Dynagas LNG Partners LP (DLNG) Q3 2017 Earnings Report, Transcript and Summary

Thank you for standing by, ladies and gentlemen and welcome to Dynagas LNG Partners Conference Call on the Third Quarter 2017 Financial Results. We have with us Mr. Tony Lauritzen, Chief Executive Officer and Mr. Michael Gregos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. [Operator Instructions] I must advise you that this conference is being recorded today. And at this time, I would like to read the Safe Harbor statement. This conference call and the slide presentation of the webcast contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties which may affect Dynagas LNG Partners’ business prospects and results of operations. Such risks are more fully disclosed in Dynagas LNG Partners filings with the Securities and Exchange Commission. And I now pass the floor to Mr. Lauritzen. Please go ahead, sir.

Good morning, everyone and thank you for joining us in our third quarter ended 30 September 2017 earnings conference call. I am joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the said period. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures, as well as a discussion of why we believe this information to be useful in our press release. The earnings for the financial quarter ended September 30, 2017 were within our expectations. There were particular cost items that fell into this quarter that affected the results. One of our vessels completed special survey in this quarter and one of our vessels to Clean Energy was trading successfully however on a relatively weak short-term market. Turning to Slide 2, the Amur River commenced our 5-year special survey in the second quarter and completed the same in the third quarter. We are satisfied that the class surveys included dry dockings were completed quickly and efficiently with only 15 days between arrival to departure at the repair yard. Amur River is on a 5-year special survey cycle like the rest of our fleets, meaning one would expect about 5 years until her next scheduled dry docking. In April 2017, the Clean Energy became available for employment at which time we entered into two consecutive short-term charters with Gazprom to employ the vessels through the end of August 2017. Following the expiration of these charters, the vessel is employed on an additional short-term charter with Petrochina and will continue to be employed on the short-term market until her 8-year contract with Gazprom from July 2018. Although we have been successful in employing the Clean Energy on the short-term market, the market was although improving weaker than her long term charter. Our adjusted EBITDA for the period was reported at $26.4 million with corresponding adjusted income of $7 million. The Partnership reported a net income of $4 million which includes $1.1 million of scheduled class surveys and dry dock costs for the Amur River. Distributable cash flow was reported at $11.3 million. A quarterly cash distribution for the third quarter of 2017 of $0.4225 per common unit was paid on October 19, 2017. The cash distribution is equal to an increase of 15.8% over the Partnership’s minimum quarterly distribution per unit. The Partnership paid on November 13, 2017 a cash distribution of $0.5625 for each of its Series A Preferred Units from the period from August 12, 2017 to November 13, 2017. Distributions on the Series A Preferred Units will be payable quarterly on the 12th day of February, May, August and November at an equivalent of $0.5625 per unit provided the same is declared by the Partnership’s Board of Directors. I will now turn the presentation over to Michael who will provide you with further comments to the financial results.

Thank you, Tony. Turning to Slide 3 of the presentation, our revenues were higher in Q3 at 33.4 million compared to 32 million for Q2, however significantly lower compared to revenues of 43 million in Q3 of 2016. Our results for the quarter were impacted by the one-off charge of $1.1 million related to the fact that one of our vessels completed its special survey in dry dock in the third quarter and the lower revenues attributable to the Clean Energy, which is the only vessel in our fleet currently trading in the short-term market pending delivery into an 8-year charter next year. Comparing Q2 2017 to Q3 2017, we see an increase of 38% in distributable cash flow and 15% in adjusted EBITDA primarily due to the fact that we had 542 available days in Q3 versus 507 in Q2 as a result of less dry docking days and the higher utilization rates on the Clean Energy in Q3. The decline in our Q3 2017 results compared to our Q3 2016 results is as we have mentioned before and natural evolution of the partnership as it evolves from term charters with higher rates and shorter duration to contracts with longer charter duration and lower charter rates. For the quarter our average fleet cash daily charter rate amounted to $65,200 per day and utilization of 97% versus $66,900 per day and utilization of 95% for Q2. Our cash breakeven for the quarter excluding dry docks and cash distributions to our common and preferred unit holders amounted to about $37,300 per day and if we include dry docks in distributions to common and preferred unit holders, cash breakeven amounts to about $70,000 per day per vessel. We expected our gross cash time charter rate for our fleet will be around $66,000 per day for the next few quarters. Operating expenses decreased from $13,720 per day per vessel in Q2 to $11,188 per day for vessels for Q3 associated with [Indiscernible] efficiencies. Moving on to Slide 4 to discuss distributable cash flow and our coverage ratio. We generated distributable cash flow in Q3 of 11.3 million with a distribution coverage ratio of 0.64 times compared to 0.43 times for the previous quarter for the reasons mentioned earlier. However, given our strong cash position, we can comfortably pay our distributions. We are experiencing a decline in our coverage ratio given the transition from short to long-term contracts discussed earlier. For the next 2 quarters we do not have any scheduled dry dockings and barring any unforeseen event our coverage ratio is expected to be slightly higher. Looking at the partnership on the no growth basis beyond Q2 2018, there will be a number of factors, which will affect distributable cash flow in Q2 2018 the Ob River will enter its new 10 year contract with Gazprom at the rate which will be about 35% lower than the current contract rate. Depending on when Gazprom decides to redeliver the Yenisei River and the Lena River in 2018, we will have some spot exposure until the vessels enter their 15 year time charters with Yamal which given the present rate environment is a very positive opportunity. Although at this stage we do not know how long this exposure will be given that the exact delivery date under the Yamal contracts has not determined yet. There will be a positive impact from the Clean Energy which will enter 8-year contract with Gazprom in Q2 of 2018 at a level, which is double the rate she is currently employed and not the determining factor will be the reemployment rate of the Arctic Aurora, which is coming open in July 2018 from her Statoil contract. And finally, we have 3 special survey in dry docks in 2018, which will also have an impact on distributable cash flow next year. These open commercial items will be addressed in the coming months as we continue to be focused on securing new contracts for our open fleet capacity, a strengthening LNG carrier market is the best background to do so and as a result we believe that our revenue and distributable cash flow in 2018 and 2019 will become even more visible. In Slide 5 we have a streamlined capital structure which includes a $479 million secured institutional term loan be and $250 million unsecured bond both with an efficient governance structure and more of the amortization of $4.8 million per annum which is supported by our long-term contract coverage and the long life of our LNG carriers. Even though we feel comfortable with refinancing our unsecured note we will be proactive in addressing the maturities which is in October 2019. Moving on to Slide 6 as at the end of Q3 on net debt was $658 million and our net debt with EBITDA ratio calculated by using last 12-month EBITDA was 5.7x except for term loan be an unsecured note our capital structure is a perpetual $75 million preferred security which can redeem our discretion at par from 2020 onwards. Moving on to Slide 7 on 19 October, we paid our 16th quarterly cash distribution which was unchanged at $0.4225 per unit for the quarter. Since we went public in November 2013, we have paid approximately $223 million in cash distributions to our unitholders on $266 million of distributable cash flow. During that time, our common unitholders have received total cash distributions amounting to $6.36 per unit. On a longer-term basis, we expect that our cash distributions will reflect a secured cash flow generating capacity of our fleet with a view to maximizing shareholder value and ensuring sustainability for the long-term across our capital structure. That wraps it up from my side. I will pass the presentation over to Tony.

Thank you, Michael. Let’s move on to Slide 8 to summarize the Partnership’s profile. Our fleet currently accounts 6 high specification and versatile LNG carriers with an average age of about 7.3 years in an industry where expected useful economic lifetime is 35 years. We have a diversified customer base with substantial energy companies namely Gazprom, Statoil, Petrochina and Yamal LNG, which the latter is a joint venture between Total, CNPC, Novatek, and the Silk Road Fund. Our contract backlog is about $1.46 billion and our average remaining charter period is about 10.1 years which compares well versus our peers. Our vessels have also served customers such as Shell, Qatargas, RasGas, Marubeni, Woodside, CPC, North West Shelf and several other major oil and gas companies. We therefore have a large customer base that we are able to contract with. Moving on to Slide 9, our fleet of LNG carriers are largely fixed on long-term charters with strong and reputable energy companies. Drivers for these charters were the characteristics of the fleet including its ice class notations and our organization’s track record. The contractual relationship between our customers and the vessels are on a time charter party basis. Under a time charter party, the charterer pays a fixed day rate to the owner regardless if the vessel is being used or not and all major variable costs such as fuel cost are for the charterer’s account. There are also no early termination rights for convenience for the charterer. Therefore and coupled with our multiyear employment profile, the Partnership enjoys visible and stable contract revenues that are not directly affected by oil or gas prices. We have minimum capital requirements, which provides significant free cash flows. Compared to other shipping segments, LNG shipping is the highly industrial segment where owners and charterers work very close together and mutual performance is key. Charterers typically program the vessels for its trade for long periods of time. We are actively pursuing opportunities for only part of the availability that we have in 2018 given that we believe the market is on an improving trend. Let’s move to Slide 10. Our sponsor Dynagas Holding represents a fleet of 9 LNG carriers which are all on long-term contracts. Four of those LNG carriers are fully owned and trading. One of those carriers to Clean Ocean is chartered to Cheniere until 2020 and will thereafter deliver to Yamal LNG for a 15-year charter. The three sister vessels, Clean Planet, Clean Horizon and Clean Vision are currently employed in the cool pool, a pool equally owned by Dynagas, GasLog and Golar which is the world’s largest provider of short-term tonnage. From 2019, these three vessels will also deliver to Yamal LNG for minimum 15 years employment each. The five Arc-7 LNG carriers are 49% owned by our sponsor and 25.5% each by Sinotrans and China LNG Shipping, two state-owned Chinese entities. These vessels are chartered to Yamal LNG for between 26 and 28-year contracts each. The first of the – of the first 2 of the five Arc-7 LNG carriers have completed construction and announce that for delivery in the very near term. We expect Yamal LNG to start exporting within this year. All the vessels on the water and in the order book are fully financed and funded. All 9 vessels have contracts in place amounting to above $8 billion contract backlog. Let’s move to Slide 11. We have a unique fleet, 5 out of the 6 vessels in our fleet have ice class 1A notation. The fleet can handle conventional LNG shipping as well as operate in ice bound and subzero areas. This means that we are able to and have been successful in pursuing business opportunities in two different markets, namely conventional shipping and a unique market for icebound trade. The initial capital expenditure for an ice class vessel is somewhat more expensive than conventional carriers. However, the operating costs between our ice class type carriers and conventional carriers are very similar. The company together with our sponsor has a market share of 75% for vessels with Arc-4 or equivalent ice class notation. There are only 3 other LNG carriers in the world with equivalent notation which to our knowledge are chartered out long-term. We view the ability to trade in icebound areas an important advantage due to the current and ongoing construction of LNG producing terminals within icebound areas. Our fleet is regularly trading in icebound areas which gives a tremendous advantage given the large gas reserves located in the middle of this Northern sea route that are being developed for first export by the end of this year. We also expect further projects to be developed in that region. Further to that, our fleet is optimized for terminal compatibility which is of significant importance in a market that is changing from a fixed route trade to worldwide trade. The fleet consists of groups of sister vessels that provides for overall relative better economics and efficiency. Let’s move to Slide 13. In summary, the market is in place where substantial ongoing growth of LNG production coming from new LNG projects primarily in the U.S., Australia, and Russia. The world LNG carrier fleet appears too small to carry those additional volumes in the long-term and there are too many small and old technology vessels. Also there has been a slowdown in the ordering of LNG carriers with marginal ordering activity since Q3 2015. There appears to be sufficient demand for the new LNG from existing and new importers and floating regasification projects creates accelerated demand for available LNG. The LNG shipping market is maturing with increased fixture activity on the back of an improving spot market increasing energy production and larger energy carrier fleet. The current LNG world fleet and the order book including FSRUs and FSUs totals about 579 vessels. The order book counting 105 vessels is about 22% of the world fleet. As much as 30% of the world fleet is below 140,000 cubic meters and aged. These vessels are small with an average size of about 135,000 cubic meters this is well below the average cargo size. We expect that most of these undersized and aged vessels will fade out of the market and be replaced with larger and younger tonnage. As seen on the graph on the upper right side, almost all vessels built prior to 2006 are small turbine driven vessels. About 49% of the world fleet is steam driven. Furthermore, 84% of the order book has already been committed for employment. This means that there are very few new buildings that may be available to replace on average undersized an aged tonnage and to carry expected incremental LNG production. According to the order book most new builds will be delivered during 2018, which is also a period we expect significant additional LNG production. We have seen a slowdown in the ordering activity of LNG carriers there are only very few yards in the world that has the experience and capability to build such vessels. And if we were to order today, our guess is that yards would be able to offer tonnage for delivery in the first or second quarter of 2020 at the very earliest. Moving on to Slide 14. We are now in a period with strong growth in LNG production. It is conservatively forecasted that LNG production will increase by more than 50% within 2022. It also assumed that project output on existing terminals may increase going forward adding additional supply. We assume that the majority of the new LNG is coming from terminals already under construction meaning a high probability of project materialization. We expect to see imminent production increases from Russia, Australia, and U.S. It is likely that the Far East will remain the largest buyers going forward, in particular with growing imports to China. We believe we will continue to see the emergence of new niche markets in areas such as South Asia, Africa, Middle East and South America with large volumes will be imported by FSRUs. We also believe that there are sufficient buyers for the new LNG to be absorbed the majority of the new LNG export volumes have sale agreements or off-take agreements in place. We believe that existing import markets will continue to increasingly rely on LNG as a price competitive and clean energy resource. Let’s move to Slide 15. The industry is keeping on track with projected growth in LNG. In three first quarters of 2017, LNG production was up 12% from the comparable period in 2016. As expected in particular, Australia and the U.S. have been the largest incremental producers so far. The trend is expected to continue going forward with existing trains such as PFLNG, Wheatstone Train 1, and Sabine Pass ramping up capacity and new projects such as Yamal LNG, Cameron, Cove Point, Elba, Wheatstone Train 2, Ichthys and Prelude being added. In March 2017, the industry saw the world’s first cargo being produced by a floating LNG terminal namely the PFLNG Satu which gives confidence to floating LNG production technology and we expect Golar’s FLNG Hilli to follow soon. Let’s move to Slide 16. With the U.S. projected to become one of the world’s largest exporters of LNG, it is important to monitor where those volumes have been shipped so far. Sabine Pass produced 189 cargoes between February 2016 and 13 October 2017. 17% of the volumes went to South America, 25% to Central America including Caribs, 15% to Europe including Turkey, 24% to the Far East, 14% to the Middle East and 5% to India and Pakistan. Initial analysis indicates that Sabine Pass requires about 1.7 vessels for every million ton LNG produced. At full production, we expect Sabine Pass to produce 27 million tons per annum over 6 trains. This means that one would require about 46 vessels fully utilized per annum to serve this terminal alone. If we conservatively estimate that the U.S. exports will produce 69 million tons of LNG per annum within 2021 U.S. volumes may require about 117 vessels alone. That is about 25% of the current world fleet. Let’s move to Slide 17. Gas, coal and oil are by far the largest sources of energy and represents about 87% of the world’s energy mix. In comparison, renewables represents 3% of the energy mix. Due to its environmentally-friendly properties, gas is expected to outperform growth in both coal and oil by far. Gas is in particular in demand for power generation, industrial use, heating and cooking and over time in the transportation segment. LNG is the fastest growing sub-segment of the gas industry, because it provides flexibility as opposed to a rigid pipeline network. Since 1990, the number of countries importing LNG has grown from 9 to 36 and the number of exporters has grown from 8 to 19. From the year 2000 until 2017, infrastructure worth $990 billion has been constructed. When we compare Slide 17, which illustrates the 9 LNG shipping trading routes that were present in 1990 with Slide 18 that illustrates LNG shipping routes in the year 2016, that accounted 255 country-to-country routes and above 600 routes when broken into ports, it is obvious that the LNG trading patterns have grown dramatically in volume and patterns. We believe this trend will continue going for forward due to increased LNG production more and more LNG infrastructure and the larger LNG carrier fleet. Let’s move to Slide 19. As we have 3 vessels with limited availability in 2018, we want to see how the short-term market is developing. In the year 2000, spot and short-term LNG sales versus all LNG sold amounted to 2%. This means that the vast majority of all LNG was typically traded from one location to another on long-term gas sales agreement, which LNG was shipped by long-term time charters. In 2015, after years of substantial international investments in LNG infrastructure, developing new LNG producing and importing terminals and increasing the LNG carrier fleet, spot and short-term LNG versus all LNG sold amounted to about 37%. This does not translate into that 37% of all LNG sold is carried on spot chartered vessels. However, the spots and short-term market has developed substantially and is today much more liquid than the medium-term and long-term markets. We see a steady increase in fixture activity with spot and short-term fixtures increasing significantly from 2014 onwards. Driven by increased LNG supply and normalized oil price and arbitrage between the Atlantic and the Pacific Basin, the market for spot and short-term LNG shipping has strengthened substantially recently and therefore we expect the period market to become increasingly active going forward. Let’s move to Slide 20, we experienced new import markets emerging in particularly we are floating regasification terminals, which we term FSRU imports that allows for quick market access in 2016, 22 million tons equivalent to about 8% of worldwide production were expect – were expected – were exported to new markets. And the majority of those volumes were discharged into FSRU terminals. Although most incremental demand going forward will come from land-based terminals, the FSRU landscape is important because it develops very quickly and is accelerating LNG demand growth. The FSRU market has grown steadily over the past years in 2016 floating regas made up 15% of total regas capacity. This number is increased to 21% within 2021, which does not include the more than 40 proposed FSRU project in December 2016, Columbia the FSRU industry followed by Turkey in January 2017. This year FSRU projects are expected to come online in Ghana, Russia, Pakistan and Brazil. In summary, when we compare LNG supply to LNG shipping – LNG shipping capacity available from now on and forward, we remain confident that the market outlook for shipping looks favorable. The growth in LNG production set that above 50% within 2022 is estimated to outpace increase in LNG shipping capacity of 22% within the same. A large portion of the new LNG will be delivered already within 2019, meaning we should expect the period ramping up to that point and subsequent years to result in an improved and increasingly healthy shipping market. Additionally, the partnership’s fleet is largely ice classed and winterized enabling the flexibility to pursue the best of 2 different markets, which has proven to be a strong advantage so far in securing long-term charters. We have now reached the end of the presentation. And I now open the floor for questions.

Thank you very much indeed. [Operator Instructions] And your first question from Stifel comes from the line of Ben Nolan. And your line is now open sir.

Yes. Thanks. Hey, Tony, Michael a couple of questions. First, I was going to see if you could maybe shed a little light on where things stand with respect to the recontracting of the Arctic Aurora, Statoil has been in the market whether tender on that, and just curious if you could shed some light on where it stands and how you think about employment in that vessel?

Thank you very much for that question. As you may know that is the Statoil requirement is a tender process. So far Statoil has not concluded that tender. So I guess we will be able rather to share some light on that in the coming weeks.

Okay. And then secondly as it relates to Yamal vessel, obviously it sounds like they are going to be loading a cargo imminently which is as far as I have heard it actually a little ahead of schedule when thinking through when your vessels go on contract, is there an opportunity for some of those contracts to maybe start at the front end of the delivery period or maybe even earlier than the scheduled delivery period?

Yes, thank you very much Ben for that question. Well, I mean we have the same understanding as you that Yamal is very much on time and rather accelerating their shipping demand. I think time will show how they will sort out their shipping needs that maybe potentially earlier than the contracts that we have with them. So, we think these are natural questions that Yamal will need to address in the near future.

Okay. And then just two more quick ones then actually it’s been in the news, you guys placed an order for FSRUs in China or the parent company placed orders for FSRUs and China didn’t see a mention of that in here. But could you maybe talk through how you think of that and how it might correlate to the – eventually to the partnership and are there contracts on those vessels?

Yes, thank you. So, there are no contracts on those vessels. These are orders without employment and how they relate to the partnership I think we also need to address going forward.

Okay. And then lastly for me this is sort of a more broad-based question, Tony, you made a comment along the lines of thinking through distributions on a go forward basis, are you going to marry them or partner where it’s going to be reflective I guess of the distributable cash flow. Obviously, the distributable cash flow in the near-term has been coming down a little bit. Is it – should I take that to mean that if as the distributable cash flow is a little bit less that you might think about ratcheting back the distribution a little bit as well?

Yes, hi, Ben, this is Michael. I think in our call earlier, we outlined the operating factors which will affect, let’s say, how much distributable cash flow we are going to generate in the near-term and in the longer term. We have some pretty good visibility. But there are some moving parts out there. At the end of the day, there are many things that we can look at when we look at coverage ratio and distributable cash flow, because we can only pay that the cash distributions which reflect how much money our ships are actually making. So, I don’t think the board or us are in a position to make a decision on that at this particular stage, because we feel relatively comfortable. We could do a dropdown which depend on the situation. We could buy third-party assets. There are many things that could be done. So, I think that’s where we stand at this particular point.

Okay, that’s helpful. And I said it was last, but with respect to dropdown, I mean, it’s been a while since you have done one and I think cost of capital has one of the issues, where do you stand in that respect now?

Well, I don’t think anything has really changed given our cost of capital doing a dropdown from our sponsor is a challenge. So, I think if everything else remains unchanged that would be – that would be relatively unlikely. So we are open to look at other type of acquisitions or deals, which could be more accretive to distributable cash flow in the longer term. So we’re very open-minded and flexible in that respect.

Okay, alright. I appreciate it. I’ll turn it over. Thanks.

Thank you very much indeed. And your next question from Morgan Stanley comes from the line of Fotis Giannakoulis. And your line is now open sir.

Yes. Hi, guys and thank you. Just want to follow up on the previous question about the drop downs. First of all, what would be the order of this dropdowns, how are you going to view the fully owned vessels by response or in terms of priority versus the other Yamal vessels the Arc-7 that they are only 50%. And if you can give us an idea of how we are going to think of the dropdown prices given the fact that some of their own vessels they are little bit older than the new building of the Yamal vessels?

Yes. Hi, Fotis. I think that goes back to what I was saying before that in order to dropdown and make the numbers work given our cost of capital that the multiple is going to have to be very, very low. And that’s – that means the price would have to be something that the sponsor would have to consider it would more certainly have to be a book los from the sponsor side. And that’s the consideration of the sponsor would have to make. So I think that’s – that’s part of the challenge. Now in terms of priority, which vessel, yes now we’re going to have – we have the Clean Ocean and we were very eminently going to have the 2 Arc-7s, which are coming online and we’ll just – we’ll just have to see it’s hard to say which if – if the windows are open and our yield improved significantly and it make sense, which of these vessels will be dropdown.

Thank you, Michael. My understanding from your answer is that the sponsor would be willing or will be open to consider a sale at the book loss or are there any other alternatives in order to help the partnership with the issue of its cost of capital, for example, taking some preferred or some other form of capital, which is not going to be that as expensive as the common equity capital. Any thoughts on that?

Absolutely. Everything will be considered. I cannot speak for the sponsor on whether the sponsor will take a big loss, because that’s something which is sponsor would have to decide and I presume this would not be a very easy decision, but I think at the end of the day the sponsor is very supportive of the partnership and will consider any – any option that you know can make the partnership in the more robust financial condition even more than there is now which it is already in the very robust condition.

Thank you, Michael. That’s very clear. Can you also comment about how you think of the refinancing of the unsecured notes – do you think that we should model it, is it a new unsecured note or this is going to be something that will be played out through the dropdowns?

As I said before, we will be proactive in addressing the maturity of this note. Most likely, it will be refinancing with another unsecured notes. So, it’s a watch the space situation, but we are proactively looking at something there.

Thank you. One last question for Tony, regarding the market, Tony, we have seen spectacular improvement of the short-term market. I am wondering how much of this improvement is seasonal, how much of this improvement is because of the fundamental tightening of the market? What shall we expect in the short-term market beyond the winter? And if you have seen improved activity in the period market either the aggregators or end users looking to charter vessels under period contracts in any meaningful way?

Yes, thank you. Thank you, Fotis for that question. Look, we last year at about the same time we also saw a spike in the market. At that time, the spike was largely driven by an arbitrage between the Pacific and the Atlantic. Now, we are seeing a much – what appears to be a much broader improvement, which is driven by first of all, supply of LNG. There is substantial increase in LNG output that needs to be transported somewhere. We see a lot of these issues in the Middle East that are keeping oil prices and oil prices relatively high compared to what it used to be and then now. And then we see significant buying interest in the Far East, in particular, from China. China is really importing LNG beyond what most people had. So, it seems like the improvement this time around versus last year is broader and more robust and we think it will last in a much longer period going forward in particular, because supply of LNG keeps increasing every quarter now. And we can only look at the forward curve and then we get a quick – very quick reaffirmation that all this LNG is coming. Of course, there are a number of ships that are also being constructed which will be delivered during next year, but we have reasons to believe given the broadness of the improvement in the market that this is here to last for longer period.

Thank you very much, Tony. Thank you, Michael.

Thank you very much indeed, sir. And as there are no further questions in the queue, we shall pass the floor back for closing remarks.

So, we would like to thank you all for your time and for listening in on our earnings call and we look forward to speaking with you again on our next call. Thank you very much.

Thank you very much indeed gentlemen. And that does conclude our conference today. Thank you all for participating and we may now disconnect. Thank you, Mr. Gregos, Mr. Lauritzen.