Hi, and welcome to FLEX LNG's Third Quarter Presentation. I'm Oystein Kalleklev, the CEO of FLEX LNG Management, and I will be joined by our CFO, Knut Traaholt, who will run you through the numbers a bit later in the presentation. Following the presentation, we will have a Q&A session where you can either use the web chat function or send a email to ir@flexlng.com. If you have any questions then we will answer some of the question in the Q&A session following the presentation. Before we begin, we just want to highlight our disclaimer regarding forward-looking statements and use of non-GAAP measure, and there are limits to the completeness of detail we can give in this presentation. So please, review also our earnings release together with this presentation. So let's start with the highlights. Revenues for the quarter came in at $91 million, which was in line with our previous guidance of $90 million. Earnings were strong. Net income and adjusted net income was $47 million and $42 million, translating into earnings per share and adjusted earnings per share of $0.88 and $0.79 respectively. During the quarter, freight and product markets were booming and this affected both short term and long term rates positively. During the quarter, we had three ships commencing new Time Charters. Flex Enterprise and Flex Amber commenced the new seven year Time Charters, which we announced in June and this replaced the shorter term Time Charters we had for these ships prior to this announcement. We also had Flex Aurora, which was delivered as the final fifth ships to Cheniere at the end of the quarter. Our CFO, Knut’s been busy refinancing ships and we have recently secured $630 million of refinancing for four of the seven ships we intend to refinance, and with these…

Thank you, Oystein. Let's look at the key financial highlights for the quarter. In the third quarter, we delivered revenues of $91 million or TCE of $76,000 per day. The increase in revenues is explained by the three Time Charter contracts mentioned by Oystein and somewhat higher earnings under the variable higher contract for the Flex Artemis. Operating expenses of $17 million for the quarter or OpEx per day of $14,600. The OpEx is higher than the guided level of $13,000 per day, and is explained this quarter by still higher COVID related expenses, crew changes and extended handovers. Going forward, as restrictions are lifted, we expect the COVID related costs to slowly go away. And with the extended handovers we have already performed, this cost should taper off and we should return to normalized levels. Interest expenses this quarter is higher due to the increase in interest rate levels, but it is mitigated by our derivative portfolio, and I will return with more details on the derivative portfolio later in the presentation. This quarter, we have extinguishment cost of debt of $13 million, which is related to the refinancing of the Endeavor and Flex Enterprise leases, where the purchase option price is higher than the book value of the debt. If we reconsidered the total refinancing of these two vessels, these costs will be paid back in approximately two years as the new terms are more attractive. This gives us net income of $47 million or an earnings per share of $0.88, and an adjusted net income of $42 million or $0.79 per share. If we look at our balance sheet of $2.6 million that is the 13 vessels state of the art LNGCs with an average age of three years. And as a reminder, these vessels and the…

Okay. Thank you, Kunt. So let's go back to the market. LNG exports the first 10 months of the year is about 5% is driven by US despite the shutdown of Freeport, which is now expected to resume exports early next year. US is still growing 11% while 6 million ton in total. Russia despite all the sanctions and the curtailment of pipeline gas, LNG export growth out of Russia is continuing to grow and is growing 12% in the first 12 months adding 3 million tons. We also have 3 million tons from Malaysia growing 13% and then 4 million tons from the various of the markets. If you look at the import side, not surprisingly maybe, it's Europe who is absorbing and soaking up a lot of the LNG. They are basically importing all the growth in the market and then also the shortfall in demand from other countries. The most notable being China, as I mentioned, with the COVID restriction and lockdown still in China, LNG import is down 22% this year. The high price of LNG is also forcing out other the countries like Bangladesh, Pakistan, India where the price of LNGs become so expensive that they are turning rather to coal and other feedstocks for their energy demand. So this demand destruction in other countries and the growth of LNG market has really saved Europe up this year, which is able to go with LNG imports by 37 million tons or 57% the first 10 months of year. So if we look at the gas current share in Europe hope, it's been solved by a couple of factors. It's one, the high prices is stimulating energy savings and we have seen especially demand -- destruction of demand subversion on the industrial side, a lot of…

Okay then we are ready from some questions, sir. I think we have about 20 for questions before we are heading for airport going to New York for investor meetings. So if you are in New York, we will be on the Marine Money Conference in on Thursday talking about LNG and shipping strategy in general. So hope you will be there, if feasible. This time, we have had a lot of questions. We have had a competition here with some giveaways for the best questions, and that has resulted in a wave of questions, which we are happy with. And we have also given some gifts for those people giving the best question. Number one, future look like, you have to wear shades, FLEX LNG shades, and if that shading is not enough, we also have a cap maybe you, Knut [Multiple Speakers] my head. You want to try this on? And safety always come number one. So we also have the Flex reflexive bands. So let's see who is winning our giveaways this time.

Yes, a lot of questions as you mentioned, and I think we kick off like last quarter with the questions from Omar Nokta from Jefferies. He starts off with the index link, the vessel, the Flex Artemis. Can you remind us of how the earnings are calculated? I'm guessing there is a ceiling of around 100,000 on a floor of about 50,000 per day.

It's much easier. Before we had more ships on index, now we only have one ship on index, but still we get a lot of focus on this. So charter hire is tied to the spot market. There is a ceiling and it's a floor, and we have communicated the floors around our cash breakeven level. When it comes to the ceiling, it's much higher than 100,000. Keep in mind we are generating $91 million of revenues in Q3, we are saying that this will go to $95 million to $98 million for Q4 earnings and Q3 for the spot ship, for the Artemis ship was pretty good already. So when we are saying that earnings are increasing $5 million to $7 million, if that’s 92 days in Q4, so basically we should be growing the revenues for that ship somewhere around $50,000, $60,000 per day. So that means that the ceiling is a lot higher than 100,000. I won't comment specifically on it for competitive reasons.

And he follows up with the question regarding the vessels coming open in 2026 and 2027. How does the charters interest for those vessels, and any indications on the rates and duration?

There's a lot of interest. Keep in mind, the first available ships you can get is ‘27 and ‘27 all the book at the yards are getting pretty packed. So soon, we are talking 2028 prices out through 50, interest rates are up, we have hedged a lot of that risk. So that means in order for people to calculate a good return, they basically need maybe 10, 12 years time charters and probably a rate starting at 9. So that means that as we shown on the graph, long term rates are picking up a lot and we think we can benefit from that. We are having the same ships as MEGI X-DF, the two stocked efficient ships. So what we can offer is maybe some more flexibility in terms of the duration of the time charter, because we have ships coming open in that window. But I think we can get better rates than we have on average today. And I would say interest is high given the fact that yes, the order book is big, but there are very, very few and committed ships in the order book. So we are working on that. We are meeting people, we get -- there are tenders in the market for these kind of deliveries slots, that's why we’re also upbeat about the prospects for recontracting ships for longer durations at [charter] rates.

And then a question from Anders Karlsen, for the vessels where the firm period is ending in 2024. So it's a question on the option periods. How are the -- is the rates the same or is there any adjustment through the rate?

Yes, I think if you look at in our presentation, there's two ships coming open possibly in 2024. It's the Vigilant, there are extension option for two years for that ship. So that's the first fully open ship we have in the middle of 2026. And then it's the Constellation, also similar period middle of 2024, the charter that can extend the ship for three more years. In general, I would say, option rates tend to be higher than the firm rate. It's a option. We are not there to give away options for free. Usually if you give a option, you want to get paid and that's usually either through a higher rate on the firm period or a higher option rate.

And then we have a number question about fleet development. How to grow the fleet, do you have any newbuilding plans, plans to expand into FSRUs or consolidation?

Yes, I think we get this question every quarter. What we have said, we want to be disciplined. We have ships coming open this ‘26, ‘27 delivery, slightly ahead of some of the newbuildings for delivery now. And also when LNG export volumes is kind of going tremendously after a bit muted period now from ‘22 to ‘24. So our focus then is not running through yard buying out ships at 250, everybody can do that if they have the money. What we want to do is secure employment for the existing ships we have, and that is our main focus. And then of course having a good return on our equities so we can pay this dividend. We are open to growing but we just feel newbuilding prices are stiff. If we now investing $250 million in that ship, it would be more difficult for us to pay that dividend, and also that capital will be idle to maybe end of 2027, it wouldn't generate any return. So yes, the yard’s ticket price is 250 but also the opportunity cost of tying up that capital for such a long period we also have to take into account. So if you're calculating, you're losing that dividend for those couple of years, you're tying up that capital. We also take that into consideration when making investment decisions. As we said in the past, we’re open for consolidation. If we find suitable ships, we have a scalable platform, we can easily grow the fleet by twice as many ships without recruiting many people. And we have a in-house management, which has delivered fantastic results for us. So we are open to do it. But you know, our number one priority is to deliver good returns for our shareholders and efficient transport and good service level for our customers. And if we do that, I think we will do it well. FSRUs, no, you know, I think that market was dead. It's been resurrected because of the problems in Europe where you had to add a lot of import capacity very quickly. So it's been good for those people who have FSRUs. And then I think there will be a conversion market for existing ships. You can convert them into FSRUs use. All modern ships are basically too modern to convert them into FSRU. I think there are 160 [high fuel] out there are better candidates for being converted to FSRUs, because they are diesel electric, they have four diesel electric motors, and you need a lot of electricity as well to generate kind of the regas kit. But you know that would be good for us. The more ships that are leaving the existing fleet, the less ships that are in the fleet and every shape you're converting to FSRU or employing as FSRU that need more cargos, and those will be transported by the existing LNG carriers, including ourselves.

Moving over to the market, we have a question from Michael [Otton]. How do you see Asia ton mile demand for this winter given the high probability of La Niña?

Yes, it seems like we will have a triple dip La Niña this year. I think it's the third time in recorded history we have a triple dip. Usually that means a cold snap in Asia, sometimes also theoretically should be in Europe, even though the winter has started mild, but it's too early to sell your skis. The winter could be coming any day soon. So in general, it should be colder whether. Whether this has an effect on ton mileage, it really depends on whether Asia suddenly they get a cold snap and start importing desperately cargos, because one thing in Asia is the fact that they have rarely limited storage space. So it's more like LNG in Asia is just in time, because they don't have the same underground gas storage levels we have in Europe. So we saw this happening January 2021 with the cold snap in Asia. And certainly we had a wave of cargos going to Asia and that really resulted in a very strong spot market for freight also in January-February 2021. That could drive up tone mileage. But so far this year, ton mileage has been very muted, because the cargos are flowing predominantly to -- or the US cargos are flowing predominantly to Europe, if that's switched to Asia, ton mileage will go up and we will probably have less problem when all the ships in floating storage is liquidating their cargos, then those cargos -- then the ton mileage will mitigate the lower point time.

And we have a question on the OpEx and the increased OpEx level in Q3. And an explanation for that is that's the new level. I'd say that, Q3, we still had some COVID related costs. It's related to quarantine and COVID testing that is facing-off and we are no longer subject to strict current timing and testing as the easing of the restrictions in particular in Asia. We have also had a large number of crew changes and new [on signers], which we think results in extended and handovers, which is higher cost that should also taper off. And we have also had some supplies which were expensed in the Q3, but is for the remaining part of the year. We do believe that we should come back to the guided level around 13,000 per day and this is something we are monitoring continuously.

Yes. But also as we said in the presentation, inflation has been higher than a lot of people expected. Not us -- we had 13 months before it started to increase the race from zero, and actually we are benefiting from a strong dollar in the sense that we have a lot of cost for the seafarers in local currency. And a strong dollar means that they will have the same purchasing power even if you have some inflation.

And then moving up to a popular theme, it's our cash balance and our refinancing phase one and two, where we release a lot of cash. What's you plan to use all this cash for?

I think you explained well. We have the best financing market I've seen in a long time. Last time I've seen something similar to this was 2014. But I think the market for financing today for Blue Chip clients as ourselves are even better today than 2014. For those who are second tired, financing market today is very challenging. So I think for the Blue Chip guys like us, we have to go back to prior to the financial crisis in 2007 when the Germans were throwing money around everywhere, we find taking the money when it's available and it's attractively priced and where we can look in that financing for many, many years to come, makes sense. And also we are coupling that with the revolver as Knut mentioned. So the carrying cost for also having that cash is not very high. So it gives us optionality value and also gives our investor comfort that our dividend can be sustainable for a very long time, given our contract backlog, our market outlook and then our very sound cash position.

And that brings over to the dividends, couple of practical questions, when the dividends is being paid, then I refer to the information that was distributed this morning on the key information related to the dividends. For the US investors on New York Stock Exchange, the dividend will be paid on or about 6th of December and in US dollars and for the investors on Oslo Stock Exchange, they were paid in -- on or about 9th of December. But please see the press release.

Well, ahead of Christmas. So just wait and you will get it so you can spend it on your family or friends.

But that gives also questions regarding guiding for dividend going forward…

Yes, I got some emails today, wondering why we don't have a special dividend. We can't really pay a special dividend every quarter. Then it becomes ordinary dividend. What we have said fairly $0.75 is a comfortable level over time, which is sustainable over longer time. When we completed the balance sheet optimization phase one, we raised $137 million of cash, our target was $100 million. We paid out special dividend of around $26 million. We are now working, progressing well on the phase two. Let's see next year what we are doing. We can't really guarantee special dividend, really depends on the market and the opportunities we have. But what I can say is we like dividends. We like to pay out dividends. We are shareholders, we have a big shareholder also in the Fredriksen Group who appreciate the dividends. So we are paying out basically hundred percent of earnings, but where we can have optionality of topping that up with special dividends. But we're not going too guaranteeing, what we are saying is we like the ordinary dividend and from time to time we will evaluate whether it makes sense to [juice] it.

And you mentioned the main shareholder, there’s a question here. How involved is the main shareholder and the decision making in the company?

Of course, our main shareholder, John Fredriksen, is the most successful shipping investor of all time probably. He's been doing this for six years. He's seen cycle common goal. So of course, he owns 44% give or take of the company. So of course he has a vested interest in the company and the performance of the company. So sure, he's heavily involved. And he's a fantastic guy to tap for advice as he has seen everything in the past, he has seen boom, busts and so for sure he's involved and like the business.

And I think we'll wrap up with a winner question on Twitter from [Johannes Schuler]. Why are the LNG and LPG markets completely detached, but still FLEX and Avance Gas management are the same and so great?

Thanks [Johannes Schuler]. I will seeing you in neighborhood with some FLEX kit soon. Avance Gas, which I'm running as Executive Chairman and our Chief Commercial Officer, Marius Foss is also Chief Commercial Officer of that company. Yes, it's detached but there are some similar drivers. Shale gas. number one, shale gas has been made US the biggest LNG exporter in the world. On the LPG side, it's by far the biggest. So 50% of the very large gas carrier cargos comes out of US. In LNG, it's less. So you know, there are some similar drivers. Although, the VLGC market is more a commodity shipping, LNG is more a liner business where it's more about logistics, having long term relationships and making sure that the cargo is always on time. On the VLGC, it's a bit different. As mentioned, commodity shipping, Avance Gas is mostly there for a spot oriented company and I will be presenting Avance Gas results next Thursday. So if you think FLEX is a bit boring and you like to have a bit more excitement into your life, you can also invest in Avance Gas listed in Oslo Stock Exchange, which has a lot more spot exposure, which goes up and down. Right now, it's very nice being in the VLGC market with rates at around 120,000 for these ships that is costing a lot less than LNG carrier. So thank you for your question, [Johannes]. And I we adjourn it for the day and hope to see you back for quarterly presentation in February. So that's it for us. Thank you very much for joining. Thank you.