[Indiscernable] and thank you for standing by. Welcome to the Second Quarter 2021, DHT Holdings, Inc Earnings Conference Call. At this time, all participants are in a listen-only mode. After this presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operators Instructions] We have three speakers today, the co-CEOs, Svein Harfjeld, Trygve Munthe, and our CFO Laila Halvorsen. I would now like to turn the conference over to your first speaker today, CFO Laila Halvorsen. Please go ahead.

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings, Second Quarter 2021 earnings call. I'm joined by DHT's Co-CEOs, Svein Harfjeld, and Trygve Munthe. As usual, we will go through the financials and some highlights before we open up your questions. The link to the slide deck can be found on our website, dhtanker.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 at our website, dhtanker.com until 08/17. 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. These forward-looking statements are based on our current expectations about future events, including DHT's prospects, dividends, share repurchases, and debt repayment; the outlook for the tanker markets in general; daily charter high rates and vessel utilization; forecasts of world economic activity; oil prices and oil trading patterns; anticipated level of new buildings and scrapping; and projected drydock schedules. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports 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. Looking at the P&L highlights EBITDA for the Second Quarter of 2021 was 21 million and net income came in at 0.8 million. The result includes the profit of 13.6 million related to the sale of DHT Lake and DHT Raven, a non-cash gain of 3 million related to refinancing, and a non-cash gain in fair value related to interest rate derivatives of 2.2…

Thank you, Laila. Switching now to capital allocation. For the second quarter, a total of 25.8 million will be returned to shareholders. As previously announced, the Company bought back 2.2% through outstanding shares during the quarter, for a total consideration of 22.5 million. In addition, the Company will pay a dividend of $0.02 per share for the quarter. It will be payable on the 26th of August to shareholders of record of the 19th of August. And with that, the Company has now paid dividends every quarter for 11.5 years. And then we wanted to provide you a little update on the fleet side. And again, as previously announced, we bought and took delivery of 2 modern Scrubber-fitted eco-ships during the First Half. The DHT Harrier, and DHT Osprey. We paid 68 million per ship and note that broker value assessments now are some 10% higher. We also sold our 3 oldest ships, all 2004 built during the spring. The Lake and Raven were delivered during the Second Quarter and we recorded a 13.6 million gain on these sales. The DHT Condor was delivered to its new owners in July, and we expect to book a profit of about 1.5 million on that sale. On the next slide, let us then provide you an update on what has been going on on the liability side of the balance sheet during the quarter. As previously announced, we have refinanced the old Nordea facility with a new and expanded Nordea facility. The new facility has a firm commitment of 316 million, with the addition of a 250 million accordion. The new loan carries a margin of 1.9%. It has a DHT style 20-year repayment profile, a 5.5 years tenor, and carries the normal DHT covenants. Additionally, and importantly, we were able to…

Thank you, Trygve. In the next 3 slides, we will discuss the employment of our fleets of firing connection with drydocks and cash breakeven levels. On the first page, you will see the expected ratios of spot and time short-term employment during the last 2 Quarters of 2021. For the Third Quarter, we have covered about 42% of our fleet on time charters at an average rate of $27,500 per day. Some of these time charters are short in nature, as we consider a decent opportunity offering premium earnings to the stock markets. Thus far, for the Third Quarter, we have booked income for 64% of the fleet at an average rate of 22,100 per day. For the fourth quarter, we have some 23% of the fleet on time charters at an average rate of about 32,100 per day. We don't expect to enter into additional time charters in the near term as we don't consider a combination of currently available rates and durations to be compelling. As many of you have noted a few quarters back, we started to take advantage of the weak spot market to bring forward drydocks. During the second quarter, we recorded about 100 days off-hire in connection with drydocks. We expect another 80 to 100 days during the third quarter, with an additional 40 to 60 days in the fourth quarter. The work to be done during this period in the second half includes the installation of ballast water treatment systems and scrubbers. This will also mark the end of our scrubber retrofit program for now. Taking our scrubber fleet to 17 out of 26 ships. A key benefit to all these efforts is that we have only 70 to 90 plan of hard days for all of 2022. As such we are positioning…

Thank you. [Operator Instructions] We will now take our first question from the line of Randy Givens at Jefferies, please go ahead. Your line is now open.

How are you Svein, Trygve, and Laila, how is it going?

Good thanks. How is Texas?

Excellent. All well, a little warm, but everything is good down here. A couple of questions for me, starting with your fleet here. You recently sold the 3 oldest VLCCs, you bought these 2 modern VLCCs all this year. How do you feel about your fleet currently? And then you mentioned you're not looking to do any time charter outs, but an appetite for time charter ins to grow a little bit more exposure?

I think as we've said many times before, in general, we're not entertaining time chartering in. So there are a few reasons for that. One, it is essentially 100% financing. It will negatively impact -- our cash breakeven levels for such. And also we like to have full control of the technical operations, so the ships under our control that they use to service our customers. So time charter [Indiscernable] we did generally well with all of that, so --

And then in terms of additional asset sales or modern purchases?

On the sell side, we have no intention of selling any of the ships on this side of the recovery. As we have discussed in the past, the appreciation of secondhand values happened a little quicker and faster than we had expected. So we think that we've gotten to a level where we're actually quite pleased with the fleet that we have. And we really do not currently have any intentions to buy or sell. So it's a whole territory for us and runs the 26 fields we see as well as we can.

Okay. And then looking at that capital allocation slide, I know you've been pretty committed to that 2 cent dividend, regardless of earnings. Just also looking at the share buyback. Very good use of cash there. You returned the 225 to shareholders buying 3.7 million shares. What was the thinking behind that, how did you get to that calculation, and how much more in share repurchases are you looking at here the remainder of the year?

Again, as we've said before, we are not regularly doing buybacks. It's a couple of things that need to be in alignment that we find that the NAV is on its way up and that we see a disconnect between share prices and NAV, so that's typically when we have a bought back shares over the years. We felt that after we acquired two ships at the beginning of the year, then prices, it really took off and as we just said, we weren't too intrigued by then the second-hand opportunities. But the share price hadn't really accelerated to the same extent. So we thought that to buy ships in the form of buying our own shares made sense. As far as forwarding appetite, that's going to be decided on those same factors, but it could very well be that we will continue to buy some, but there is no target that we want to spend x million dollars or anything like that, so it's a purely opportunistic approach from our side.

Got it. Sounds prudent. And quickly Quarter date guidance on just the spot vessels. Do you have that number at the rates that you've booked so far for a spot on 3Q?

It's below 1/3 of the spot fleet, and that's at 10,006.

10,6. All right. Well, hey, thank you so much.

Thank you.

We will now take the next question from the line of Omar Nokta from Clarkson Securities. Please go ahead, your line is now open.

Thank you very much. Hey, guys. Good afternoon. Just maybe following a little bit on Randy's question regarding the -- the discussion around time-charters. Given we've had such extremes here over the past 2 years, it's clearly paid off at least for you to have several of your ships on time charter that you booked last year. And so this past Quarter, you earned 10,000 on the spot market, but your overall fleet wipe TC was much -- it was closer to 20 basically. Going forward, how do you think just in general, I know that in the very near term there aren't that many opportunities, but in the grand scheme, when you think about DHT on an ongoing basis, what percentage do you want to have your vessels on time charter?

We don't have a 6 percentage that we target, but we look at the nominal numbers. And obviously last year, our numbers were very attractive. So we did really as much as we could. Some of these [Indiscernable] charters this year has been more of an alternative to trading in the spot market. So -- but -- in the next recovery, you should certainly expect us to do little time charters and when numbers are very healthy, we'll do as much as we can. So -- but it's not the 6 percentage that's the guidance is just what makes good economic sense for these [Indiscernable] Amish elders?.

That's fine. Okay, that's clear and I guess maybe another follow-up to the prior discussion points. Clearly, especially with the Delta variant recently, there has been a bit of a -- call it a delay in this tanker recovery or at least an unexpected delay, at least from the part of what we're seeing with respect to the stock performance. Given the order of the book, it has become very tight here with no real [Indiscernable] available. Especially for tankers, come maybe '24 and really in '25, it does paint a positive picture as you mentioned in your opening remarks, after basically a duration of the upswing once rates do turn. And I know you're fine standing path at the moment. But how do you feel about investing capital, when it's time to invest, knowing that, perhaps maybe '22, we're looking at a healthier market and then a healthy market for '22, '23, '24, potentially beyond that, just say? some [Indiscernable] be on the supply side. How do you feel then about deploying capital? Is it -- you bought the 2016 earlier this year. What's the sweet spot when you do think about investing?

As we also said earlier, for us to invest, the ships have to be of an equal design that means built late 15 and younger. We felt from a cash return point of view, that's 5-year-olds or really the sweet spot. The fuel economics of a 5-year-old and a 1-year-old is basically the same. We're very happy with those investments. Keep in mind that -- in the recovery when it happens, this Company will churn out a lot of money with the 26 ships it already has. But it's important for us when invest to also look at the required rates over the life -- the remaining life of the ships that we buy, not just what you can earn in 12 or 24 or 36 months. This is the reason why we took a step back once asset prices ratcheted up much quicker than we had expected in the Spring. If for some reason there will be opportunities to look at levels, look too dissimilar to open? investment? earlier this year, we're certainly open to considering it. So we're not against buying more ships, but there have to be levels that you think will represent good investments over the remaining life of the ship.

Got it. Thanks. Thanks for that [Indiscernable] I will turn it ov

We will now take our next question from the line of Chris Tsung from Webber Research. Please go ahead. The line is now open.

Good afternoon, everyone. How are you [Indiscernable]

Hello. Yeah. Go ahead.

Got it, sorry. Thanks. I guess it's a two-part question regarding scrubbers. What sort of? spreads? are you guys seeing between a scrubber and non-scrubber fitted vessel? And secondly, with the sales that you guys announced on the 2004 vessels, we all have scrubbers on that. So is that a requirement to sell vessels?

To answer the latter part first maybe, there have been ships sold -- not from us, but they're without scrubbers in the market. So there is an appetite for that as well. But that has mainly been ships coming out of Japan with more -- maybe more basic specifications and they're typically being picked up by private owners. as such. For us, there was particular interest in our ships, maybe because [Indiscernable] but they're also very well-maintained and it was an industrial payer that bought these ships. That they will use them for own transportation needs. That's also good numbers in that. Currently, the annual benefit of a normal ECO-ship to discover is about $2 million over the year. That's the additional earnings you can -- you will get so you can do the rest of the math yourself.

Okay. Thanks. And I guess just a form of the second part of my question was just -- could we access -- I know you guys are not planning to sell any more vessels. You guys have stopped your scrubber program at 17. But just trying to -- thinking about it, if you guys were to entertain selling a vessel, could it be from the part of your fleet that has the scrubber or does not?

Yeah. When do you run a tank [Indiscernable] the Company, essentially everything is for sale. It all depends on the price. So it's not carved in stone that we only sell the oldest ships or with a scrubber or without scrubbers. It is where we think it behooves the shareholders and where it makes sense to us. But with all that said, traditionally, we have been sold -- selling out from the older end of the fleet. And you will note that all of our older ships are scrubber-fitted, or will soon be scrubber-fitted. Hopefully, that adds some color to your question.

Yeah, that's perfect. Thank you all. I'll turn it over.

Thank you.

We will now, take our next question from the line of Jon Chappell from Evercore. Please go ahead. Your line is now open.

Hey, everyone, this is Sean Morgan on for Jon Chappell this morning. It appears that you signed some extended 4 to 5 TCs since the Q1 results. I'm just wondering if we could get the types of rates those are being signed on and should we just use ship -- trip over figures for the one-year or is there a higher extension rate than those well-time charters of last year?

It makes value. I'm going to be -- I'll not disclose the raise of the particular charters, so I think you should relate to the numbers we have disclosed now on what's the average share for the [Indiscernable] straight? of fleets in each quarter, so.

Okay. Thanks. And then on the breakeven slide, I think that's interesting. You'd be able to reduce the maintenance CapEx per year -- for the coming quarter, but is there any ability to offset some of the OpEx costs, or are those pretty efficient at this point in terms of just reducing the breakeven even further?

Yeah, we have a long-term view of the way we operate our ships. So how much we spend on OpEx is independent of what type of markets we're in. But you also see that we run this quite competitively and cost-efficiently. As Laila said for the Quarter was $7,800 per day per ship and we find that to be quite sharp and competitive. But to your question specifically in all, we don't think there's any room to cut in OpEx just to obtain a lower cash breakeven.

Yeah. Okay. Thank you.

Welcome.

We will now take our next question from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.

Thanks. I wanted to get back to scrubbers, but maybe from a different perspective, it sounds like you're done here at 17. Is that simply a capital allocation decision that you're preserving capital, it's a challenging market you don't have as many dry docks coming beyond this Quarter? Or is it the ships that don't have scrubbers that are sufficiently efficient enough so that you don't feel like they would benefit enough?

The latter part of your question is correct. Right. So these are eco-ships. So they consume much less fuel than the more mature end of the fleet. So that means the payback will be longer, the investment is OpEx compelling, simply. So we're sort of pleased with how we set it up now. That it's the older ships that's got scrubbers and then there are some eco-ships than without scrubbers.

Okay. So there -- at least from where we sit now, those more modern ships probably never will have scrubbers, or at least not any anytime soon. Is that fair?

That's correct.

Okay. And then getting back to the cash breakeven first, it's nice that you've been able to retool the debt and very little amortization associated with that. But just thinking through as we hopefully get into a better market, perhaps at some point next year. The low cash break-even is a pretty easy bar. And in looking beyond, assuming that you are generating substantially more cash than is needed to cover that debt. Is there a need to pick that amortization back up to a little bit of a higher level? and maybe a little bit more -- concerning debt repayment, or would you imagine that -- should cash flow be available, it would be available to distribute to shareholders in one form or the other?

There's no need to ramp up that amortization bond, so we are free to do whatever we want with the available cash flow once the market recovers. But I think it's premature today [Indiscernable] and so we indicate what we're going to do once the market returns to healthy numbers. But what we enjoy is to have the freedom to choose what we think is the right thing to do when that time comes.

Keep in --

Okay. Perfect.

--keep in mind that our loan facilities are straight-line amounts. We need to select then to prepay the schedule amounts for a particular period to -- that will improve the position of the Company. So it's not because we have non-amortizing debt for this sort of a wall of debt coming at some point in the future, so.

Sure. Okay. No, I understood. I appreciate it. Thank you, guys.

And also, our capital allocation is a minimum of 60% from ordinary net income to be distributed to shareholders. So obviously, if cash flows are phenomenal, the Company can consider sorting of use that capital allocation policy, right?

As you saw for the second quarter.

Great, thanks.

(Operator Instruction) And we will now take our next question from the line of Ronald Silvera from Marine Surveyors. Please, go ahead, your line is now open.

Thank you for taking my call. I appreciate very much [Indiscernable] what you guys have accomplished. in this is very, very difficult Quarter that we've just been through. I find it quite fascinating that you have reduced in the last 2 years of debt levels are over 900 to the nominal notional debt now of debt now or 536. This to me is a wonderful job done in an incredibly difficult market now. I would like to suggest that what would you have been as far as earnings this quarter, if you still had $900 or so million in debt, I doubt if it would be anywhere near where you are now. In any case, for the future, I know you've been buying shares. I would like to suggest that you sell some $5 [Indiscernable] options. I realize that this will not bring you a ton of money but it will bring you something. Okay. Especially if you do them for next January. And you have the cash set aside to cover whatever options you're able to sell. And that will simply reduce the cost of any shares that you are repurchasing, as well as straight repurchases if you continue to do that as well. In any case, I think that the way you guys have run this Company is a Harvard business class classic of how to do it. That's my input.

Well, thank you. Thank you for your kind words and we certainly recognize sort of the auction market as something we can also get into. And we've discussed this in the past, but overall we find that the liquidity may not be what it needs to be for us to do something there, but we appreciate your input.

You don't have to do a lot. But it just shows that you can do some, and I would much rather see you build your cash for the opportunities that may come. Because we, as you said, will probably go through a long, tough period before we get into a great market as we had in early 2020. And I'm sure like to, as a shareholder in many years now, see that happen.

[Indiscernable]

We will now take our next --

Do you have --

Sorry.

Do you have any intentions at the current levels of still prepaying any of your debt?

I think now we have prepaid all regular installments on the 2 large facilities through 2022, so do not expect us to make additional premium payments soon. We feel that we have a significant runway of 18 months here with unusually low cash break-even levels. And we're certainly expecting the market to come back to more normal and healthier levels within that timeframe. Currently, we do not have any intention for additional prepayments.

Okay. Thank you. Well done, guys.

Thank you. Thank you.

We will now take our next question from the line of Magnus Fyhr from Wainwright. Please go ahead. Your line is now open.

Hi. Good afternoon. Just two questions. You've been extremely disciplined in your capital allocation strategy. And you also mentioned that asset values have depreciated real faster than you had thought. Is it fair to assume that you would rather be buying back stock in your own Company, than buying secondhand vessels as long as the arbitrage is as wide as it is today?

Then -- what we did in the second quarter was sort of buying ships and we bought our ships, right? So they were certainly cheaper than what was available in the market. But the levels of course, nominally are less compared to buying 1 or 2 or 3 ships. So I think we are fairly sort of agnostic in general, but ideally, we would like to have the opportunity to buy 1, or 2, or 3 more ships. That's the opportunity we'll hopefully get.

We just think it's -- in the business, we are in, that over time you could argue that it's not a phenomenally high-end margin business. We think it's paramount that you buy right. And by saying buying right, it's being disciplined as you phrased it, Magnus.

Yeah. That leads me to the second question. Some of your competitors have been buying the new ship's dual-fuel capability. How do you feel about your fleet? You have a modern fleet. And how do you feel like you're positioned for the new regulations and your appetite for pursuing any of these types of new builds?

As we said in the summary, we feel that we are in excellent shape. We have a good fleet and we're well-positioned for the changes in the regulatory framework that's coming up over the next few years. So we will be able to meet that. We're quite confident enough, so on -- that we'll not have to contract new buildings at this juncture and there are 2 reasons for that. One is that prices right now are just too high, we think. But secondly, there is a lack of clarity on the technology going forward. So let's say, we are of course staying well-tuned of the developments and [Indiscernable] we be might think differently.

Very good. Thank you.

Thanks.

If there are no further questions, I would now like to hand the call back to the Company. Please go ahead.

Well, thank you very much to all who showed interest in DHT and everything [Indiscernable] Good day, Ed.

Thank you for participating. You may disconnect.