announced earlier today.

Samuel H. Norton: We evaluate the market time charter equivalent for our ATC vessels at levels exceeding six figures on a daily basis. Since we now have clear visibility of both charter rates and fixed contract coverage for 2024, changes in our expectations for 2024 should occur solely as a result of changes in lightening volumes and in the rate conditions experienced in the international MRR market, in which currently only two of our non-Jones Act vessels trade, available trading days for the year remaining, only for the fourth quarter for both the Alaskan Explorer and the Alaskan Frontier. For both of those vessels, we are currently fielding inquiries for employment. And we are optimistic that we will fix these ships well in advance of their open availability. We anticipate continued strength in all important financial metrics and a sustained build in our available cash balances over the next several quarters as profitable time charters at high utilization rates are realized. Given all of this, we are in a position today to provide guidance on our expectation of time charter equivalent earnings for the full year of approximately $450 million.

After accounting for cash used for debt service planned maintenance capex installment payments for engine upgrades or ATC vessels.

And the retirement of the ATC deferred compensation plan, we expect to generate surplus cash of approximately $50 million over the course of 2024.

To deliver these results our Michigan is firmly focused on execution and operational excellence as well as our pursuit of growth opportunities described earlier.

Jamie we can now open up the call for questions.

Ladies and gentlemen at this time, we'll begin the question and answer session.

Ask a question you May press Star and then one on your Touchtone telephone if you are using a speaker phone. Please do ask that you. Please pickup your handset prior to pressing the keys.

Withdraw your questions you May press star into.

Again that is star and then one to join the question queue, we'll pause momentarily to assemble the roster.

Our first question today comes from Ryan Vaughan from Needham. Please go ahead with your question.

Alright, Thank you Sami Jack great job on the quarter, great job on the year as well a few questions for me.

Samuel H. Norton: Attaining this top line result should generate a growth in adjusted EBITDA of between 10 and 15 as compared with full year results for 2023 announced earlier today. After accounting for cash used for debt service, land maintenance capex, installment payments for engine upgrades, or ATC vessels, and the retirement of the ATC Deferred Compensation Plan, we expect to generate surplus cash of approximately $50 million over the course of 2024. To deliver these results, our mission is firmly focused on execution and operational excellence, as well as the pursuit of growth opportunities described earlier. Jamie, we can now open up the call to questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on your touch-tone telephone. If you are using a speakerphone, would you please pick up your handset prior to pressing it? To withdraw your questions, you may press the star in, Once again, that is star and then one to join the question queue.

Maybe just the first one I know, it's a little bit early but you are.

There are quite a bit of a capex on the slides here you mentioned the fourth quarter or just how.

How you're thinking about are the use cases for the frontier.

Number two just thinking you guys have done an incredible job of.

Elaborating the balance sheet.

I'm just running some rough numbers it looks like at the end of the year it would be a little bit less than one and a half turns.

Can you just give us some guidance so it's probably even a little bit better than that just how you're thinking about that you did mentioned some unencumbered vessels. How are you thinking about appropriate leverage for the business.

Got it.

And then just the last one if you don't mind <expletive> you had mentioned that $25 million left on the share buyback is that.

Accessible currently or is that on hold given Sam your earlier remarks about the unsolicited proposal just any update on that thank you.

Okay. So I'll try I'll try and address.

Three questions, but if I can frontier.

We expect to volunteer to be.

Operator: We'll pause momentarily to assemble the roster. Our first question today comes from Ryan Vaughan from Needham; please go ahead with your question. All right, thank you. Hi, Sam and Dick, great job in the quarter, great job in the year as well. A few questions for me. Maybe just the first one.

Available out of the.

For or geographic dry dockings in Singapore. So we expect the vessel will be out of the dry dock.

By the end of September.

Depending on where.

Her employment options.

Evolve.

That would make are in my opinion are sort of ready to load cargo.

Probably.

Three to six weeks later than that.

Ryan Vaughan: Sam, I know it's a little bit early, but you're through quite a bit of the CapEx on the frontier. You mentioned the fourth quarter, how you're thinking about the use cases for the Frontier. Number two, just thinking, you guys have done an incredible job. Unknown Attendee, Climent Molins, Ryan Vaughan, Douglas Wheat, Unknown Attendee, Climent Molins, www. CGPKpublications.ca, Thank you. Okay, so I'll try.

Depending on where she goes in my prepared remarks, I highlighted the fact that.

We think that medium term the production of Alaskan crude oil is going to be a big driver of the use case for all of our ATC vessels.

The interim period between the end of this year and in the early part of 2027.

That's that's that's a period that we have to fill a week we have some ideas about how we might do that both.

In the traditional Alaska trades as well as emerging interest that we see for transporting crude oil.

Samuel H. Norton: I'll try and address three questions, but if I can, Frontier. We expect the Frontier to be available out of the Geographic Dry Dock in Singapore, so we expect the vessel to be out of the dry dock by the end of September, depending on where employment opportunities evolve. That would make her, in my opinion, sort of ready to load cargo, probably three to six weeks later than that.

On the Gulf Coast to two locations on the East coast of United States.

I also pointed out.

We saw a good example of that.

In the use case for the Alaska and explore.

She is currently.

On a contract to transport crude oil from pad.

Pad three to pad one for one of our Delaware Bay refineries our refinery customers.

And there is a there is interest from other parties to explore.

Explore utilize this size of a crude oil tanker in the Gulf Coast and East Coast trade. So.

Samuel H. Norton: Depending on where she goes, you know, in my prepared remarks, I highlighted the fact that we think that, in the medium term, the production of Alaskan crude oil is going to be a big driver of the use case for all of our ATC vessels. The interim period between the end of this year and the early part of 2027 is that period that we have to fill. We have some ideas about how we might do that both in the traditional Alaskan trades, as well as emerging interest that we see for transporting crude oil from the Gulf Coast to locations on the East Coast of the United States. I also pointed out that we saw a good example of that in the use case for the Alaskan Explorer. She's currently on a contract to transport crude oil from pad three to pad one for one of our Delaware Bay refineries, refinery customers. And there is interest from other parties to explore and utilize this size of crude oil tanker in the Gulf Coast at East Coast Trades. So we see either one of those options in the short run.

We see either one of those options in the short run.

Either either working the traditional Alaskan trades or working additional the demand side.

Any additional demand in the Gulf Coast trades.

As to the likely short term utilization of these vessels.

A medium term sort of beyond 2027.

I think we feel that the home for all of these vessels will be in the Alaskan trade cause that new production comes on stream.

Our level of debt.

No. That's it that's a constant conversation for us are we.

Are we in our conversations we consider that our business is cyclical and that.

Market peaks or near market peaks, it's a good idea to be reducing debt and that has been a.

They pay an objective of ours over the last 18 months or so.

And as <expletive> alluded to we currently.

Our plan to allow a maturing debt facility used to just be paid off with surplus cash that we have.

I think that you'd noted one and a half times I think that that's a good number I think that we expect our.

Samuel H. Norton: Unknown Attendee, Climent Molins, Ryan Vaughan, Douglas Wheat, Climent Molins, a medium-term sort of beyond 2027. I think we feel that the home for all of these vessels will be in the Alaskan trades as that new production comes on stream, level of debt. That's a constant conversation for us.

We expect our net debt cash net of debt net of cash by the end of this year.

To be less than that probably it's less than $300 million of net debt and a N.

No.

And we've guided to a 10% to 15% increase in adjusted EBITDA against the 2023 levels. So.

Samuel H. Norton: We, we, in our conversations, consider that our business is cyclical and that, at market peaks or near market peaks, it's a good idea to be reducing debt, and that has been an objective of ours over the last 18 months or so. And as Dick alluded to, we currently plan to allow. Unknown Attendee, Climent Molins, Ryan Vaughan, Douglas Wheat, Unknown Attendee, Climent Molins, I think that you noted one and a half times. I think that that's a good number.

That would put it at less than one and a half times turn.

Nick do you want to answer the question on the $25 million.

Sure.

You know I think you know.

It is available currently.

We were.

Probably be somewhat.

Bosch is about using it right now.

But.

We still see this as an attractive use of cash to reduce the outstanding shares and to.

Returned money to shareholders.

Samuel H. Norton: I think that we expect our net debt cash net of student debt net of cash by the end of this year to be less than that, probably less than 300 million dollars of net debt, and and you know, We've guided to a 10 to 15% increase in adjusted EBITDA against the 2023 level, so that would put it at less than one and a half times term, um, If you want to answer the question on the $25 million. Sure. You know, I think, you know, it is available currently. We wouldn't probably be somewhat cautious about using it right now. But you know, we still see this as an attractive use of cash to reduce the outstanding shares and to return money to shareholders who have an interest in selling their shares. Transcribed by https://otter.ai Yeah, and there it's 25 million US dollars. Unusual Live. Unusual Live.

They have an interest in selling their shares.

So.

Yeah.

It's 25 million U S dollars.

Of unusual onshore.

Uh huh.

So it is fully available to us should we choose to use it.

Okay, Great alright, well, thanks for that and great job appreciate it.

Thanks, Brian.

Once again, if you would like to ask a question. Please press star and then one.

Our next question comes from.

Mom and <unk> from value Investor's, because you have with your question.

Good morning, Thank you for taking my questions.

I wanted to start by asking our potential opportunities in the C. O. Two space you received a grant from the department of energy to start to see the ability of developing on storage and transport hub.

Should we think about potential timings and secondly should the project be commercially feasible with the Wishy focus on transportation or also on the ownership and operation of the storage and terminal facilities.

Ryan Vaughan: So it is fully available to us should we choose to use it. Okay, great. All right. Well, thanks for that. Great job.

Yeah.

Ryan Vaughan: Thanks, Brian. Once again, if you would like to ask a question, please press star and then one. Our next question comes from Climent Molins from Value Investors. Please go ahead with your question. Good morning.

So.

I ask the timing.

A lot depends on on a lot of things, but we are pursuing this opportunity with the belief that current support for climate.

Climent Molins: Thank you for taking my questions. I wanted to start by asking about potential opportunities in the CO2 space. You received a grant from the Department of Energy to study the feasibility of developing a storage and transport hub. How should we think about potential timings? And, secondly, should the project be commercially feasible?

Climate change initiatives.

We will continue include.

Including a significant amount of funding that is being made available, but the current administration to be able to promote those solutions.

The grant is part of that program.

And we believe that.

Within the next two.

Samuel H. Norton: Would the OIG focus on transportation or also on the ownership and operation of the storage and terminal facilities? Um, so... As to timing, you know, a lot depends on a lot of things, but we are pursuing this opportunity with the belief that current, support for climate change. Climate change initiatives will continue, including a significant amount of funding that's being made available by the current administration to be able to promote those solutions. The grant is part of that program, and we believe that within the next 12 to 18 months, we should complete the study that's being funded by that grant. It would be nice,

12 to 18 months, we should complete the study that's being funded by that grant.

It would be.

It would be.

Success in my opinion if.

By the end of 2025.

We had a clear understanding of the scope.

Full front end engineering and design.

Hey.

A full development of the scope for going out for a construction.

Construction bids to be able to.

To assemble the various component parts of this value.

Samuel H. Norton: It would be a success, in my opinion, if, by the end of 2025, we had a clear understanding of the scope, a full front-end engineering and design, and a full development of the scope for going out for construction bids to be able to assemble the various component parts of this value chain that we're interested in investigating. Given the requirement that the vessels would need to be built in the United States, and given the chronic are our current understanding of the lead time for vessel deliveries following a contract award, I think a three-year forward delivery position is a good number to be working. I think that probably the other elements of the project could probably be completed within that three-year period.

<unk> chain that we're interested in investing.

Given the requirement there.

The vessels would need to be built in the United States.

And given the current.

Our current understanding of the lead time for a vessel deliveries following a contract award.

I think a three year forward delivery position as it is a good number to be working on.

I think that probably.

There are elements of the project could probably be completed within that three year period.

So I think there is cause to believe that.

Samuel H. Norton: So I think there is cause to believe that sometime during 2029, uh, probably the latter part of 2029, there might be revenue generating opportunities that would start from this project. So we're looking at a five-year, effectively at a five-year forward revenue generating opportunity, which I understand and most people do. Unknown Attendee, Climent Molins, Ryan Vaughan, Douglas Wheat, Unknown Attendee, Climent Molins, Should this project prove feasible, the opportunities for managing the capture of carbon at industrial facilities in Florida are extraordinary. In a 40 mile radius of Tampa itself, there are existing industrial emitters that emit 25 million tons a year of carbon dioxide. As indicated in my comments, our initial project is scaled to 2 million. An unrealistic scale, but there are opportunities we think to scale up from that if the concept proves feasible. And for the scope of the work.

Sometime during 2029.

Probably the latter part of 2029 there might be.

There might be a revenue generating that would start from this project. So we're looking at a five year effectively at a five year forward.

Our revenue generating opportunity.

I understand.

And most people.

That's sort of economic model such far out in the future.

Nonetheless, I would emphasize that.

Should.

This project proves feasible.

The opportunities for.

Managing the capture of carbon and industrial facilities in Florida, We think is extraordinary.

We then.

A 40 mile radius of Tampa itself there's.

Existing industrial emitters that.

In mid 25 million tons, a year of carbon dioxide.

As indicated in my comments, our initial project is.

Scale, two 2 million.

On per annum.

Scale.

But there are opportunities, we think to scale up from that if it gets the concept proves feasible.

And for the.

For the scope of the work clearly.

Samuel H. Norton: Clearly, we're interested in the maritime component of this, however, our current focus is also to participate in the shore-based storage and well liquefaction and storage facilities that would be shore-based and to participate as well potentially in the downstream storage and regasification of these facilities. So that's all for study and further consideration. But at this juncture, we're imagining a... Project Boundary that would extend from the outlet flange of a delivery pipe, probably from an emitter to the outlet flange of the delivery receiving facilities for delivery into pipelines for further delivery to sequestration sites in Pad 3. That's very helpful.

Clearly we're interested in the maritime component of this however, our current focus is also.

She.

Paid in the ER and the store base storage and.

Well, the liquefaction and storage facilities that would be short days.

And to.

And to participate.

As well potentially into downstream storage and regasification of these facilities.

So that's all.

But the study and further further consideration.

But at least at this juncture, we're we're imagining a.

Project boundary that would.

It would extend from the outlet flange of a delivery pipe probably from our emitter.

To the to the outlet flange of the.

Of the delivery receiving facilities for delivery into probably pipelines for further deliberate to sequestration sites in pad three.

That's very helpful. Thank you I also wanted to ask about recent contract renewals.

Samuel H. Norton: Thank you. I also wanted to ask about recent contract renewals. You mentioned new three-year contracts for Jones Act vessels are assessed at the mid-$80,000s, but could you provide some additional commentary on the delta between the new contracts for the Tampa, the Endurance, the Nikitsky, and the Alaskan Explorer relative to their previous employment? So. Unknown Attendee.

You mentioned, new three year contracts for Jones Act vessels are assessed the mid 80, thousands but could you provide some additional commentary on the delta between the new contracts for the Tampa the endurance than it geese, Ken the Alaskan explorer relative to their previous employment.

So.

Samuel H. Norton: Yes. OSG, we fixed one ATB during the first quarter of this year. Her increase from the previous rates is an order of magnitude of $20,000 per day, and for the Overseas Nikitsky and for the Overseas Tampa, the increase. So then the Kiske is an order of magnitude of $20,000 per day, and for the Tampa, $10,000.

Yes.

B.

Oh O S T a.

We picked one ATB during the during the first quarter of this year per increase.

From the previous rates is order of magnitude $20000 per day.

And for the.

Overseas and the kids ski.

And for the overseas Tampa or the increase.

And then the kids ski is order of magnitude of $20000 per day for the and for the Tampa $10000 per day.

Yeah.

Samuel H. Norton: Well, that's really helpful. Thank you. That's all from me. Thank you for taking my questions and congratulations for the quarter. I appreciate it.

Roughly.

That's really helpful. Thank you that's all for me. Thank you for taking my questions and congratulations for the quarter.

I appreciate it.

Climent Molins: And once again, if you would like to ask a question, please press star and one. Our next question comes from Josh Kehoe. Please go ahead with your question. Yeah, hi, Sam and Dick.

Yeah. Once again, if he would like to ask a question. Please press star and one.

Our next question comes from Josh Kehoe. Please go with your question.

Alright, great.

Josh Kehoe: Great quarter, great year, just to echo what Ryan said earlier. I just have two questions. The first one is just a quick one.

Great quarter, great year, or just to Echo what Ryan said earlier I used to have two questions. The first one just a quick one I previously Sam had mentioned potential interest in a newbuild ATB from one of your customers and I'm just wondering if there's any update on that.

Samuel H. Norton: Previously, Sam had mentioned potential interest in a new build ATB from one of your customers. I'm just wondering if there's any update on that. Um, nothing firm at the moment, although I think it would be accurate to characterize the current Gulf Coast, cross-gulf availability, capacity is quite tight, and I think that, Josh, you know this. One of the things that people are watching is whether the new carb regulations. California resulted in some of the equipment that has traditionally been moving on the west coast coming back to the gulf coast. I saw I saw today actually that the U.S. Coast Guard is choosing to not enforce some of those rules, and there's still an open question as to whether or not those car rules will be enforced. So I think people are watching that.

Hmm.

Nothing firm at the moment although.

I think it would be accurate to characterize the current Gulf coast.

Our cross Gulf.

The availability of.

Our capacity is being quite tight.

And I think that.

One of the thing Josh you know that's one of the things that people are watching is whether the new carb regulations.

In California, our reserve.

And some of the equipment that has traditionally been moving on the west coast coming back to the Gulf Coast.

I saw I saw today actually they are the U S. Coast Guard is is choosing to not enforce some of those and there is still an open question as to whether or not those carb rules will be enforced. So I think people are watching that on the assumption that nothing much changes on the west coast in other words that the existing.

Samuel H. Norton: On the assumption that nothing much changes on the West Coast, in other words, that the existing equipment that's operating on the West Coast will be allowed to continue to operate there, I think that might be the catalyst, one or more of the principal transporters of refined petroleum products in the Gulf Coast trade, to come with an RFQ for new ATB sometime during the first half of this year. Okay, yeah, great color on the carb regulations. I'm following those closely, too.

It's operating in the West Coast will.

Be allowed to continue to operate there I think that might be the catalyst.

One or more of the principle.

Transporters of refined petroleum product in the Gulf Coast trades.

Two to come with an RF SKU for for new ATB sometime during the first half of this year.

Okay, that's great color on the Carb regulations I'm following it as closely to so thank you on that Mike.

Josh Kehoe: So thank you for that. My second question is, I noticed it looked like for Q4, the international, the non-English speaking, Unknown Attendee, Climent Molins, Ryan Vaughan, Susan Allan, Alyson Osenenko, Unknown Attendee, Ballasting back from East Asia may have been part of that. But I was just curious if you've seen any interest in increasing the number of preference cargos, you know, out of Marad and whatnot to support the TSP fleet. That's the end of my questions.

First question is I noticed it looked like for Q4 that the international the non.

Jones Act tankers the T. S. P tankers that there was a little bit soft on the numbers compared to previous so I believe one of the tankers may have them.

Dallas thing back from East Asia, and part of that but I was just curious if you've seen any or heard any.

Interest in increasing number of preference cargoes out of merit and whatnot to support the TSP fleeting.

At the end of my questions and once again, great quarter, you hit your guidance spot on it.

Samuel H. Norton: And once again, great quarter. You get your guidance spot on. I love seeing what's been going on, so thank you. Yeah, I think I think the TSP preference cargo issue is an ongoing conversation. You know, the programs that are sponsored by the transportation department are built around commercial trades, plus a stipend, plus access to preference cargoes. I think there's a general view that the dry cargo operators in the Maritime Security Program are afforded a larger. Unknown Attendee, Climent Molins, Ryan Vaughan, Douglas Wheat, Unknown Attendee, Climent Molins, Ryan Vaughan, Unknown acronym availability has raised some questions amongst the operators as to how.

What's been going on so thank you.

Yeah, I think I think the TSP preference cargo issue is an ongoing conversation.

You know there is the programs that are sponsored by the transportation Department.

Are built around.

You know commercial trades plus a stipend.

Plus as tight band.

Plus access to preference cargoes.

I think there's a general view that the dry cargo operators in the Maritime security program.

Our afforded a a larger.

Value for the preference cargoes that is the case currently with the tanker trades.

And clearly the introduction of new U S flag tankers into what was.

Already a relatively.

Although oh.

Availability.

Has raised some questions amongst the operators as to.

Samuel H. Norton: If and if so, how to increase the preference cargo availability. I think there is a relative recognition of the need to be able to address this issue at TRANSCOM and at MARAD. I think that that conversation, over time, should result in some positive direction from the owner's point of view. I think it's really too early to comment.

Wow.

And if so how to increase the preference cargo availability.

I think there is relative.

The relative recognition of the need to be able to address this issue at transcon and admire Ed.

And I think that that conversation over time should result in some and some positive direction from from from the owners want to do.

No I think I think it's really too early to to comment.

Samuel H. Norton: You know what the level, let's go with the current level of preference cargo is going to be. Last year because of the Military Affiliate Command's chartering of six vessels to assist them with repositioning cargo out of Red Hill. Storage Facilities and, and Hawaii that created in the second half of the year a significant increase in what's called, and I consider that a preference progress to increase US flag utilization internationally. Most of those vessels, if not all of them, have now been redelivered. So, there is a question as to, you know, what this year is going to look like. I mentioned that, you know, the Red Sea is clearly an area of operation not favored by many operators. And so we've seen at least one cargo, which would normally have transited the Red Sea, moved from the Mediterranean, not on our ship but on one of the other U.S. flagships, moved from the Mediterranean load port to a Middle Eastern discharge port, not transiting the Suez Canal but going around the Cape.

You know what what what the level, let's call. It with the current level of preference carbon is going to be last year.

Because of the.

Military Sealift command chartering of six vessels to system with repositioning cargo out of the Red Hill.

Storage facilities in in Hawaii.

That created in the second half of the year of a significant increase in what I consider that a preference cargoes or increase in U S flag of utilization internationally.

Most of those vessels are if not all of them have now been redelivered.

So there was a question as to who know what's this year, we're going to look like.

I mentioned that you know the Red Sea is key.

Clearly a.

An area of operation not favored by many operators and so we've seen.

At least one cargo, which would normally have transferred to the Red Sea.

<unk> moved from the from the Mediterranean not on our ship it on one of the other U S flagships.

Moved from them from a Mediterranean load port to middle Eastern a discharge port.

Not transiting the Suez canal, but going around the Cape of good hope that obviously adds ton mile demand and days under preference cargoes. So that's a positive from the honest perspective, that's a positive development.

Samuel H. Norton: We'd hope that obviously adds ton-mile demand and days on their preferred cargo. So that's a positive development; from the owner's perspective, that's a positive development. I think it's yet to be seen how things play out this year, but, you know, we certainly saw a greater number of days under preference cargo during those years than we had in prior years. You know, it's a question to me right now whether we revert back to the sort of level of MSC cargoes that we did in 2020 and 21, or whether we see a sustained level of increased preference cargoes resulting from the various geopolitical events around the world and a step-up of commitment to moving cargo on US flag vessels from Transcom.

I think I think it's yet to be seen how things play out this year, but.

We are we in I think 2022 and 2023.

We certainly saw a greater.

Number of days under preference cargo during those two years than we had in prior years.

You know what.

It seemed to me right now, whether we revert back to the sort of level of M. A C cargoes that we did in 2021.

Or whether we see a sustained level of increased preference cargoes, resulting from the various geopolitical.

Events around the world and and and a step up of <unk>.

They are intent to moving a cargo on U S flag vessels from transcon, so yet to be seen.

Samuel H. Norton: So, yet to be, and ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Sam Norton for any closing remarks. Thank you, Jamie. And thank you again, all for listening in. We look forward to continuing to provide you with more information as and when we can. And to what we consider will be good quarters in the month ahead.

And ladies and gentlemen, with that we will be concluding today's question and answer session.

Like to turn the floor back over to Sam Norton for any closing remarks.

Thank you Jamie and thank you again all for listening in.

Look forward to continuing to provide you with more information as and when we can and to what we consider will be good.

Samuel H. Norton: Thanks again for listening. Have a good day. Ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for joining us. You may now disconnect your line.

Good quarters in the month.

Okay.

Thanks again for listening have a good day.

Ladies and gentlemen, with that we'll conclude today's conference call. We thank you for joining you may now disconnect your lines.