Q1 2026 DHT Holdings Inc Earnings Call
Operator: Good day and thank you for standing by. Welcome to the Q1 2026 DHT Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, CFO Laila Halvorsen. Please go ahead.
Speaker #1: After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone.
Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded.
Speaker #1: I would now like to hand the conference over to your speaker today, CFO Laila Halvorsen, please go ahead.
Laila Halvorsen: Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings first quarter 2026 Earnings Call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available on our website, dhtankers.com, until 13 May. In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exhibit to our Form 6-K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature.
Laila Halvorsen: Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings first quarter 2026 Earnings Call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available on our website, dhtankers.com, until 13 May. In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exhibit to our Form 6-K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature.
Speaker #2: Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' first quarter 2026 earnings call. I am joined by DHT's president and CEO, Svein Marksnes Harfjeld.
Speaker #2: As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, DHTankers.com.
Speaker #2: Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available on our website, DHTankers.com, until May 13th.
Speaker #2: In addition, our earnings press release will be available on our website and on the SSE Adcare system as an exhibit to our Form 6K.
Speaker #2: As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events as detailed in our financial report.
Laila Halvorsen: These forward-looking statements are based on our current expectations about future events as detailed in our financial report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic report available on our website and on the SEC EDGAR system, including the risk factors in these reports for more information regarding risks that we face. As usual, we will start the presentation with some financial highlights. In Q1 2026, we achieved revenues on TCE basis of $157 million and adjusted EBITDA of $133 million. Net income came in at $164.5 million, equal to $1.02 per share.
Laila Halvorsen: These forward-looking statements are based on our current expectations about future events as detailed in our financial report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic report available on our website and on the SEC EDGAR system, including the risk factors in these reports for more information regarding risks that we face. As usual, we will start the presentation with some financial highlights. In Q1 2026, we achieved revenues on TCE basis of $157 million and adjusted EBITDA of $133 million. Net income came in at $164.5 million, equal to $1.02 per share.
Speaker #2: Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic report available on our website and on the SSE Adcare system including the risk factors in these reports for more information regarding risks that we face.
Speaker #2: As usual, we will start the presentation with some financial highlights. In the first quarter of 2026, we achieved revenues on TCE basis of 157 million, and adjusted EBITDA of 133 million.
Speaker #2: Net income came in at 164.5 million, equal to $1.02 per share. After adjusting for the 60 million gain on sale of DHT Europe and DHT China, and a non-cash fair value gain related to interest rate derivatives of 1.1 million, we had ordinary net income for the quarter of 103.4 million equal to 64 cents per share.
Laila Halvorsen: After adjusting for the $60 million gain on sale of DHT Europe and DHT China and a non-cash fair value gain related to interest rate derivatives of $1.1 million, we had ordinary net income for the quarter of $103.4 million equal to $0.64 per share. Vessel operating expenses for the quarter were $19.1 million, which included approximately $2 million in non-recurring costs related to spares and consumables. G&A for the quarter was $5 million. In terms of market performance, our vessels trading in the spot market earned an average of $91,700 per day, while the vessels on time charters achieved $61,300 per day. The average combined TCE for the fleet in the quarter was $78,800 per day.
Laila Halvorsen: After adjusting for the $60 million gain on sale of DHT Europe and DHT China and a non-cash fair value gain related to interest rate derivatives of $1.1 million, we had ordinary net income for the quarter of $103.4 million equal to $0.64 per share. Vessel operating expenses for the quarter were $19.1 million, which included approximately $2 million in non-recurring costs related to spares and consumables. G&A for the quarter was $5 million. In terms of market performance, our vessels trading in the spot market earned an average of $91,700 per day, while the vessels on time charters achieved $61,300 per day. The average combined TCE for the fleet in the quarter was $78,800 per day.
Speaker #2: Lesser operating expenses for the quarter were 19.1 million, which included approximately $2 million in non-recurring costs related to spares and consumables. And G&A for the quarter was $5 million.
Speaker #2: In terms of market performance, our vessels traded in the stock market, earned an average of 91,700 dollars per day, while vessels on time charters achieved 61,300 dollars per day.
Speaker #2: The average combined TCE for the fleet in the quarter was 78,800 dollars per day. We continue to maintain a very strong balance sheet supported by conservative leverage and robust liquidity.
Laila Halvorsen: We continue to maintain a very strong balance sheet supported by conservative leverage and robust liquidity. At the end of Q1, total liquidity was $350 million, consisting of $126 million in cash and $230 million available under our two Revolving Credit Facilities. Following the repayment of $56 million in April under the Nordea Revolving Credit Facility, current availability under our two RCFs stands at $285.8 million. At quarter end, financial leverage was 16.8% based on market values for the fleet, and net debt was $16 and a half million per vessel, which is well below estimated residual values. Looking at our cash flow, we began the quarter with $79 million in cash. From operations, we generated $133 million in EBITDA. Debt repayment and cash interest totaled $20 million.
Laila Halvorsen: We continue to maintain a very strong balance sheet supported by conservative leverage and robust liquidity. At the end of Q1, total liquidity was $350 million, consisting of $126 million in cash and $230 million available under our two Revolving Credit Facilities. Following the repayment of $56 million in April under the Nordea Revolving Credit Facility, current availability under our two RCFs stands at $285.8 million. At quarter end, financial leverage was 16.8% based on market values for the fleet, and net debt was $16 and a half million per vessel, which is well below estimated residual values. Looking at our cash flow, we began the quarter with $79 million in cash. From operations, we generated $133 million in EBITDA. Debt repayment and cash interest totaled $20 million.
Speaker #2: At the end of the first quarter, total liquidity was 350. Consisting of 126 million in cash and 230 million available under our two revolving credit facilities.
Speaker #2: Following the repayment of 56 million in April under the Nordea revolving credit facility, current availability under our two RCFs stands at 285.8 million. At quarter end, financial leverage was 16.8% based on market values for the fleet, and net debt was 16.5 million per vessel, which is well below estimated residual values.
Speaker #2: Looking at our cash flow, we began the quarter with 79 million in cash. From operations, we generated 133 million in EBITDA. Debt repayment and cash interest totaled 20 million.
Laila Halvorsen: Proceeds from sale of DHT Europe and DHT China amounted to $101 million, and $66 million was distributed to shareholders through a cash dividend. $2.8 million related to investments in vessels, and $160 million was deployed towards investments in vessels under construction, which included delivery of our first three newbuildings. We also issued $91.5 million in long-term debt. Changes in working capital and other items amounted to $30 million, and the quarter ended with $126 million in cash. With that, I will turn the call over to Svein to go through the quarterly highlights.
Laila Halvorsen: Proceeds from sale of DHT Europe and DHT China amounted to $101 million, and $66 million was distributed to shareholders through a cash dividend. $2.8 million related to investments in vessels, and $160 million was deployed towards investments in vessels under construction, which included delivery of our first three newbuildings. We also issued $91.5 million in long-term debt. Changes in working capital and other items amounted to $30 million, and the quarter ended with $126 million in cash. With that, I will turn the call over to Svein to go through the quarterly highlights.
Speaker #2: Proceeds from sale of DHT Europe and DHT China amounted to 101 million. And 66 million was distributed to shareholders through a cash dividend. 2.8 million related to investments in vessels and 160 million was deployed towards investments in vessels under construction, which included delivery of our first three new buildings.
Speaker #2: We also issued 91.5 million in long-term debt. Changes in working capital and other items amounted to 30 million, and the quarter ended with 126 million in cash.
Speaker #2: With that, I will turn the call over to Svein to go through the quarterly highlights.
Svein Moxnes Harfjeld: Thank you, Laila. We are very pleased with the well-timed delivery of the first three of our four newbuildings in the Antilope-class. The DHT Antelope delivered in January, the DHT Addax, and DHT Gazelle in March. The fourth vessel, DHT Impala, is expected to deliver this summer. This represents fleet renewal in conjunction with planned divestment of our three oldest ships built in 2007, two of which have been delivered. The last of the three, DHT Bauhinia, was sold for USD 51 and a half million in the quarter and is expected to deliver in June, July. We expect a capital gain of USD 34.2 million and cash proceeds of USD 50 and a half million from this last sale.
Svein Moxnes Harfjeld: Thank you, Laila. We are very pleased with the well-timed delivery of the first three of our four newbuildings in the Antilope-class. The DHT Antelope delivered in January, the DHT Addax, and DHT Gazelle in March. The fourth vessel, DHT Impala, is expected to deliver this summer. This represents fleet renewal in conjunction with planned divestment of our three oldest ships built in 2007, two of which have been delivered. The last of the three, DHT Bauhinia, was sold for USD 51 and a half million in the quarter and is expected to deliver in June, July. We expect a capital gain of USD 34.2 million and cash proceeds of USD 50 and a half million from this last sale.
Speaker #3: Thank you, Laila. We are very pleased with the well-timed delivery of the first three of our four new buildings in the Antelope class. The DHT Antelope delivered in January; the DHT Audax and DHT Gazelle in March.
Speaker #3: The fourth vessel, DHT Impala, is expected to deliver this summer. This represents fleet renewal in conjunction with planned divestment of our three oldest ships built in 2007, two of which have been delivered.
Speaker #3: The last of the three, DHT Bahinia, was sold for 51.5 million in the quarter and is expected to deliver in June-July. We expect the capital gain of 34.2 million and cash proceeds of 50.5 million from these last sales.
Svein Moxnes Harfjeld: Our planned increase of market exposure for the H1 of this year had the objective not only to benefit from the spot market, but also to balance this with selective new term employment. It has been a busy period with numerous contracts secured. The DHT Harrier, built 2016, with their existing time charter due to expire, extended the contract for 5 years from January 2026 at $47,500. It has 2 optional years priced at $49,000 and $50,000. We secured 3 new one-year time charters. DHT Opal, built 2012, for 1 year at $90,000. DHT Taiga, built 2012, for 1 year at $94,000. DHT Redwood, built 2011, for 1 year at $105,000. One of our new buildings delivered into a 5 to 7 year time charter with a key customer.
Svein Moxnes Harfjeld: Our planned increase of market exposure for the H1 of this year had the objective not only to benefit from the spot market, but also to balance this with selective new term employment. It has been a busy period with numerous contracts secured. The DHT Harrier, built 2016, with their existing time charter due to expire, extended the contract for 5 years from January 2026 at $47,500. It has 2 optional years priced at $49,000 and $50,000. We secured 3 new one-year time charters. DHT Opal, built 2012, for 1 year at $90,000. DHT Taiga, built 2012, for 1 year at $94,000. DHT Redwood, built 2011, for 1 year at $105,000. One of our new buildings delivered into a 5 to 7 year time charter with a key customer.
Speaker #3: Our planned increase of market exposure for the first half of this year had the objective not only to benefit from the spot market, but also to balance this with selective new-term employment.
Speaker #3: It has been a busy period with numerous contracts secured. First, the DHT Harrier built 2016 with their existing time charter due to expire extended the contract for five years from January 26 at 47.5 thousand.
Speaker #3: It has two optional years priced at 49 and 50 thousand. We then secured three new one-year time charters, DHT Opal built 2012 for one year at 90 thousand, DHT Taiga built 2012 for one year at 94 thousand, DHT Redwood built 2011 for one year at 105 thousand.
Speaker #3: Further, one of our new buildings delivered into a five-to-seven-year time charter with a key customer. Subsequent to the quarter end, we secured two additional one-year time charters, for DHT Sunderbanks built 2012 and DHT Amazon built 2011 with average rate of 109 thousand dollars per day.
Svein Moxnes Harfjeld: Subsequent to the quarter end, we secured two additional one-year time charters for DHT Sundarbans, built 2012, and DHT Amazon, built 2011, with average rate of $109,000 per day. As such, our 5 oldest ships are then out on one-year time charter contracts averaging $101,000 per day. Back to you, Laila Halvorsen.
Svein Moxnes Harfjeld: Subsequent to the quarter end, we secured two additional one-year time charters for DHT Sundarbans, built 2012, and DHT Amazon, built 2011, with average rate of $109,000 per day. As such, our 5 oldest ships are then out on one-year time charter contracts averaging $101,000 per day. Back to you, Laila Halvorsen.
Speaker #3: As such, our five oldest ships are then out on one-year time charter contracts averaging $101,000 per day. Back to you, Laila.
Laila Halvorsen: Thank you. In line with our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, the board has approved a dividend of $0.64 per share for Q1 2026. This marks our 65th consecutive quarterly cash dividend. The shares will trade ex dividend on 21 May, and the dividend will be paid on 28 May to shareholders of record as of 21 May. Here we also present our estimated P&L and cash break-even levels for the last three quarters of 2026. Our P&L breakeven for the period is estimated at $29,700 per day, while our cash break even is estimated at $23,400 per day, which reflects all true cash costs.
Laila Halvorsen: Thank you. In line with our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, the board has approved a dividend of $0.64 per share for Q1 2026. This marks our 65th consecutive quarterly cash dividend. The shares will trade ex dividend on 21 May, and the dividend will be paid on 28 May to shareholders of record as of 21 May. Here we also present our estimated P&L and cash break-even levels for the last three quarters of 2026. Our P&L breakeven for the period is estimated at $29,700 per day, while our cash break even is estimated at $23,400 per day, which reflects all true cash costs.
Speaker #2: Thank you. In line with our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, the board has approved a dividend of 64 cents per share for the first quarter of 2026.
Speaker #2: This marks our 65th consecutive quarterly cash dividend. The shares will trade ex-dividend on May 21st and the dividend will be paid on May 28th to shareholders of Record as of May 21st.
Speaker #2: Here we also present our estimated P&L and cash break-even levels for the last three quarters of 2026. Our PLM break-even for the period is estimated at 29,700 per day.
Speaker #2: While our cash break-even is estimated at 23,400 per day, which reflects all through cash costs. The difference between our P&L and cash break-even is estimated at 6,300 dollars per day for the last three quarters.
Laila Halvorsen: The difference between our P&L and cash breakeven is estimated at $6,300 per day for the last three quarters. This discretionary cash flow will remain within the company and be allocated for general corporate purposes. On this slide, we present an update on bookings to date for Q2 2026. We expect 997 times charter dates covered for Q2 at an average rate of $73,900 per day. This rate includes profit sharing for the month of April and the base rate only for the months of May and June for contracts with profit-sharing structures. We also anticipate 1,025 spot days for the quarter, of which 88% have already been booked at an average rate of $168,300 per day.
Laila Halvorsen: The difference between our P&L and cash breakeven is estimated at $6,300 per day for the last three quarters. This discretionary cash flow will remain within the company and be allocated for general corporate purposes. On this slide, we present an update on bookings to date for Q2 2026. We expect 997 times charter dates covered for Q2 at an average rate of $73,900 per day. This rate includes profit sharing for the month of April and the base rate only for the months of May and June for contracts with profit-sharing structures. We also anticipate 1,025 spot days for the quarter, of which 88% have already been booked at an average rate of $168,300 per day.
Speaker #2: This discretionary cash flow will remain within the company and be allocated for general corporate purposes. On this slide, we present an update on the scheme to date for the second quarter of 2026.
Speaker #2: We expect 997 time charter days covered for the second quarter, at an average rate of $73,900 per day. This rate includes profit sharing for the month of April and the base rate only for the months of May and June for contracts with profit sharing structures.
Speaker #2: We also anticipate 1,025 spot days for the quarter, of which 88% have already been booked at an average rate of $168,300 per day.
Laila Halvorsen: The spot P&L breakeven for the quarter is estimated to be less than zero, as the time charter earnings are expected to exceed forecasted costs. Turning to our 2026 dry dock schedule. As shown on this slide, we have 7 vessels scheduled for dry docking during 2026. DHT Lion completed its second special survey and dry dock in Q1, and this was completed on time and within expectations. Looking at the remainder of the program, 4 vessels, DHT Osprey, DHT Panther, DHT Puma, and DHT Harrier, are scheduled for their second special survey and dry dock. In addition, DHT Amazon and DHT Redwood are scheduled for their third special survey and dry dock.
Laila Halvorsen: The spot P&L breakeven for the quarter is estimated to be less than zero, as the time charter earnings are expected to exceed forecasted costs. Turning to our 2026 dry dock schedule. As shown on this slide, we have 7 vessels scheduled for dry docking during 2026. DHT Lion completed its second special survey and dry dock in Q1, and this was completed on time and within expectations. Looking at the remainder of the program, 4 vessels, DHT Osprey, DHT Panther, DHT Puma, and DHT Harrier, are scheduled for their second special survey and dry dock. In addition, DHT Amazon and DHT Redwood are scheduled for their third special survey and dry dock.
Speaker #2: The spot P&L break-even for the quarter is estimated to be less than zero, as the time charter earnings are expected to exceed forecasted costs.
Speaker #2: Turning to our 2026 drydock schedule. As shown on this slide, we have seven vessels scheduled for drydocking during 2026. DHT Lion completed its second special survey and drydock in the first quarter, and this was completed on time and within expectations.
Speaker #2: Looking at the remainder of the program, four vessels—DHT Osprey, DHT Panther, DHT Puma, and DHT Harrier—are scheduled for their second special survey and drydock.
Speaker #2: In addition, DHT Amazon and DHT Redwood are scheduled for their third special survey and drydock. Overall, the 2026 Drydock schedule is well-planned, fully incorporated into our operating and capital expenditure outlook, and does not change our underlying view on fleet availability or cash flow generation.
Laila Halvorsen: Overall, the 2026 dry dock schedule is well planned, fully incorporated into our operating and capital expenditure outlook, and does not change our underlying view on fleet availability or cash flow generation. Importantly, this reflects our continued focus on maintaining a high quality fleet while preserving operational reliability and asset value over the long term. I now turn the call back to Svein.
Laila Halvorsen: Overall, the 2026 dry dock schedule is well planned, fully incorporated into our operating and capital expenditure outlook, and does not change our underlying view on fleet availability or cash flow generation. Importantly, this reflects our continued focus on maintaining a high quality fleet while preserving operational reliability and asset value over the long term. I now turn the call back to Svein.
Speaker #2: Importantly, this reflects our continued focus on maintaining a high-quality fleet while preserving operational reliability and asset value over the long term. And then I'll turn the call back to Svein.
Svein Moxnes Harfjeld: Thank you, Laila Halvorsen. We will now spend some time on what we see as the current market pillars, the future catalysts, and our strategic positioning. We will here start with the current market pillars. The VLCC market is, in our view, influenced by the following primary drivers. First, the basic supply demand fundamentals continue to support freight rates, as evidenced during H2 2025 when the freight market strengthened without any special events taking place. Second, we experienced strategic fleet consolidation with the market structure having been strengthened by significant consolidation activity from a private aggregator during Q1 2026. This is a historical first, and the fleet demographics and fragmented ownership made this truly possible. We don't see this effort as a fly by night and expect it to positively influence our market going forward.
Svein Moxnes Harfjeld: Thank you, Laila Halvorsen. We will now spend some time on what we see as the current market pillars, the future catalysts, and our strategic positioning. We will here start with the current market pillars. The VLCC market is, in our view, influenced by the following primary drivers. First, the basic supply demand fundamentals continue to support freight rates, as evidenced during H2 2025 when the freight market strengthened without any special events taking place. Second, we experienced strategic fleet consolidation with the market structure having been strengthened by significant consolidation activity from a private aggregator during Q1 2026. This is a historical first, and the fleet demographics and fragmented ownership made this truly possible. We don't see this effort as a fly by night and expect it to positively influence our market going forward.
Speaker #3: Thank you, Laila. We will now spend some time on what we see as the current market pillars: the future catalysts and our strategic start with the current market pillars.
Speaker #3: The VCC market is, in our view, influenced by the following primary drivers: first, the basic supply-demand fundamentals continue to support freight rates, as evidenced during the second half of 2025, when the freight market strengthened without any special events taking place.
Speaker #3: Second, we experienced strategic fleet consolidation with a market structure having been strengthened by significant consolidation activity from a private aggregator during the first quarter of 2026.
Speaker #3: This is a historical first, and the fleet demographics and fragmented ownership made this truly possible. We don't see this effort as a fly-by-night and expect it to positively influence our market going forward.
Svein Moxnes Harfjeld: Risk premiums driven by regional hostilities involving Iran have introduced significant risk premiums on certain trade routes, resulting in substantial earnings differences between the various trading routes. This is not a fundamental driver, but has alerted the entire industry to how vulnerable it is to curve balls. Near-term loss in crude oil available for transportation from the Middle East Gulf is a risk. We believe, however, that this could be compensated by reduced vessel productivity through, 1, increased transportation distances as refiners source barrels from further away. 2, approximately 10% of the VLCC fleet being tied up either with cargo and waiting to exit the Gulf or waiting to load from Saudi Arabia's western export facility. For the sake of good order, we have no ships inside the Gulf when the conflict broke out. We have no ships inside currently, and our fleet is fully operational.
Svein Moxnes Harfjeld: Risk premiums driven by regional hostilities involving Iran have introduced significant risk premiums on certain trade routes, resulting in substantial earnings differences between the various trading routes. This is not a fundamental driver, but has alerted the entire industry to how vulnerable it is to curve balls. Near-term loss in crude oil available for transportation from the Middle East Gulf is a risk. We believe, however, that this could be compensated by reduced vessel productivity through, 1, increased transportation distances as refiners source barrels from further away. 2, approximately 10% of the VLCC fleet being tied up either with cargo and waiting to exit the Gulf or waiting to load from Saudi Arabia's western export facility. For the sake of good order, we have no ships inside the Gulf when the conflict broke out. We have no ships inside currently, and our fleet is fully operational.
Speaker #3: Third, risk premiums driven by regional hostilities involving Iran have introduced significant risk premiums on certain trade routes, resulting in substantial earnings differences between the various trading routes.
Speaker #3: This is not a fundamental driver but has alerted the entire industry to how vulnerable it is to curveballs. Fourth, near-term loss in crude oil available for transportation from the Middle East Gulf is a risk.
Speaker #3: We believe, however, that this could be compensated by reduced vessel productivity through, one, increased transportation distances as refiners source barrels from further away, and two, approximately 10% of the VCC fleet being tied up either with cargo and waiting to exit the Gulf, or waiting to load from Saudi Arabia's western export facility.
Speaker #3: For the sake of good order, we have no ships inside the Gulf when the conflict broke out. We have no ships inside currently and our fleet is fully operational.
Svein Moxnes Harfjeld: Now let's discuss the future catalysts. We believe several emerging trends warrant specific attention, as they are expected to provide longer term tailwinds for the large tanker market and our operations. Sanction relief and trade normalization. Assuming conflicts will be resolved, potential sanctions relief on Venezuelan and Iranian crude exports would likely shift volumes from the shadow fleet to compliant operators, thereby expanding the addressable market for our vessels. Fleet modernization and demolition. We anticipate that the shift toward compliant trade will deprive the aging non-compliant shadow fleet of employment, likely accelerating the retirement of substandard tonnage and further tightening global vessel supply. These two themes in combination could shrink the working fleet by 10, maybe 15% of capacity. Energy security and inventory replenishment. A heightened focus on national energy security could trigger long-term crude oil inventory building, supporting transportation demand beyond immediate consumption needs.
Svein Moxnes Harfjeld: Now let's discuss the future catalysts. We believe several emerging trends warrant specific attention, as they are expected to provide longer term tailwinds for the large tanker market and our operations. Sanction relief and trade normalization. Assuming conflicts will be resolved, potential sanctions relief on Venezuelan and Iranian crude exports would likely shift volumes from the shadow fleet to compliant operators, thereby expanding the addressable market for our vessels. Fleet modernization and demolition. We anticipate that the shift toward compliant trade will deprive the aging non-compliant shadow fleet of employment, likely accelerating the retirement of substandard tonnage and further tightening global vessel supply. These two themes in combination could shrink the working fleet by 10, maybe 15% of capacity. Energy security and inventory replenishment. A heightened focus on national energy security could trigger long-term crude oil inventory building, supporting transportation demand beyond immediate consumption needs.
Speaker #3: Now let's discuss the future of catalysts. We believe several emerging trends warrant specific attention. As they are expected to provide longer-term tailwinds for the large tanker market and our operations.
Speaker #3: Sanction relief and trade normalization. Assuming conflicts will be resolved, potential sanctions relief on Venezuelan and Iranian crude exports would likely shift volumes from the shadow fleet to compliant operators, thereby expanding the addressable market for our vessels.
Speaker #3: Fleet modernization and demolition. We expect we anticipate that the shift toward compliant trade will deprive the aging non-compliant shadow fleet of employment. Likely accelerating the retirement of substandard tonnage and further tightening global vessel supply.
Speaker #3: These two themes in combination could shrink the working fleet by 10, maybe 15% of capacity. Energy security and inventory replenishment. A heightened focus on national energy security could trigger long-term crude oil inventory building.
Speaker #3: Supporting transportation demand beyond immediate consumption needs—this theme will likely change customer behavior from just-in-time to just-in-case. And finally, what is DHT's strategic positioning?
Svein Moxnes Harfjeld: Finally, what is DHT's strategic positioning? Consistent with the outlook presented in our previous reports, we observe that end users are increasingly seeking to secure vessel capacity in response to tightening market conditions. As you well have noted, we positioned our fleet for H1 of the year to seize on this development, capturing spot market rewards whilst selectively securing term employment to reduce volatility and enhance earnings visibility. The delivery of our four VLCC new buildings this year is proving well-timed, with one vessel already commencing a long-term charter with a key customer. Our disciplined capital allocation policy remains a priority, ensuring that the positive market developments and our positioning will reward shareholders through quarterly cash dividends equal to 100% of ordinary net income.
Svein Moxnes Harfjeld: Finally, what is DHT's strategic positioning? Consistent with the outlook presented in our previous reports, we observe that end users are increasingly seeking to secure vessel capacity in response to tightening market conditions. As you well have noted, we positioned our fleet for H1 of the year to seize on this development, capturing spot market rewards whilst selectively securing term employment to reduce volatility and enhance earnings visibility. The delivery of our four VLCC new buildings this year is proving well-timed, with one vessel already commencing a long-term charter with a key customer. Our disciplined capital allocation policy remains a priority, ensuring that the positive market developments and our positioning will reward shareholders through quarterly cash dividends equal to 100% of ordinary net income.
Speaker #3: Consistent with the outlook presented in our previous reports, we observe that end users are increasingly seeking to secure vessel capacity in response to tightening market conditions.
Speaker #3: As you will have noted, we positioned our fleet for the first half of the year to cease on this development. Capturing spot market rewards while selectively securing term employment to reduce volatility and enhance earnings visibility.
Speaker #3: The delivery of our four VCC new buildings this year is proving well-timed, with one vessel already commencing a long-term charter with a key customer.
Speaker #3: Our disciplined capital allocation policy remains a priority, ensuring that a positive market development and our positioning will reward shareholders through quarterly cash dividends equal to 100% of ordinary net income.
Svein Moxnes Harfjeld: With that, we open up for questions. Operator.
Svein Moxnes Harfjeld: With that, we open up for questions. Operator.
Speaker #3: And with that, we open up for questions. Operator?
Operator: Thank you. Our first question comes from the line of Jon Chappell from Evercore.
Operator: Thank you. Our first question comes from the line of Jon Chappell from Evercore.
Speaker #4: Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced.
Speaker #4: To withdraw your question, please press star one and one again. Our first question comes from the line of John Chappelle from Evercore. Please go ahead.
Speaker #4: Your line is open.
Jon Chappell: Thank you. Good morning or good afternoon. I am starting with that last slide on strategic options, quick two-parter. Obviously signed a lot of contracts at rates that no one could blame you for. Could you just help with the Gazelle rate? It's the one that wasn't disclosed in the press release and can help with transparency. Two, I know you like to keep some spot market exposure. It keeps you in the conversation, helps you understand flows. Even though the rates are still somewhat elevated and generating fantastic returns, do you think for the most part, you'd like to keep the remainder of the fleet in the spot so you stay in the information flow?
Jonathan Chappell: Thank you. Good morning or good afternoon. I am starting with that last slide on strategic options, quick two-parter. Obviously signed a lot of contracts at rates that no one could blame you for. Could you just help with the Gazelle rate? It's the one that wasn't disclosed in the press release and can help with transparency. Two, I know you like to keep some spot market exposure. It keeps you in the conversation, helps you understand flows. Even though the rates are still somewhat elevated and generating fantastic returns, do you think for the most part, you'd like to keep the remainder of the fleet in the spot so you stay in the information flow?
Speaker #5: Thank you. Good morning or good afternoon. Svein, starting with that last slide on strategic options, quick two-parter: obviously, you signed a lot of contracts at rates that no one could blame you for.
Speaker #5: Could you just help with the Gazelle rate? It's the one that wasn't disclosed in the press release and can help with transparency. And two, I know you like to keep some spot market exposure.
Speaker #5: It keeps you in the conversation, helps you understand flows. Even though the rates are still somewhat elevated and generating fantastic returns, do you think for the most part you'd like to keep the remainder of the fleet in the spot so you stay in the information flow?
Svein Moxnes Harfjeld: Thank you, Jon. As for your first question on the rate on Gazelle, that is a explicit agreement with the customer not to disclose the rate. We are not at liberty to do that. I apologize for that. Secondly, for this year, we are now sort of closing in on 50% cover on time charter. Keep in mind that two of those ships have base rate with profit-sharing elements on top with no ceilings, so they are, you know, partly taking part in the spot market. When it comes to adding a term business, we are quite content for now, and we might revisit this sort of later on.
Svein Moxnes Harfjeld: Thank you, Jon. As for your first question on the rate on Gazelle, that is a explicit agreement with the customer not to disclose the rate. We are not at liberty to do that. I apologize for that. Secondly, for this year, we are now sort of closing in on 50% cover on time charter. Keep in mind that two of those ships have base rate with profit-sharing elements on top with no ceilings, so they are, you know, partly taking part in the spot market. When it comes to adding a term business, we are quite content for now, and we might revisit this sort of later on.
Speaker #6: Thank you, John. As for your first question on the rate on Gazelle, that is explicit agreement with the customer not to disclose the rate.
Speaker #6: So we are not at liberty to do that. I apologize for that. Secondly, for this year, we are now sort of closing in on 50% cover on time charter.
Speaker #6: Keep in mind that two of those ships have a base rate with profit sharing elements on top, with no ceilings. So they are partly taking part in the spot market.
Speaker #6: When it comes to adding term business, we are quite content for now. And we might revisit this sort of later on. But as of this moment, we are very satisfied with the general positioning of the company and the opportunities we see ahead.
Svein Moxnes Harfjeld: As of this moment, we are very satisfied with the general positioning of the company and the opportunities we see ahead.
Svein Moxnes Harfjeld: As of this moment, we are very satisfied with the general positioning of the company and the opportunities we see ahead.
Jon Chappell: Okay, great. For a follow-up, just kind of understanding the operational challenges and opportunities since your last conference call. Obviously, we're seeing these headline rates that are eye-watering, but they're very inconsistent, depending on where the source is. When we see a headline rate, do we assume that that's something that DHT can achieve? Do we have to take into account maybe some theoretical elements of that? Is there more waiting time or ballast time as you're moving the fleet around to areas that are maybe safer for the crew and also, you know, taking into account bunker fuels? Just trying to understand when we see a number, is that a number that you can really get or is there a lot of different elements in it that maybe it's not quite the headline rate?
Jonathan Chappell: Okay, great. For a follow-up, just kind of understanding the operational challenges and opportunities since your last conference call. Obviously, we're seeing these headline rates that are eye-watering, but they're very inconsistent, depending on where the source is. When we see a headline rate, do we assume that that's something that DHT can achieve? Do we have to take into account maybe some theoretical elements of that? Is there more waiting time or ballast time as you're moving the fleet around to areas that are maybe safer for the crew and also, you know, taking into account bunker fuels? Just trying to understand when we see a number, is that a number that you can really get or is there a lot of different elements in it that maybe it's not quite the headline rate?
Speaker #5: Okay. Great. And then for a follow-up, just kind of understanding the operational challenges and opportunities since your last conference call, obviously we're seeing these headline rates that are eye-watering, but they're very inconsistent.
Speaker #5: Depending on where the source is. When we see a headline rate, do we assume that that's something that DHT can achieve? Or do we have to take into account maybe some theoretical elements of that?
Speaker #5: Is there more waiting time or ballast time as you're moving the fleet around to areas that are maybe safer for the crew? And also, taking into account bunker fuels, just trying to understand when we see a number, is that a number that you can really get, or is there a lot of different elements in it that maybe it's not quite the headline rate?
Svein Moxnes Harfjeld: Yeah. The most referred to index and route has been what is called TD3C, which is cargo loaded in Saudi Arabia and discharged in China.
Svein Moxnes Harfjeld: Yeah. The most referred to index and route has been what is called TD3C, which is cargo loaded in Saudi Arabia and discharged in China.
Speaker #6: Yep. So the most referred to index and route has been what is called TD3C. Which is cargo loaded in Saudi Arabia and discharged in China.
Svein Moxnes Harfjeld: Obviously, that route has not really been operational in general terms of the market, with some exceptions, obviously, as many ship owners were not entertaining to enter the Persian Gulf. It has been produced the relative pricing on two other sort of load ports in the region. One being Yanbu, which is in the Red Sea, i.e., the western load ports of Saudi Arabia. Secondly, Fujairah, which is outside of the Strait of Hormuz, which is in the UAE. Those pricings have been, you know, below the TD3C, but certainly related to that as there's many similarities to the trade. I think it's fair to say that there's a limited number of ships that have captured what the TD3C index has referred in the market.
Svein Moxnes Harfjeld: Obviously, that route has not really been operational in general terms of the market, with some exceptions, obviously, as many ship owners were not entertaining to enter the Persian Gulf. It has been produced the relative pricing on two other sort of load ports in the region. One being Yanbu, which is in the Red Sea, i.e., the western load ports of Saudi Arabia. Secondly, Fujairah, which is outside of the Strait of Hormuz, which is in the UAE. Those pricings have been, you know, below the TD3C, but certainly related to that as there's many similarities to the trade. I think it's fair to say that there's a limited number of ships that have captured what the TD3C index has referred in the market.
Speaker #6: Obviously, that route has not really been operational in general terms of the market, with some exceptions, obviously. As many shipowners were not entertaining to enter the person golf.
Speaker #6: So it has been produced a derivative pricing on two other sort of load ports in the region. One being Yandu, which is in the Red Sea, i.e., the western load ports of Saudi Arabia.
Speaker #6: And secondly, Fujairah, which is an outside of the Strait of Hormuz, which is in the UAE. So those pricings have been below the TD3C, but certainly related to that, as there's many similarities to the trade.
Speaker #6: But I think it's fair to say that there's a limited number of ships that have captured what the TD3C index has referred in the market.
Svein Moxnes Harfjeld: That's just the nature of how the game has been played the last few weeks. On our part, we managed to keep our fleet efficient without any operational disruptions. We have not taken on any excessive ballast or cost or expenditure to keep our fleet going. We're trying to, as good as we can, to be sort of ahead of the game a bit. We've done a fair amount of business from the Atlantic, where we also have a big COA with export of oil from the Atlantic basin to Asia. That has occupied also a few ships. On our part, we haven't really been impaired on our earnings, if I can say it that way.
Svein Moxnes Harfjeld: That's just the nature of how the game has been played the last few weeks. On our part, we managed to keep our fleet efficient without any operational disruptions. We have not taken on any excessive ballast or cost or expenditure to keep our fleet going. We're trying to, as good as we can, to be sort of ahead of the game a bit. We've done a fair amount of business from the Atlantic, where we also have a big COA with export of oil from the Atlantic basin to Asia. That has occupied also a few ships. On our part, we haven't really been impaired on our earnings, if I can say it that way.
Speaker #6: That's just the nature of how the game has been played the last few weeks. So on our part, we managed to keep our fleet efficient without any operational disruptions.
Speaker #6: We have not taken on any excessive ballast or cost or expenditure to keep our fleet going. We're trying to, as good as we can, to be sort of ahead of the game a bit.
Speaker #6: You don't a fair amount of business from the Atlantic. Where we also have a big COA with export of oil from the Atlantic Basin to Asia.
Speaker #6: So that has sort of occupied also a few ships. So on our part, we haven't really been impaired on our earnings if I can say it that way.
Jon Chappell: Okay. That's a great update. Thanks, Svein Moxnes Harfjeld.
Jonathan Chappell: Okay. That's a great update. Thanks, Svein Moxnes Harfjeld.
Speaker #5: Okay. That's a great update. Thanks, Svein.
Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Sherif Elmaghrabi from BTIG. Please go ahead. Your line is open.
Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Sherif Elmaghrabi from BTIG. Please go ahead. Your line is open.
Speaker #4: Thank you. We'll now move on to our next question. Our next question comes from the line of Sharif El Maghrabi from BTIG. Please go ahead.
Speaker #4: Your line is open.
Sherif Elmaghrabi: Hi, good afternoon. Thanks for taking my questions. Starting with the fleet, your fleet, the sale of your oldest vessels lines up pretty nicely with the delivery of new builds this year. Looking ahead, I'm curious how you're thinking about continued fleet growth. Seems like there's a fair amount of on-the-water opportunities, maybe that tonnage skews older.
Sherif Elmaghrabi: Hi, good afternoon. Thanks for taking my questions. Starting with the fleet, your fleet, the sale of your oldest vessels lines up pretty nicely with the delivery of new builds this year. Looking ahead, I'm curious how you're thinking about continued fleet growth. Seems like there's a fair amount of on-the-water opportunities, maybe that tonnage skews older.
Speaker #7: Hi. Good afternoon. Thanks for taking my questions. Starting with the fleet, your fleet, the sale of your oldest vessels lines up pretty nicely with the delivery of new builds this year.
Speaker #7: So, looking ahead, I'm curious how you're thinking about continued fleet growth. It seems like there's a fair amount of on-the-water opportunities, but maybe that tonnage skews older.
Svein Moxnes Harfjeld: Yeah. We are very happy with the fleet that we have, and there are no ships in our fleet that are planned for divestments. We have a balance sheet that is sort of able to entertain fleet growth. We are always on the lookout for opportunities. Right now, that's been very hard to find, frankly. I wouldn't say because there's been other competing buyers for ships, but the competition has been a very healthy freight market. Potential sellers have opted to retain their ships in their operation to earn money simply. As I said, we would like to continue to build the DHT.
Svein Moxnes Harfjeld: Yeah. We are very happy with the fleet that we have, and there are no ships in our fleet that are planned for divestments. We have a balance sheet that is sort of able to entertain fleet growth. We are always on the lookout for opportunities. Right now, that's been very hard to find, frankly. I wouldn't say because there's been other competing buyers for ships, but the competition has been a very healthy freight market. Potential sellers have opted to retain their ships in their operation to earn money simply. As I said, we would like to continue to build the DHT.
Speaker #6: Yeah. So, we are very happy with the fleet that we have. And there are no ships in our fleet that are planned for divestments.
Speaker #6: We have a balance sheet that is sort of able to entertain fleet growth. So we're always on the lookout for opportunities. Right now, that's been very hard to find, frankly.
Speaker #6: I wouldn't say because there's been other competing buyers, for ships. But the competition has been a very healthy freight market. So potential sellers have opted to retain their ships in their operation to earn money, simply.
Speaker #6: But as I said, we would like to continue to build the DHT. So at some point, hopefully, there will be opportunities for us to invest in additional ships for the fleet.
Svein Moxnes Harfjeld: At some point, hopefully, there will be opportunities for us to invest in additional ships for the fleet.
Svein Moxnes Harfjeld: At some point, hopefully, there will be opportunities for us to invest in additional ships for the fleet.
Sherif Elmaghrabi: Got it. Thanks. Second question. You talked about the risk premium from the war in Iran. Obviously, hopefully that ends sooner rather than later. Whenever it does, how quickly could we see activity return to the Gulf? More specifically, obviously, charters want you to go back as soon as possible. What are some of the puts and takes there that you have to consider, things like, you know, mariner risk or insurance coverage, stuff like that?
Sherif Elmaghrabi: Got it. Thanks. Second question. You talked about the risk premium from the war in Iran. Obviously, hopefully that ends sooner rather than later. Whenever it does, how quickly could we see activity return to the Gulf? More specifically, obviously, charters want you to go back as soon as possible. What are some of the puts and takes there that you have to consider, things like, you know, mariner risk or insurance coverage, stuff like that?
Speaker #5: Got it. Thanks. And then second question, you talked about the risk premium from the war in Iran. Obviously, that hopefully that ends sooner rather than later.
Speaker #5: But whenever it does, how quickly could we see activity return to the Gulf? And more specifically, obviously, charters want you to go back as soon as possible.
Speaker #5: But what are some of the puts and takes there that you have to consider things like mariner risk or insurance coverage, stuff like that?
Svein Moxnes Harfjeld: I think, you know, we need to see a high level of credibility to a solution to the conflict, and that we can expect whatever agreements that will be put in place will have a, you know, they can last. In all fairness, the news flow, you know, over these last 2 weeks have been rather volatile with, you know, good news, bad news, almost trading each other every second day. We cannot sort of react, I think, to good news one day and assume we can all sort of enter in the second day and the market sort of goes back to normal. I don't think we would be alone in consider the situation like that. Credibility to sort of a solution has to be in place.
Svein Moxnes Harfjeld: I think, you know, we need to see a high level of credibility to a solution to the conflict, and that we can expect whatever agreements that will be put in place will have a, you know, they can last. In all fairness, the news flow, you know, over these last 2 weeks have been rather volatile with, you know, good news, bad news, almost trading each other every second day. We cannot sort of react, I think, to good news one day and assume we can all sort of enter in the second day and the market sort of goes back to normal. I don't think we would be alone in consider the situation like that. Credibility to sort of a solution has to be in place.
Speaker #6: I think we need to see a higher level of credibility to our solution to the conflict, and that we can expect whatever agreements that will be put in place will have something that can last.
Speaker #6: Because in all fairness, the news flow over these last few weeks have been rather volatile. With good news, bad news, almost trading each other every second day.
Speaker #6: So we cannot sort of react I think to good news one day and assume we can all sort of enter in the second day and the market sort of goes back to normal.
Speaker #6: And I don't think we would be alone in considering the the situation like that. So credibility to sort of a solution has to be in place.
Svein Moxnes Harfjeld: I think that that will take a bit longer than just a few more days, right? I think the key action we need to see now, of course, is that all these ships that are trapped inside the Gulf, that they can exit safely. That will take a while. We believe there are some 57 VLCCs inside the Gulf with cargo that is waiting to exit. Plus, there are a lot of other ship types and not only tankers, but also inside that are waiting to sort of resume operations. I guess a lot of this has to be unwind, if you like, for, you know, to demonstrate that the passage through the Strait is safe.
Svein Moxnes Harfjeld: I think that that will take a bit longer than just a few more days, right? I think the key action we need to see now, of course, is that all these ships that are trapped inside the Gulf, that they can exit safely. That will take a while. We believe there are some 57 VLCCs inside the Gulf with cargo that is waiting to exit. Plus, there are a lot of other ship types and not only tankers, but also inside that are waiting to sort of resume operations. I guess a lot of this has to be unwind, if you like, for, you know, to demonstrate that the passage through the Strait is safe.
Speaker #6: And I think that that will take a bit longer than just a few more days, right? So I think the key action we need to see now, of course, is that all these ships that are trapped inside the Gulf, that they can exit safely.
Speaker #6: That will take a while. We believe there are some 57 VSCCs inside the Gulf with cargo that is waiting to exit. Plus there are a lot of other ship types.
Speaker #6: And not only tankers. But also inside that are waiting to sort of resume operations. So I guess a lot of this has to be unwind, if you like, for the demonstrate that the passage through the Strait is safe.
Sherif Elmaghrabi: Got it. Thanks for taking my questions.
Sherif Elmaghrabi: Got it. Thanks for taking my questions.
Speaker #5: Got it. Thanks for taking my questions.
Svein Moxnes Harfjeld: Of course.
Svein Moxnes Harfjeld: Of course.
Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Omar Nokta from Clarksons. Please go ahead. Your line is open.
Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Omar Nokta from Clarksons. Please go ahead. Your line is open.
Speaker #4: Thank you. We'll now move on to our next question. And our next question comes from the line of Omar Nokta from Clarksons. Please go ahead.
Speaker #4: Your line is open.
Omar Nokta: Thank you. Hi, Svein Moxnes Harfjeld. Good afternoon. Hi, Laila Halvorsen. Maybe just to follow up a little bit on kind of the discussion points of Hormuz and risk premiums. Are you able to talk a little bit about how, from your perspective, the risk premium across the different routes, you know, forgetting inside Hormuz since that's not really transacting. Outside of that, you mentioned Yanbu, Fujairah. Can you just talk a bit about how that risk premium has developed as this crisis has gone on, and then also your willingness to transact in those areas?
Omar Nokta: Thank you. Hi, Svein Moxnes Harfjeld. Good afternoon. Hi, Laila Halvorsen. Maybe just to follow up a little bit on kind of the discussion points of Hormuz and risk premiums. Are you able to talk a little bit about how, from your perspective, the risk premium across the different routes, you know, forgetting inside Hormuz since that's not really transacting. Outside of that, you mentioned Yanbu, Fujairah. Can you just talk a bit about how that risk premium has developed as this crisis has gone on, and then also your willingness to transact in those areas?
Speaker #8: Thank you. Hi, Svein. Good afternoon. Hi, Laila. Maybe just a follow-up, a little bit on the discussion points of Hormuz and risk premiums.
Speaker #8: Are you able to talk a little bit about how, from your perspective, the risk premium across the different routes, for getting inside Hormuz since that's not really transacting, but outside of that, you mentioned Yanbu, Fujairah.
Speaker #8: Can you just talk a bit about how that risk premium has developed as this crisis has gone on? And then also your willingness to transact in those areas?
Svein Moxnes Harfjeld: Yeah. Firstly, to entertain trades inside the Strait of Hormuz was a non-starter for us. We think it was a very easy decision. We have 25 on average on our employees on board these ships, and to expose them to trades like this is not something we are willing to discuss. Secondly, I think initially, Yanbu, Fujairah, also had at least some academic risks to these areas. As people have gotten a bit more comfortable with these areas, those freights have sort of moved, you know, differently from where sort of the Persian Gulf freight potentially could be. It is now closing in to be sort of more aligned with what Atlantic trades are offering.
Svein Moxnes Harfjeld: Yeah. Firstly, to entertain trades inside the Strait of Hormuz was a non-starter for us. We think it was a very easy decision. We have 25 on average on our employees on board these ships, and to expose them to trades like this is not something we are willing to discuss. Secondly, I think initially, Yanbu, Fujairah, also had at least some academic risks to these areas. As people have gotten a bit more comfortable with these areas, those freights have sort of moved, you know, differently from where sort of the Persian Gulf freight potentially could be. It is now closing in to be sort of more aligned with what Atlantic trades are offering.
Speaker #6: Yeah. So firstly, to entertain trades inside the Strait of Hormuz was a non-starter for us. We think it was a very easy decision. We have 25 on average on our employees onboarded ships.
Speaker #6: And to expose them to trades like this is not something we are willing to discuss. So secondly, I think initially, Yanbu, Fujairah, also had at least some academic risks to these areas.
Speaker #6: As people have gotten a bit more comfortable with these areas, those freights have sort of moved differently from where sort of the person Gulf freight potentially could be.
Speaker #6: So it's now closing in to be sort of more aligned with what Atlantic trades are offering. So now as of now, there's not really a big delta between these.
Svein Moxnes Harfjeld: Now, or as of now, there's not a really big delta between these. There could be some positional issues and stuff like that. I see there's some more normalization in pricing those two routes, i.e., Fujairah and Yanbu compared to the rest of the markets.
Svein Moxnes Harfjeld: Now, or as of now, there's not a really big delta between these. There could be some positional issues and stuff like that. I see there's some more normalization in pricing those two routes, i.e., Fujairah and Yanbu compared to the rest of the markets.
Speaker #6: It could be some positional issues and stuff like that. But I see there's some more normalization in pricing those two routes, Aya Fujairah and Yanbu, compared to the rest of the markets.
Omar Nokta: Okay. Thank you. How do you think, I guess, about, you know, in a reopening scenario, and let's say things go back to normal, which clearly seemingly that seems difficult to anticipate, but just how do you think about the permanence of these new routes? Or at least, you know, these routes have gotten a bit more active. Do you think these are here to stay? What do you kind of think about how that affects this market long term?
Omar Nokta: Okay. Thank you. How do you think, I guess, about, you know, in a reopening scenario, and let's say things go back to normal, which clearly seemingly that seems difficult to anticipate, but just how do you think about the permanence of these new routes? Or at least, you know, these routes have gotten a bit more active. Do you think these are here to stay? What do you kind of think about how that affects this market long term?
Speaker #8: Okay. Thank you. And then how do you think, I guess, about in a reopening scenario and let's say things go back to normal, which clearly seemingly that seems difficult to anticipate, but just how do you think about the permanence of these new routes?
Speaker #8: Or at least these routes have gotten a bit more active? Do you think these are here to stay? And would you kind of think about how that affects this market long term?
Svein Moxnes Harfjeld: I mean, Yanbu in the Red Sea, has the capacity to, you know, sort of super efficient operation, about 4 million barrels a day, so they can load 2 V's a day. That is not a new trade. That terminal has been there for many years. They've been serving certain markets, maybe not to its full capacity, though. I think whether that route is keeping that capacity or whether some of that cargo is shifted back to the Gulf doesn't really impact the general efficiency of the market because it's a very similar type of duration for those voyages. When it comes to Fujairah, I think in the near term, it's a bit hard to say.
Svein Moxnes Harfjeld: I mean, Yanbu in the Red Sea, has the capacity to, you know, sort of super efficient operation, about 4 million barrels a day, so they can load 2 V's a day. That is not a new trade. That terminal has been there for many years. They've been serving certain markets, maybe not to its full capacity, though. I think whether that route is keeping that capacity or whether some of that cargo is shifted back to the Gulf doesn't really impact the general efficiency of the market because it's a very similar type of duration for those voyages. When it comes to Fujairah, I think in the near term, it's a bit hard to say.
Speaker #6: I mean, Yanbu in the Red Sea has the capacity for, sort of, super-efficient operation—about 4 million barrels a day. So they can load two of these a day.
Speaker #6: That is not a new trade. That terminal has been there for many years. They've been serving certain markets—maybe not to its full capacity, though.
Speaker #6: So I think whether that route is keeping that capacity or whether some of that cargo is shifted back to the Gulf, doesn't really impact the general efficiency of the market.
Speaker #6: Because it's a very similar type of duration for those voyages. When it comes to Fujairah, I think in the near term, it's a bit hard to say.
Svein Moxnes Harfjeld: What we would be curious to see how UAE's exit from OPEC will sort of unfold. I think they have had the ambitions for quite some time to increase their quotas. As they now become free from OPEC, they will of course also be free to decide how much they will produce. You know, whether that will go out of Fujairah only or also from the ports inside, we don't know yet exactly the ratios and how that will play out. I think for we should expect it to be more cargo in the water in general, and maybe that will have a downward pressure on oil price, which will stimulate our business in general.
Svein Moxnes Harfjeld: What we would be curious to see how UAE's exit from OPEC will sort of unfold. I think they have had the ambitions for quite some time to increase their quotas. As they now become free from OPEC, they will of course also be free to decide how much they will produce. You know, whether that will go out of Fujairah only or also from the ports inside, we don't know yet exactly the ratios and how that will play out. I think for we should expect it to be more cargo in the water in general, and maybe that will have a downward pressure on oil price, which will stimulate our business in general.
Speaker #6: But what we would be curious to see how UAE's exit from OPEC will sort of unfold. I think they have had ambitions for quite some time to increase their quotas.
Speaker #6: And as they now become free from OPEC, they will, of course, also be free to decide how much they will produce. And whether that will go out of Fujairah only, or also from the ports inside, we don't know yet exactly the ratios and how that will play out.
Speaker #6: But I think we should expect there to be more cargo in the water in general, and maybe that will have a downward pressure on oil prices.
Speaker #6: But which will stimulate our business in general.
Omar Nokta: Thank you. Got it. That makes sense. Thank you, Svein.
Omar Nokta: Thank you. Got it. That makes sense. Thank you, Svein.
Speaker #8: Thank you. Got it. That makes sense. Thank you, Svein.
Svein Moxnes Harfjeld: Thank you.
Svein Moxnes Harfjeld: Thank you.
Operator: Thank you. We'll now move on to our next question. The next question comes from the line of Jeffrey Scott from Scott Asset Management. Please go ahead. Your line is open.
Operator: Thank you. We'll now move on to our next question. The next question comes from the line of Jeffrey Scott from Scott Asset Management. Please go ahead. Your line is open.
Speaker #6: Thank you.
Speaker #4: Thank you. We'll now move on to our next question. The next question comes from the line of Jeffrey Scott from Scott Asset Management. Please go ahead.
Speaker #4: Your line is open.
Jeffrey Scott: Good morning. I have a question about the couple of ships that are on long-term charter with profit sharing. I've always thought that the 50/50 break for profit sharing was a very fair division of kind of risk and reward for the long-term chartering market. It requires some estimate of what that profit sharing is. How do you, how do you get to the profit-sharing number?
Geoffrey Scott: Good morning. I have a question about the couple of ships that are on long-term charter with profit sharing. I've always thought that the 50/50 break for profit sharing was a very fair division of kind of risk and reward for the long-term chartering market. It requires some estimate of what that profit sharing is. How do you, how do you get to the profit-sharing number?
Speaker #9: Good morning. I have a question about the couple of ships that are on long-term charter with profit sharing. I've always thought that the 50-50 break for profit sharing was a very fair division of kind of risk and reward for the long-term chartering market.
Speaker #9: But it requires some estimate of what that profit sharing is. How do you get to the profit sharing number? Is it often the Baltic Index?
Svein Moxnes Harfjeld: So, uh-
Svein Moxnes Harfjeld: So, uh-
Jeffrey Scott: Is it off a Baltic index?
Geoffrey Scott: Is it off a Baltic index?
Svein Moxnes Harfjeld: Thank you for asking. We don't disclose the details of these contracts. The profit-sharing mechanism is calculated on our ship's particular specification for fuel consumption and efficiency, all of that. It is the index based profit or calculation. One charter has only one index as the sort of as the pricing base, and the other one has a mix. None of these contracts are frustrated in any way by, you know, the COVID, the changes we have seen recently. We also noted that somebody now trying to pursue Baltic legally. Whether that case has a probability of going one or the other way, I don't know.
Svein Moxnes Harfjeld: Thank you for asking. We don't disclose the details of these contracts. The profit-sharing mechanism is calculated on our ship's particular specification for fuel consumption and efficiency, all of that. It is the index based profit or calculation. One charter has only one index as the sort of as the pricing base, and the other one has a mix. None of these contracts are frustrated in any way by, you know, the COVID, the changes we have seen recently. We also noted that somebody now trying to pursue Baltic legally. Whether that case has a probability of going one or the other way, I don't know.
Speaker #6: Thank you for asking. So, we don't disclose the details of these contracts. But the profit-sharing mechanism is calculated on our ships' particular specifications for fuel consumption and efficiency—all of that.
Speaker #6: And it is the index-based profit or calculation. So one charter has only one index as a sort of as the pricing base. And the other one has a mix.
Speaker #6: But none of these contracts are frustrated in any way by the qualitative changes we have seen recently. And we also noted that there are somebody now trying to pursue Baltic legally.
Speaker #6: Whether that is, whether that case has probability of going one or the other way, I don't know. But again, the basis, which is the price mechanism in our charters, are operational.
Svein Moxnes Harfjeld: Again, you know, the basis which is the price mechanism in our charters are operational, and we get paid by our customer, and there's no frustration in these systems.
Svein Moxnes Harfjeld: Again, you know, the basis which is the price mechanism in our charters are operational, and we get paid by our customer, and there's no frustration in these systems.
Speaker #6: And we get paid by our customer. And there's no frustration in these systems.
Jeffrey Scott: There's no conflict in that conversation?
Geoffrey Scott: There's no conflict in that conversation?
Speaker #9: There's no conflict in that conversation?
Svein Moxnes Harfjeld: No.
Svein Moxnes Harfjeld: No.
Speaker #6: No.
Jeffrey Scott: Okay. Thank you very much.
Svein Moxnes Harfjeld: Okay. Thank you very much.
Speaker #9: Okay. Thank you very much.
Svein Moxnes Harfjeld: Thank you.
Svein Moxnes Harfjeld: Thank you.
Speaker #6: Thank you.
Operator: There are no further questions at this time, so I'll hand the call back to Svein for closing remarks.
Operator: There are no further questions at this time, so I'll hand the call back to Svein for closing remarks.
Speaker #4: There are no further questions at this time. So I'll hand the call back to Svein for closing remarks.
Svein Moxnes Harfjeld: Thank you very much to all for being interested in DHT and wishing you all a good day ahead. Thank you.
Svein Moxnes Harfjeld: Thank you very much to all for being interested in DHT and wishing you all a good day ahead. Thank you.
Speaker #6: Thank you very much to all for being interested in DST. And wishing you all a good day ahead. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.
