Q2 2024 International Seaways Inc Earnings Call

Good morning, everyone, and welcome to the International Seaway Second Quarter 2024 Results Conference Call.

Operator: 24 Results conference call. My name is Carla, and I will be coordinating your call today. During the presentation, you will have the opportunity to ask questions by pressing star followed by one on your telephone keypad. And if you change your mind, please press star followed by two. I will now hand you over to your host, James Small, CAO and General Counsel, to begin. James, please go ahead. Thank you. Good morning.

Speaker Change: I will now hand you over to your host, James Small, CAO and General Counsel to begin. James, please go ahead.

James Small: Thank you. Good morning, everyone, and welcome to International Seaways' earnings call for the second quarter of 2024. Before we begin, I would like to start off by advising everyone with us on the cost of the following. Those statements may address, without limitation, the following topics: Outlooks for the Crude and Product Tanker Markets and Changes in Trading Patterns, forecasts of world and regional economic activity and of the demand for and production of oil and petroleum products. The effects of ongoing and threatened conflicts around the globe.

James Small: Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call and in the accompanying presentation, management may make forward-looking statements regarding the company or the industry in which it operates. Those statements may address, without limitation, the following topics.

James Small: Company Strategy and Business Prospects. Expectations regarding revenues and expenses, including vessel, charter hire, and G&A expenses. Estimated future bookings, TCE rates, and capital expenditures, projected scheduled dry dock and off higher days, Purchases and Sales of Vessels, Construction of New-Build Vessels, the company's consideration of strategic alternatives, anticipated and recent financing transactions and plans to issue dividends, the company's relationships with its stakeholders, and the company's ability to achieve its financing and other objectives, and other economic, political, and regulatory developments globally.

James Small: The Company's Strategy and Business Prospects

James Small: the company's relationships with its stakeholders.

James Small: The company's ability to achieve its financing and other objectives.

James Small: Any such forward-looking statements take into account assumptions made by management based on various factors, including management's experience and perception of historical trends, current conditions, and other factors that management believes are appropriate to consider in the circumstances. Overlooking statements are subject to risks, uncertainties, and assumptions. Many of these are beyond the company's control, which could cause actual results to differ materially from those applied or expressed by the state. Factors, risks, and uncertainties that could cause International Seaways' actual results to differ from expectations include those described in our annual report on Form 10-K for 2023, our quarterly report on Form 10-Q for the second quarter of 2024, and in other filings that we have made, or in the future may make, with the U.S. Securities and Exchange Commission.

James Small: Any such forward-looking statements take into account assumptions made by management based on various factors, including management's experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances.

James Small: Overlooking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control, which could cause actual results to differ materially from those implied or expressed by the statements.

James Small: Factors, risks, and uncertainties that could cause International Seaways actual results to differ from expectations.

James Small: Include those described in our annual report on Form 10-K for 2023, our quarterly report on Form 10-Q for the second quarter of 2024, and in other filings that we have made, or in the future may make, with the U.S. Securities and Exchange Commission.

James Small: Now, let me turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois, thank you.

Lois Zabrocky: Thank you very much. Good morning, everyone.

Lois Zabrocky: Thank you for joining International Seaways on its earnings call for the second quarter of 2024, on slide four of the presentation, which you can find in our investor relations section of our website. Results for the second quarter represent our eighth consecutive quarter of adjusted net income over $100 million. Net income was $145 million, or $2.91 per share. Excluding the gains on vessel sales and other one-off items, adjusted net income for the second quarter was $118 million, or $2.37 per diluted share, and adjusted EBITDA was $167 million.

James Small: Net income was $145 million, or $2.91 per share.

James Small: excluding the gains on vessel sales and other one-off items.

James Small: Adjusted net income for the second quarter was $118 million, or $2.37 per diluted share. And adjusted EBITDA was $167 million.

Speaker Change: On the lower left section of the slide, we were busy with Fleet Renewal in the second quarter, taking delivery of six eco-MRs while selling three aged 15 years or more. This lowered our average MR age by one year.

Lois Zabrocky: We were busy with fleet renewal in the second quarter, taking delivery of six EcoMR while selling three aged 15 years or more. This lowered our average MRH by one year. One of the three vessel sales closed in mid-July. We funded the acquisition of the Eco-MRs with the proceeds from vessel sales along with a $50 million revolver draw and the issuance of 624,000 shares in cash on hand. On the upper right-hand side of the slide.

Speaker Change: One of the three vessel sails closed in mid-July.

Speaker Change: We funded the acquisition of the Eco-MRs with the proceeds from vessel sales, along with a $50 million revolver draw, and the issuance of 624,000 shares in cash on hand.

Lois Zabrocky: We continue to benefit from our balance. At the end of the second quarter, we had $682 million in total liquidity, which included $506 million of undrawn receivables. We increased our revolver capacity by nearly, consolidated our term loans and converted them into a revolving credit facility. We now save about $80 million per year in mandatory repayment, which also raises our free cash flow generation and lowers our spot break-even rate to under $13,400 per day.

Speaker Change: On the upper right-hand side of the slide.

Speaker Change: We continue to benefit from our balance sheet. At the end of the second quarter, we had $682 million in total liquidity, which included $506 million of undrawn revolving.

Lois Zabrocky: As a result of these accomplishments, we continue to share our upside with our shareholders. Today, we declared a combined dividend of $1.50 per share, representing 64% of adjusted net income, and, as shown in the lower right-hand chart, another quarter of a double-digit yield for our shareholders. Over the last 12 months, Seaways' dividend yield has been 12% of our average market cap. We continue to prioritize our balanced capital allocation, positioning the company for the future with opportunistic renewal and enhancing our balance sheet while sharing in our upcycle with a double-digit dividend yield to our shareholders.

Speaker Change: As a result of these accomplishments,

Speaker Change: We continue to share our upside with our shareholders. Today, we declared a combined dividend of $1.50 per share, representing 64% of adjusted net income.

Speaker Change: Slide five.

Lois Zabrocky: The black dash represents a neutral impact and a red down arrow meaning the topic is not good for tanker demand. A good portion of this growth is regionally in Asia, and the results could indirectly impact our tanker demand. With a greater percentage of the fleet in this vintage, the industry needs more ships to cover the increasing seaboard demand.

Speaker Change: The black dash, representing a neutral impact, and a red down arrow mean the topic is not good for tanker demand.

Speaker Change: ONLY in HIGHLIGHTS

Speaker Change: We expect oil demand to continue to grow at a rate above its 30-year average growth.

Speaker Change: It's a heavy election year worldwide and results could indirectly impact our tanker demand.

Speaker Change: While Seaways has benefited by geopolitical events that have caused disruption to both crude and product tanker trades, it is important to recognize that these events have not defined tanker earnings, but merely bolstered a fundamentally strong market.

Speaker Change: The graphs at the bottom of the slide show that the growth in oil demand and seaboard transportation of crude oil and refined products looks to remain healthy over the next few years.

Speaker Change: However, shifts on order, as we show at the bottom left hand of the page, are not enough to replace a fleet that is aging significantly.

Speaker Change: The average age of the tanker fleet today is over 13 years old and is likely to get older with so few new building deliveries.

Speaker Change: With a greater percentage of the fleet in this vintage, the industry needs more ships to cover the increasing seaborne demand.

Speaker Change: Overall, this sets the stage for a continued strong upcycle over the next few years, and seaways will capitalize on these market conditions.

Speaker Change: You can count on us to utilize our balanced capital allocation approach to renew our clean and adapt to industry conditions with a strong balance sheet while returning to shareholders.

Speaker Change: I'll now turn it over to our CFO Jeff Pribor to provide the financial review. Jeff?

Jeff Pribor: On slide 8, net income for the second quarter was $145 million, or $2.91 per diluted share.

Speaker Change: This includes gains on vessel sales and a provision for the settlement of our UK multi-employer pension funds.

Speaker Change: On the upper right chart, a just-even dollar in the second quarter of 2024 was $167,000.

Lois Zabrocky: Our expense guidance for the second quarter fell largely within the range of expectation, with $4 million in charter hire and $1 million in G&A. The linering business contributed about $6 million to EVADOT's second quarter and brought its year-to-date EVADOT contract. That's $24 million in debt, borrowed $50 million on our new $500 million office credit facility funding. We have a strong financial position detailed by the balance sheet on the left-hand side of the screen, or less than 100 basis points above today's soap.

Speaker Change: Our expense guidance for the second quarter fell largely within the range of expectations, but I'd like to highlight certain aspects within our ecosystem.

Speaker Change: As outlined in the appendix, our actual on-fire time was 559 days.

Speaker Change: About half of the 200 day difference relates to docking that we move forward into the second quarter ahead of both of these vessels delivering into time charters early in the third quarter.

Speaker Change: Another 60 days of additional off-fire time relates to repair work, which was generally one-off in nature, to maintain safe and reliable operations.

Speaker Change: Our line of business continues to prosper with nearly $14 million of revenue in a quarter.

Speaker Change: Combined with about $3 million in vessel expenses, $4 million in charter hire, and $1 million in G&A, the lightering business contributed about $6 million in EBITDA in the second quarter, and brought its year-to-date EBITDA contribution to just about $13 million.

Speaker Change: who began the quarter with a total of $626 million.

Speaker Change: We first had 102 C7 ionics at Just Seabed Dock in the second quarter.

Speaker Change: less $24 million in debt service, less our dry dock and capital expenditures of $16 million, and then add open capital benefits largely due to the collection of receivables of approximately $28 million.

Speaker Change: We also sold two vessels during the quarter for $48 million and borrowed $50 million on our new $500 million revolving credit facility in funding for the MLR.

Speaker Change: Lastly, you pay $1.75 per share or $87 million dividends during the quarter.

Speaker Change: These components led to ending liquidity of $682 million, comprised of $176 million in cash and short-term investment, and $506 million in non-profit volume and capacity.

Speaker Change: Moving now to slide 10, we have a strong financial position detailed by the balance sheet on the left hand side of the page.

Speaker Change: Cash and Liquidity remains strong at $682 million.

Speaker Change: Specials on the books, at cost, are approximately $2 million.

Speaker Change: versus current market values of over $3.7 billion.

Speaker Change: And with $720 million in gross debt at June 30th, this equates to a net loan to value of quite around 14%.

Speaker Change: Our debt at June 30th was 78% hedge to our fixed rates, leading to an all-in weighted average interest rate of about 625 basis points.

Speaker Change: or less than 100 basis points about today's soap.

Lois Zabrocky: In the table on the bottom right-hand side of the slide, our debt balances as of June 30th reflect the amend and extend of the $750 million dollars, statewide so far, but it's less the effect of nearly 2,800 per day time travel. We also included in the appendix a quarterly expected pot fire for the rest of the year. The CapEx goes on for about 20 minutes. That concludes my remarks, and I'd now like to turn the call back to Lois for closing comments.

Speaker Change: In the table on the bottom right hand side of the slide, our debt balances as of June 30th reflect the amend and extend of the $750 million dollar facility, which we now call the $500 million dollar RCA.

Speaker Change: As well as mentioned before, this facility has no mandatory debris.

Speaker Change: generating a savings of about 80 million dollars per year.

Speaker Change: It also increases our free cash flow generation by the same $80 million per year, since mandatory repayments are included as part of debt service calculating free cash flow.

Speaker Change: You have 516 and an undrawing of office.

Speaker Change: Our nearest maturity in the portfolio isn't until the next decade.

Speaker Change: We continue to lower our breakeven costs and we share in the upside with double-dissipation.

Speaker Change: On the last slide that I'll cover...

Speaker Change: Slide 11 reflects our forward-looking guidance and spoke-to-date GCE applied with our spot-cast for human rights.

Speaker Change: Starting with GCE fixtures for the third quarter of 2024, we can see some seasonality returning to the tag markets.

Speaker Change: While I will advise you, the actual GCEU report at our next earnings call may be different.

Speaker Change: Today.

Speaker Change: composed of a suite wide breakeven of about $16,000 per day.

Speaker Change: plus the effect of nearly 2,800...

Speaker Change: On the bottom left hand side of the chart.

Speaker Change: We provide some updated guidance for our expenses in the third quarter, as well as our estimates for 2024.

Speaker Change: which is significantly lower than previously guided due to changes in our dry dock schedule and the CAPEX schedule down to 24.

Speaker Change: I don't plan to read each item line by line, but encourage you to use these for modeling purposes.

Speaker Change: That concludes my remarks and I'd now like to turn the call back to Wallace for closing comments.

Wellis: Thank you very much, Jeff.

Wellis: On slide 12, we have provided you with Seaways Investment Highlights.

Wellis: Summarizing briefly.

Wellis: Our total shareholder return is nearly 500% since our inception, representing a 23% compounded annual return.

Wellis: Over the last 12 months, our combined dividend of $5.82 per share represents a 12% yield on our average share price over that time.

Lois Zabrocky: We continue to make strides to keep our fleet age below the global tanker average for growth opportunities and to supplement our scale in each class by operating and leading pools. Lastly, our spot tankers need only earn $13,400 per day to break even in the next 12 months.

Wellis: in what we see as a sweet spot for tanker investments and returns.

Wellis: We've invested in a range of tanker classes, casting a wider net.

Wellis: for growth opportunities and supplementing our scale in each class by operating and leading pools.

Wellis: We keep our balance sheet fortified for any down cycle.

Speaker Change: and we have 34 tankers that are unencumbered.

Speaker Change: Lastly, our spot tankers need only earn $13,400 per day to break even in the next 12 months.

Speaker Change: Thank you. And with that said, Operator, we'd like to open the lines up for questions.

Speaker Change: Thank you.

Lois Zabrocky: I appreciate it. Thank you, guys.

Unnamed Speaker: 200 days more than we had provided in the last quarterly.

Speaker Change: Timing and a little bit of positioning of vessels or preparing vessels. It was just sort of opportunistic.

Speaker Change: Sorry, it was just opportunity, I think it was. Yes, absolutely.

Speaker Change: I was just going to supplement what Jeff was saying, you know, one of the things we're, you know, focusing on on those AfriMaxxes is getting them into a position for that West Coast trade, and those in particular were a couple of vessels that, you know, we were preparing with extra dry docking.

Lois: Gotcha. Sherif, Lois, you said the AFRMAC is there?

Lois: Yes, you know, we are positioned now with that pool that we put together with Ultra Chile and have those vessels out there and we will try to take advantage of that TMX trade as that develops.

Speaker Change: Gotcha. Now, that actually leads to my second question. It seems like the Aframax in particular have been below sort of market levels. And I appreciate that they're a little bit older maybe than average, but it was part of that and is part of that even in the third quarter simply a function of...

Speaker Change: you know the shifting around of the fleet and maybe some of that dry docking and going forward we should expect those to be a little bit more similar to the market rates would you think?

Speaker Change: so we could take advantage of one, hopefully the TMX trade, but two, just the relationships that have been built over years with those joint venture pools. What that meant though for the first half of the year is

Speaker Change: Do you think there's much of a chance that we begin to see

Speaker Change: definitely something that we watch constantly and when we look at you know the supply side and you know take the V's where you have you know either none or one delivery and single digits next year so you know you're looking at very little new buildings coming in the market

Speaker Change: I kind of expect, believe it or not, for, you know, in two years, today the total tanker fleet in the world is over 13 years.

Speaker Change: I think in two years it's going to be over 15 years, and then, you know, we're only in the mid-innings, we believe, in this very structurally strong cycle, and

Speaker Change: You know, unless those owners can't trade at all, I don't expect them to leave the fleet, but then, you know, eventually, that will come home to Rootbeats.

Speaker Change: And another point is, you know, that the older vessels just don't have a lot of water.

Speaker Change: Sure, that's a good point. All right, I appreciate it. Thank you guys.

Unnamed Speaker: I was just going to supplement what it just said.

Unnamed Speaker: Yes, you know, we are positioned now with

Jeff Pribor: Good morning. Hi Jeff.

Jeff Pribor: of the summer pullbacks here in rates, and then as that relates to the share price,

Jeff Pribor: Could you look towards the $50 million repurchase program here to take advantage of the, it seems like an attractive discount to NAP? How are you thinking about, I guess, the

Jeff Pribor: Yeah, hi Chris, so Look, we think it's important to have a share repurchase program in place And we not long ago refreshed the amount of our last repurchase so we do have a solid $59 in place

Speaker Change: And as always, we will look at that opportunistically. But, you know, we stuck with the dividend. What we are striving for with that is a measure of transparency.

Jeff Pribor: statistics for people to wrap their minds around or look up, you know, in whatever source they want, and consistency for straight quarters of it.

Speaker Change: I think that's a measure of consistency and solid yield always mentioned in her remarks that it's still double digits 12 percent last 12 months so we think that's

Unnamed Speaker: He kind of answered the question for us, and that's exactly right.

Speaker Change: Good capital allocation, but to answer your question again, with the share repurchase program in place and our low leverage

Speaker Change: And a lot of liquidity. Yeah, we will monitor the share prices. That's certainly an option available to us going forward.

Speaker Change: Relative to history, looking at your expectations for OPEX and the inflation going forward, do you think you can maintain the cash break even where it is today and what would be the main drivers do you think of upward pressure on that number from where we are today?

Speaker Change: guidance and you know for the remainder of the year and we look to be able to hold that line.

Speaker Change: Got it. Sounds good, Lois. Thank you for that. I'll turn it over.

Speaker Change: Our next question comes from Omar Nokta from Jeffreys.

Omar Nokta: Thank you. Hey guys, good morning.

Omar Nokta: A couple questions from my side. Just wanted to ask, we're talking about the tanker market and rates are clearly softer at the moment, seasonally it looks like.

Speaker Change: Both crude and product are lower than where they were in the first half.

Speaker Change: And just wanted to get your sense, you know, as we move through the final here, four or five months of the year, how do you see both crude and product faring? I guess one, perhaps an easy question is, you know, do you see a rise in rates in the coming months in both segments? And then two, do you think there's one that's going to lead the other?

Speaker Change: You put a lot in there, Omar. How are you? It's lovely. So, you know, as we, you know, look at the year on creative product, and definitely we've seen seasonality creep into our markets here in the third quarter.

Speaker Change: Nonetheless, you know, while it doesn't look like there will likely be more than two million barrels a day of oil demand growth for the year, there certainly will be more than a million barrels per day and maybe around a million and a half in oil demand growth. And that's the fundamentals of kind of, you know, where we start.

Speaker Change: The markets have been pretty consistent, you know, this year when we look at it. I mean, I would say

Speaker Change: Crude may have a little more, you know, products. I mean, look at those Q3 numbers. You know, you're looking at 35 a day for what has been booked on MRs, right, that we

Speaker Change: put in our charts. So that's really quite strong. And then I'll have Derek jump in there on, there still is an expectation on the second half for demand increases.

Derek: Thanks Omar. Thanks Lois. I think you said it great, right? We've seen a return to seasonality that we haven't really seen since

Derek: the sort of COVID recovery in the tanker markets and the Russian-Ukrainian invasion. So some seasonality is not necessarily a bad thing for the markets, right? We see a softer summer in June and July , but you know, Omar, we've already seen increased OPEC plus

Omar Nokta: crude exports for August , you know, almost 2 million barrels a day more than say compared to July . So that's sort of, that's sort of

Omar Nokta: The push of crude supply should help the crude markets a great deal into the fourth quarter. Couple that with, you know, some of the earlier comments on the order book, right? There's a V to deliver this year. There's five V's to deliver next year.

Speaker Change: Mid-30s for Q3, books so far, that's historically very, very strong for the AMRs. We don't see anything softening that.

Speaker Change: Um, per se, but I think that the crew will have to lead sort of the, uh, the increase.

Derek: because they've got the most room to go up.

Speaker Change: That's gotta be a tanker.

Speaker Change: Yeah, uh, the, uh, just Lois, you just mentioned in the appendix, um, I just wanted to ask, you know, the guidance on, say, the OPEX.

Speaker Change: I'm not sure if I'm looking at it the right way, or calculating it correctly, but it feels like perhaps maybe the running costs on the ships are going to be maybe $500 a day lower, if not maybe $1,000. Does that sound right?

Speaker Change: at least in relation to say the first half. Do you think this is a new baseline or should we just kind of think about the average for the full year as more indicative?

Speaker Change: I'd like to have Tom come back, you know, and kind of maybe look at, you know, the first half, the second half, but basically, we look at pretty stable OPEX, you know, overall, and it isn't as if you're going to have

Omar Nokta: Thank you, Omar.

Omar Nokta: And our next question comes from Sherif Elmaghrabi from BTIG.

Unnamed Speaker: to get this new pool off the ground. Got it. Okay, that's very helpful. I appreciate that.

Sherif Elmaghrabi: Hi, good morning. Thanks for taking my question. In your prepared remark, you highlighted your liquidity position, which is approaching about $700 million by the end of August .

Sherif Elmaghrabi: That's a lot of dry powder, and looking beyond the next two years when yards look backed up, I'm wondering if you see long-term growth opportunities on the crude side.

Speaker Change: the product side, or if you would consider something entirely different. You know, I think you've already covered sharing purchases, but something different given where asset prices for both are.

Speaker Change: Thank you, Sherif. So, I'll flip it to Jeff in a moment, you know, what we would say is that, you know, we took delivery of three new Vs in 2023, dual-fuel LNG on those, we are building six of these LR1s, and, you know, we've been

Jeff Pribor: selling MRs that are older and bringing in the more modern ones so we don't feel like there's a have to here.

Speaker Change: Optionality. So, you know, we're happy with the low levels of debt we've got at 14% above the value. If you want sub-debt, a lot of debt we have left is so-called high-quality debt that we would want to pay off, plus, you know, it provides a greater return on the equity.

Speaker Change: around 100,000 barrels a day of

Speaker Change: Derek, any more flavor on that?

Speaker Change: Hey, that's great color. Thanks, everyone.

Speaker Change: As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. And our next question comes from Liam Burke from B Riley.

Unnamed Speaker: And then lastly, for me, if I could, just the bigger picture, you know, we talked about the aging fleet and there's the dark fleet and all of this kind of thing. Although it seems like there's been a little bit more cracking down on that. Do you think there's much of a chance that we begin to see some of these older assets actually leaving the trade and being scrapped even in a high market? Or is it probably just market-related, other than maybe ones and twos? Just curious if you think that we're beginning to get to maybe a tipping point with respect to the age of the assets in the broader fleet.

Unnamed Speaker: definitely something that we watch constantly, and when we look at the supply side, and you know take the fees where you have either none or one delivery and single digits next year, so you know you're looking at very few new buildings coming into the market. You know, unless those owners can't trade at all, I don't expect them to leave the fleet. But then, you know, eventually, that will come home to Rooney.

Unnamed Speaker: And another point is, you know, that the older vessels...

Speaker Change: Good morning, Lois. Good morning, Jeff.

Leah Burke: Good morning.

Speaker Change: You know, Liam, we've got a total of 15 vessels on time charter. And, you know, we look, try to look for something that's going to lock in more than, you know, you're in very strong spot markets, right? So we look for a multi-year period.

Speaker Change: And when Derek can lock it in above long-term averages, then we go ahead and do that. We have about 20% of the fleet.

Liam: Fair enough, thank you. And on the MRs, you've got, you still have a few older ones in the fleet. How are you balancing historically elevated rates with potentially

Speaker Change: divesting some of these older MRs and lowering the age of the fleet.

Speaker Change: Yeah, Liam, so, you know, if you look at, you know, we've been steadily, uh, we call it pruning, you know, selling, you know, uh, four or five a year. You know, now you saw us bring in some more, um, modern assets. And then every one of these vessels that's in the spot market over the last year has brought in, uh, $7 million over its, um, break-even level.

Speaker Change: So it's pretty, you know, it's pretty stunning, you know, all around on the MR, so, you know, the earnings potential is very strong, you know, we divest some of the older, we bring in more modern.

Speaker Change: You know, we feel pretty steady on it.

Liam: Great. Thanks, Lois.

Jeff: Hey, good morning, everybody, and thanks for taking my questions. Good morning, Jeff. Yeah, morning, Lois. Jeff, maybe this is a question for you, but just looking at the summer pullbacks here in rates and then as that relates to the share price, could you look towards the $50 million repurchase program here to take advantage of what seems like an attractive discount to NAV? How are you thinking about, I guess, the

Lois: Thank you, Liam.

Jeff: It's a statistic for people to wrap their minds around or look up, you know, in whatever sort that they want. And consistency, four straight quarters of it. Good capital allocation, but with our, to answer your question again, with the share purchase program in place and our low leverage and a lot of liquidity, yeah, we will monitor the share prices. That's certainly an option available to us going forward.

Unnamed Speaker: All right. Thank you for that.

Unnamed Speaker: My next question is just around the cash breakeven here, which is at very low levels relative to history. Looking at your expectations for OPEX and inflation going forward, do you think you can maintain the cash breakeven where it is today? And what would be the main drivers, do you think, of upward pressure on that number from where we are today?

Lois Zabrocky: Got it. Sounds good, Lois. Thank you for that. I'll turn it over.

Speaker Change: And that was our final question. So I'll hand back over to the CEO , Lois Zabrocky, for any final remarks.

Operator: Our next question comes from Omar Nokta of Jeffrey.

Lois Zabrocky: You put a lot in there, Omar. How are you?

Lois Zabrocky: So, you know, as we look at the year on crude and product, and definitely, we've seen seasonality creep into our markets here in the third quarter.

Lois Zabrocky: Thanks Omar and thanks Lois. I think you said it great right; we've seen a return to seasonality that we haven't really skied The Covid Recovery in the Tanker markets and the Russian-Ukrainian invasion. So some seasonality is not necessarily a bad thing for the markets. We see a softer summer in June and July. But Omar, we've already seen increased OPEC clusters.

Lois Zabrocky: Got it. Thank you. That's a helpful color set. So a couple million barrels more here in August versus July should start to tighten the market. And I guess presumably, then that means

Lois Zabrocky: Well, they've got, if we look at the V's, Omar, they've got sort of the most room to come up, right? I mean, the MR's, 38 Q1, 35 Q2, mid-30s for Q3, books so far. That's historically very, very strong for the MR's. We don't see anything softening that.

Lois Zabrocky: That's going to be a tank. Yeah, the one that just Lois you just mentioned in the appendix.

Unnamed Speaker: I just wanted to ask, you know, the guidance on Theta Op X. I'm not sure if I'm looking at it the right way or calculating it correctly, but it feels like perhaps the running costs on the ships are going to be maybe $500 a day lower, if not maybe $1000. Does that sound right, at least in relation to say the first half? Do you think this is a new baseline, or should we just kind of think about the average for the full year as more indicative?

Lois Zabrocky: We just want to thank everyone for joining us for, you know, really, eighth quarter of really strong returns to shareholders. And we're looking forward to, you know, getting back together next quarter. So thank you very much. Enjoy the summer.

Unnamed Speaker: You know, nobody's taken a decrease, right? But we are looking at stable off the back. So we'll come back just to bridge that gap, you know, to get into those numbers a little bit, if that's OK with you.

Unnamed Speaker: Oh, totally fair. I appreciate it. Thank you. I'll pass it over.

Unnamed Speaker: Hi, good morning. Thanks for taking my question. As in your prepared remark, you highlighted your liquidity position, which is approaching about $700 million by the end of August.

Unnamed Speaker: a good deal of imported crude into Dangotay as the facility was getting up and running. How long we expect that to continue is always debatable, being Nigeria's... Clean Product Trades in the Atlantic Basin, and I think we still need a little bit of time to tell.

Unnamed Speaker: Good morning, Lois. Good morning, Jeff. Good morning. Lois, you added two more MRs to the time charter market. Are you seeing an increased step-up in demand from shippers to secure tonnage on a longer-term basis?

Unnamed Speaker: So it's pretty, you know, it's pretty stunning, you know, all around on the MR. So, you know, the earnings potential is very strong. We divest some of the older ones, we bring in more modern ones.

Operator: And that was our final question. So I'll hand back over to the CEO, Lois Zabrocky, for any final remarks.

Operator: That does conclude today's conference call. Thank you for joining us. You may now disconnect from the call.

Speaker Change: This concludes today's conference call. Thank you for joining. You may now disconnect from the call.