KNOT Offshore Partners LP (KNOP) Q3 2016 Earnings Report, Transcript and Summary

Good afternoon and welcome to the KNOT Offshore Partners Third Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Costain, CEO. Please go ahead.

Thank you. If any of you have not seen the earnings release or slide presentation, they’re both available on the Investors section of our website. On today’s call, our review will include non-U.S. GAAP measures such as distributable cash flow, DCF and adjusted EBITDA. The earnings release includes a reconciliation of these non-U.S. GAAP measures to the most directly comparable GAAP financial measures. A quick reminder that any forward-looking statements made during today’s call are subject to risks and uncertainties and these are discussed at length in our annual and quarterly SEC filings. As you know, actual events and results can differ materially from those forward looking statements. The partnership does not undertake a duty to update any forward looking statements, and now onto the presentation. KNOT Offshore Partners, KNOP’s focus is on the Shuttle Tanker segment. This asset is deal specific and an integral part of the logistic supply chain that provides a vital service transporting oil from the offshore oil production units to shore side. In effect, a midstream mobile pipeline business with fully contracted revenues, stable non-volume based revenue streams. KNOP trades at a significant yield premium to the Alerian Index, which represents around 75% of MLPs by market cap. Unlike most of these MLPs, however, we are operating in a space. We’re seeing substantial oil production growth and consequently the supply of Shuttle Tanker is tightening as demand grows. We have a young fleet and after record-breaking set of results in the previous quarter, but to-date, we reported our latest best ever financial results for the third quarter of 2016. These are our highest ever revenues and operating income. Together with our highest ever adjusted EBITDA and distributable cash flow has a very solid financial situation. We’re also pleased to announce latest additions to the MLP, the Raquel Knutsen, for an acquisition price of $116.5 million expected from the December 1, 2016. The vessel has delivered in March 2015 with a ten-year firm charter to Raquel. As well as being an accretive acquisition, the vessel has a time charter duration of over 8.25 years plus five further years of options significantly increasing our MLP charter backlog. It also reduces the average age of the fleet. Our sector is unique amongst marine MLPs. In that, there has been no speculative ordering of shuttle tankers, so the partnership should yield both stable and sustainable revenues. Before ordering a new vessel, our sponsor, Knutsen NYK, will always agree a long-term employment contract with the charter. Our sponsor Knutsen NYK is according to Clarkson Platou research, parts of the largest shipping group in the world and NYK is a major company in the Mitsubishi family. Now turning to presentation, Slide 3. Q3 2016 financial highlights and recent events. For the third quarter of 2016, the partnership generated record revenues and operating income of $43.6 million and $21.2 million, respectively, also our highest average adjusted EBITDA and distributable cash flow of $35.1 million and $20.3 million. We declared a stable distribution of $0.52 for this quarter, the coverage ratio of 1.35. We had an excellent operational performance of 100% utilization this quarter. We are pleased to announce that on September 13, 2016, Statoil exercised its options to extend the time charter of the vessel Bodil Knutsen for two additional years, in accordance with the existing time charter. We’ve also began the series of one-year extension options, five years in total again within the period. In addition, we are announcing latest addition to the MLP fleet Raquel Knutsen for an acquisition price of $116.5 million effective from the December 1, 2016. The vessel was delivered in March 2015 with a ten-year time charter to Raquel. With this acquisition, which demonstrates our sponsor’s strong support and commitment to the MLP, our fleet will have grown 275% since the IPO in April 2013. Slide 4, income statements. Total revenues were $43.6 million for the three months ended September 30, 2016, Q3, compared to $43.1 million for the three months ended June 30, 2016, Q2, an increase of $0.5 million. Operating expenses for Q3 were $22.4 million, compared to $22.8 million in Q2. Operating income for Q3 was therefore $21.2 million compared to $20.2 million for Q2. Net income is significantly impacted by the recognition of realized losses and unrealized gains and losses on derivative instruments, and net gain of $3.6 million in Q3, and a loss of $3.2 million in Q2 due to changes in long-term interest rate outlook. Net income for Q3 was $19.4 million, compared to $11.6 million in Q2. This equates to an earnings per unit of $0.70. If we adjust the unrealized non-cash elements and derivatives a $4.4 million gain, earnings per unit becomes $0.52. Slide 5, adjusted EBITDA. In Q3, the partnership generated our best ever adjusted EBITDA of $35.1 million. It compares to $34.1 million in Q2. Adjusted EBITDA of first earnings before interest, taxation, depreciation, amortization it provides the proxy for cash flow. Adjusted EBITDA is a non-U.S. GAAP measure used by our investors to measure financial performance. With a wasting asset like a vessel, younger fleets in theory should produce lower EBITDAs for every dollar invested. The annuity effect reduces the value loss in the early years, which is factored into replacing CapEx calculation or distributable cash flow. KNOP fleets has an average age of 4.9 years and this compares to the rest of the industry average or shuttle tanker excluding KNOP of 11.5 years. Slide 6, distributable cash flow. Another non-U.S. GAAP measure used to estimate the distribution sustainability. Today, we report our highest ever quarter distributable cash flow of $20.3 million in Q3, compared to $18.5 million in Q2. We maintain our highest distribution level for Q3 of $0.52 per unit, equivalent to an annual distribution of $2.08. This distribution coverage ratio, of course was a very comfortable 1.35. Slide 7, balance sheet. At the end of September, we had our best available liquidity positions to date with cash and cash equivalents of $27.4 million and an ongoing undrawn credit facility of $30 million. The credit facilities are available until June 2019. We have a predictable cash flow and we do not have any loan maturities to grow the second half of 2018. The total interest-bearing debt outstanding of $635 million, and annually we currently have scheduled repayments of $48.9 million. This compares to replacement CapEx charge of $28 million when computing distributable cash flow. We believe this treasury position is very comfortable and with our sponsors support we have been able to utilize this available liquidity to further grow the MLP. Slide 8, stable operational performance results in stable financial performance, since the formation of KNOP, we have had very strong levels of vessel utilization, which means continuingly high and an increasing predictable revenue, adjusted EBITDA, and discounts in cash flow as more vessels are added to the fleet. In Q3, we had record distributable cash flow of 20.3 million and we’ll make 15 million distribution. Since our initial public offering over three years ago, we have declared distributions of $6.66, so our initial investors have received a total payout of nearly 32%. Our current yield is around 11%. Slide 9, Raquel Knutsen drop-down. Built by Cosco in China and delivered on the March 27, 2015, the Raquel Knutsen is a Suezmax shuttle tanker operating under a time chart that expires in the first quarter of 2025 with Repsol Sinopec in Brasil to have our options to extend until 2013. We have agreed with our sponsor Knutsen NYK to acquire the vessel or the MLP for 116.5 million with delivery effective from December 1, 2016. It will be part financed by commercial debtors around $75 million and also through a combination of non-amortizing solid credits of $25 million, and also cash, which we have available. The corporate credit line remains undrawn at this point. The senior loan has a margin of 200 basis points with an annual repayment of $4.3 million. Since our last drop on October 15, 2015 the Ingrid Knutsen until acquire Raquel Knutsen on December 1, 2016, the MLP will have paid repaid $59.2 million of the secured interest bearing debt outstanding. The net charter rate will be around $6 million of net income and approximately $13 million of EBITDA for the year ended December 31, 2017. Slide 10. Long-term contracts backed by leading energy companies. The Windsor Knutsen has a two year contract from 13 October, 2015 with as Brazil Shipping, as a subsidiary of Royal Dutch Shell with options to extend for further six years. Hilda Knutsen and sister ship Torvill Knutsen are employed on the Goliat field, of the original five year contracts on these two vessels on average of 2 years of the firm charter period remains. Given the specialized nature of this contract, we would expect the vessels to operate on this field throughout its life. The Bodil Knutsen, the largest shuttle tanker operating in the North Sea is ice-class, and on charter to Statoil until May 2019. There are five further options to extend. Statoil has recently been given permission to proceed with the development of the Johan Castberg oilfield in the Barents Sea, 250 kilometers north of Hammerfest. And this should provide medium term employment and security for the Bodil. Four of our vessels are on long-term bareboat charter to 2023 with Petrobras Transporte. These vessels are among the youngest in the Petrobras fleet being delivered between 2011 and 2012 and are heavily utilized. Dan Sabia and Dan Cisne are of unique size and the Fortaleza Knutsen and Recife Knutsen have shallow drafts with lots of thruster capacity. Three of these vessels have undertaken their first five year special survey in 2016 at the charters expenses. Delivered in 2013, the Carmen Knutsen is on charter direct for Respol Sinopec until 2023. The Ingrid Knutsen was delivered in December 2013 and is operating in the North Sea on a time-charter for Standard Marine Tonsberg AS, a Norwegian subsidiary of Exxon Mobil. This will expire in the first quarter of 2024. The charterer has options to extend the charter to five one-year periods. Slide 11, tenders have returned. At the time of the IPO, our fleet of four vessels had an average age of three years. Now over three years, we have a fleet of 10 vessels, which have an average age of 4.75 years. The Raquel Knutsen will reduce the average fleet age by 3 months on entering the MLP. With a strong sponsor support and despite recent market volatility we continue to grow. The market for new builds has returned and we had several tentative enquires and an invitation to 10 different two new built shuttle tankers. Slide 12, the dropdown inventory. Four potential acquisitions. Today we have a further potential dropdown inventory of four vessels having added seven vessels to the fleet. The fixed contract periods for the dropdown is a minimum of five years on average. It could be longer depending on which series of options that Charterer elects to take on delivery. Slide 13, committed to safety. In at almost end of October 2016 both Knutsen NYK, which manage the shuttle tankers fleet of KNOP; and Knutsen OAS Shipping, which manage Knutsen Group’s LNGs and product tankers have not registered any LTI, Loss time Injury’s and during that period more than 7 million hours has been worked all over the world. Slide 14, save the date. On the 15 of February 2017, the partnership we held at Investor Day where the interim results for the quarter end 31 December was represented in addition to an Investor Day it will be in a similar to amongst the last years events. In summary, we have a solid and highly profitable contract base. With a revenue backlog of $727 million and a further $153 million with the Raquel Knutsen drop-down, an average contract duration as of let’s say September was 4.9 years. We have a modern shuttle tanker fleet with an average age of around 4.8 years and this compares to the rest of the industry average of 11.5 years. The partnership is well placed and highly focused on expanding the medium term, both the MLP and the oil markets recover. No one has more expertise and experience in operating the sophisticated shuttle tanker like Knutsen offshore and we operate these vessels with real expertise. We’ve had minimal off-hire with a 100% utilization in the last quarter and 99.7% since the IPO, excluding scheduled Drydockings. We have a supportive sponsor who has a large asset base, which will grow the MLP by cash and good proportion of expanding market. Thank you. And I’d like to turn it over now to anybody who has got any questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Michael Webber with Wells Fargo. Please go ahead.

Hey, good morning, guys, how are you?

Hi, Michael. How are you?

Good. Just to quickly touch based on the drop and any sort of corresponding distribution increase. I could have missed it in the prepared remarks. I know I didn’t see it in the release. But what’s the thought process around eventually bumping the distribution following the dropdown and/or any timing around that decision?

Well, we haven’t – we decided this at present moment time to use the additional funds from the Raquel to strengthen – further strengthen the balance sheets and improve our cover ratios, because in the medium-term, obviously, we’ve taken more leverage with this drop and with the cover that we have today, we can we repay the debt quite substantially. I mean, at the moment, the 135 coverage be used over time to reduce the leverage in the MLP in the last – since we did the last drop at the end that we have repaid, we will have when we receive this vessels we’ll be repaid around US$60 million, and by the end of 2016, we will repay the similar amount. So we see that we need to keep the coverage. We’re not raising new equity, or doing something else. So that’s really the thinking behind it today.

Right, and that makes sense. So when you look at the, I guess, the amort and the balloon schedule the next couple of years, I believe, you’ve got $155 million and a balloon payment coming in 2018 along with kind of a $50 million amort schedule in 2017 and something similar in 2018. So it’s pretty lumpy in 2018 and into 2019, which…?

The 2018 is really related to the Hilda and Torill. I mean, obviously, we’ll wait to see how the charters –what’s in the structure the new charters have and what we can raise against the vessels. Obviously, if the charter wants the term deal, it makes it easier to actually increase leverage on the ships. If we he wants optionality, we’ll probably just renew at the current level. So it’s really, we don’t know what the outcome is for these things until actually happens and therefore it’s quite good to stay flexible really, and not push it all out to distributions

Of course. And maybe if I back away from that for a second and kind of the question on the dividend was within the context of your equity currency, kind of looking at that amort schedule. So maybe just big picture, when you see that 2018 and 2019 schedule coming up, you’ve got good contract coverage. You’ve the possibility of raising the distribution here, but you want to build some cover. How do you – when can you realistically address the 2018 and 2019 balloon payments to actually refi those, and then how do you prioritize your kind of your toolkit in terms of your levers you can use, including new equity or organic actually to try to handle that?

We’d like to have a little bit of flexibility, because obviously we don’t want to press. We don’t like to press the charter on the rates, it’s more. He should come to us and decide what he wants to do. It’s just needs a negotiation. It gives them more flexibility. And at some point, they will come to us and ask about the renewal on the ships. I would expect, because the ships the two the Hilda and Torill are specialized. And then I think in 2019, they’ll start look at the Petrobras ships that starting to come and it’s quite a lots of refinancing at that point, but the contracts still had a lot of cover on them. So we see that we’re quite relaxed about it, this area is not something. But it’s something we haven’t got lots of visibility on in terms of how much you can actually until you actually finalize negotiations and then talk to the banks we haven’t got lot of visibility on exactly how much cash flow we’ll have in that. So it’s better to wait and see and this is why one of the reasons why if we’re not going to market gain equity, we’re better off just dropping the ship and maybe put it in the distribution increase in the corporate.

Okay, that makes sense. Just within that context and looking at the option theory associated with a number of these vessels, what’s the window prior to that option kicking in, where they actually need to notify you whether or not they’re going to be keeping the vessel? Can you get some visibility into that kind of six to nine months ahead of time, or is it a tighter window?

Yes, yes, usually six months normally with an option they have to acquire. Yeah.

Okay.

And the way the shuttle tanker market is today, it’s pretty tight. I mean, we’ve actually time chartered out to one of our competitors and there isn’t a lot of tonnage around. So we’re not worried about this. We think that the market will stay reasonably tight now. And as I alluded to in the call, we’re starting to see inquiries about new ships again. So new opportunities open up a bit, but it’s early days yet. It’s been very quiet for last year, but I think it’s functioning the way the capital markets have been generally and the shipbuilding market as well. But it’s starting to change because of the new ships.

Right. That makes sense. Just one more for me and I’ll turn it over. I believe you mentioned, or you mentioned earlier somewhere there’s an active tender for two shuttles in the market right now, and I think there’s another one coming down the pipe that we read about. Given the state, from a financial standpoint of some of your competitors, maybe your larger competitors, where they’re still digging out from some balance sheet issues, how competitive are those dynamics? And is it materially different today than, say, it was two to three years ago in terms of who you’re seeing at the table next to you, kind of vying for this business?

I mean I don’t think it helps; it’s not very easy to comment on the new competitors. But we obviously, from our perspective, we’re happy that were in good position to contract. And I can’t really comment on the other MLP sort of other businesses…

Have they been any more or less competitive in terms of the tendering process?

I would say that we can be pretty competitive, because we can finance pretty well the ships. We really have a very good reputation and therefore leverage is easy for the financing. So – but I don’t – I mean it’s difficult for me to comment how the business do the contracting, we just have our own business model and that’s that.

Right, but you’re seeing fewer players kind of vying for the same business because they’re busier, right? That’s kind of all I’m getting at.

I would expect the usual suspects would be invited, Michael.

Okay, okay. That’s helpful. All right, I will turn it over, but thank you for the time, guys.

Your next question comes from Spiro Dounis with UBS Securities. Please go ahead.

Hey, good afternoon, John. How are you?

I’m good, Spiro. And how are you?

Good, good, not too bad. I think you’re the only green stock on my screen today, so congrats on that. Just wanted to pick up on some where Mike left off, just around maybe equitizing this drop at a later date. And I don’t want to put words in your mouth, but it sounds like maybe you’re still not thrilled with where the units are trading. So to the extent the yield compresses, things get better, unit price goes up, just maybe some thoughts around doing issuance later, repaying some of these seller’s loan earlier than expected and then raising the distribution on the back of that. Is that a path you could take or a possibility?

Yes. In order to better strengthen the balance sheet and increase our finance flexibility, we would definitely make opportunistic issuances of equity given the right pricing level. It’s not our major focus because obviously we have to acquire ships over time because every, every year the MLP is significantly deleveraging and we’d like to keep a reasonably decent level of leverage and grow the MLP. So since the Ingrid drop and, say, to the end 2017, we will basically have repaid nearly $120 million in debt. And therefore, we like to keep a bit of – it’s good to keep a bit of leverage because today it’s quite a nice way of building the distribution. But yes, we definitely see opportunities to expand the business, we definitely would like to take more equity. I think the main points about the drop that that’s happen today is it shows the sponsors majorly, they’re keen on keeping MLP as a viable business and pushing it forward. I think it’s really a positive development, because obviously we’ve had a very difficult time in the last 12 months, like a lot of MLPs. And this just shows major commitment and that’s good.

Yes, and that actually kind of segues into my next question, which was around the sponsor’s appetite to grow. And once again, you mentioned those tenders. Just curious – are there any cash needs at the sponsor level that would maybe precipitate either another drop-down or an equity raise to help fund, maybe these new two shuttle tankers that you potentially could win. Just trying to get a sense of if you win those, what does that mean right here and now for the MLP?

I think at that moment, it doesn’t mean a lot, because the deposits are not very large on these contracts these days. I think it’s about 15%, I would say. That’s not something we’d worry about. I think they’re not that short of cash they would make a strategic decision in a few weeks over winning a contract like that. I mean, we have – we do have some reserves quite considerable. So I don’t think it makes much difference to be honest.

Gotcha, and sorry if I missed it. Was there any sort of timing around when we might hear about these tenders? Is it a next six months deal, or even closer than that?

I don’t actually know, but I would expect it would be six months something like that. I would expect whether we win or not, the good thing is the market’s opening up again and people are starting to make inquiry. I mean, we’re not going to win all the contracts and now our competitors are not going to win contracts. But there are contracts out there and there’s an appetite to buy again, and that’s positive.

Oh, it was a good sign. All right. That’s it for me. Thanks, John.

Thanks.

The next question comes from Nick Raza with Citi. Please go ahead.

Thank you. I just had a couple of quick follow-up questions. is there – John, is there a level of leverage that you can point us towards in terms of where you think the partnership should be or would be ideal? Just so we can sort of measure where – at which point in time you will sort of initiate dropdowns or do a distribution increase?

That’s a good question, Nick. It obviously depends on the – a little bit on the retail banking market as well. But we like to target about five, the ratio of the bidder over interest. And we find at the moment, the easiest way to actually releverage the MLP is to drop a new ship in highly leveraged or more leverage than the average, because obviously you’d have to be financed existing play then, so it makes sense to keep the leverage going that way, I mean, with a young fleet like this. We are deleveraging on a straight line basis, but the write-down of the ship is really more of an annuity. So you do get a gap and basically that’s the cover on our distribution, because we go in with a fairly neutral cash flow. And so we’d always try and keep every drop, we’d always try and push the leverage on the drop. And then I mean, I think, today it’s probably fine. I mean, by the end of 2017, we’ll be actually on probably more normalized leverage, I guess.

So around that five times if you sort of foresee, assuming net of balloon payments and any other obligations that you may have…?

Yes, the balloons…

Go ahead.

The balloons we just expect to refinance. I mean, generally, you can assume that because the ships are relatively young, the market is a very stable market, you would expect to have no problems refinancing the balloon. If we can’t, at least, increase the leverage, at least, before the balloon and refinance this. It’s a function of the market being a bit tight financially. But generally, we would look to increase the level of debt when we refinance through the works on the balloon.

Fair enough.

So we don’t consider it an ordinary payment.

Fair enough. And then as a sort of an offbeat question, I mean, some of your competitors – one of your competitors is arguably in sort of a financial duress. Is there a thought to sort of buying out other folks’ shuttle tanker operations outright?

Well, we’ve always looked at them we bought the lowest in fleet few years ago. It’s not something we – the price has to be right, to be honest with you, and the contracts have to be good. We – yes, we’re always interested, but today that’s not on the agenda.

Fair enough. That’s all I had, guys. Thank you so much.

The next question comes from Ben Brownlow with Raymond James. Please go ahead.

Hey, John, congratulations on the quarter and the dropdown.

Thanks, Ben.

On the pace of growth with the remaining four dropdown vessels, can you just comment about how you’re thinking about that? Is that largely dependent on the capital markets?

Yes, I think so. I mean, I think the sponsor is pretty strong and can keep the yield strip outside of the MLP, if he wants to. He saw an opportunity, because we have quite a lot of – cash on the balance sheet and we’ve deleveraged a fair bit to drop a ship in. I think we – if we don’t look for a sources of capital then I think it’s likely that we will wait a little bit to continue to grow. It just depends on how the market reacts to our units over time. And then if we get the opportunity, we might go onto the market and raise equity, do a bond issue, don’t really know. We’d have to think about really. But today, we – we’re just happy that we got a ship in, it’s probably, it’s pushed the MLP as we can be, to be honest, it stretched a little bit, because we have taken a seller credit. But the commercial debt is fine The debt position is pretty safe. I think the whole thing is pretty good. The cover is very good and we’ll see next year if things – all things being equal, we’ll see an even higher level of cover on the fleet, which is good.

Good. And on the valuation approach, would you look at the Raquel kind of on a similar valuation versus the other four drops?

Don’t know how much. That’s obviously decided by the conflicts committee and the fairness opinion we get as to what level is correct or appropriate. I mean, ultimately, with the MLP, because of the way the marine space is, you have a young fleet. It’s quite highly leveraged and deleverages quite quickly. You have to drop in assets accretively obviously, but you have to keep dropping assets into get the full value of the MLP, keep the leverage there, because the contracts that we have either with oil majors or with national oil companies generally they’re very, very strong contracts and they do yield. We do yield stable revenues. So to get the maximum benefit out there, you have to keep acquiring assets and dropping them in. So that they’re – otherwise, you just end up deleveraging the MLP over time. And it’s not – at this level of yield, it doesn’t really work. We can today with 10 ships, we can drop another ship in every ones two years and improve the outlook. Of course, it depends on what people’s view of the market is and what the banking sector’s view of the shipping is. But all things being equal, that will be the case. So we have to keep growing really to make it work for commitment with [Multiple speakers].

That makes sense. And then just switching over just quick – one or two quick more. On the Windsor, any discussions there on the extension? And can you just remind us kind of what the rate revision on that?

Well, what we had on that, yes, we had about 6% to 7% reduction in the rate. The – that’s the structure of the contract now. It’s going to be one option, one option, one. Why would they renegotiate that, because ultimately they want the flexibility that was part of the deal to get the three BG ships that we had at the time, now they’re Shell ships. And that was – that would be agreed. We agreed to give them a bit of flexibility like in the Windsor on that short contracts. And also, that’s really how it’s risen, so it has not much changed. And similarly the Bodil is not, that’s what we’ve agreed to, so that’s what we’ll stick to. And I wouldn’t expect any problem with that. It will get exercised. It’s not quite flexible because going forward, the market’s getting tighter as well.

Okay. And the Bodil that was at the very similar rate to the prior contractor right?

Yes.

Okay. Thank you.

A little bit less, but similar.

[Operator Instructions] The next question comes from Lin Shen with HITE Asset Management. Please go ahead.

Hi, good afternoon. Thanks for taking my question. When I see the slide, Page 11, you have a chart, which is back to February 2016, early this year’s supply demand forecast. So can you talk about what are you seeing now, or your current forecast on next year? Do you see the gap for demand supply should be very positive for your business?

Yes. I mean, I actually like the fact the market has quite – taken quite time. It’s developing reasonably at a nice pace. So I think – well, the graphs that were previously quite – they have actually reduced the demand and the supply difference in the balance. We – I’m happy with this, because it means that orders are done in a gradual and nice way. If you had a massive surplus or shortage of ships within the space of a year or two, you might end up with a frenzy of orders and it’s not always necessarily the most disciplined way to run a business. So I think we can see – empirical evidence tells us, because the sponsor has a really with their fleet they’re fully utilized, and also our competitors are having the same problem. They are not compared to us. One of our competitors come to us moved actually time charter ship-outs for them for several years. So they just can’t get it. So there is definitely a shortage here, how this market pans out, depends on how quickly the fields are opened up and how good the oil flows are from these fields, I mean, certainly if you believe the press releases of some of the oil majors and national oil companies, you will see that the outlook is very positive. And so we’re optimistic. Can’t say that the figures will develop as firms project. But I think the outlook is very, very positive for the Shuttle Tanker. And as of today, we can see that there is really a lot more interest in the market. It’s starting to be a better movement and we’re seeing orders, which is quite a positive thing.

Thank you very much.

This concludes our question-and-answer session and the conference is also now concluded. Thank you for attending today’s presentation. You may now disconnect.