KNOT Offshore Partners LP (KNOP) Q4 2016 Earnings Report, Transcript and Summary

Let's start with the presentation. Thank you. If any of you have not seen the earnings release or the 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 DCF and adjusted EBITDA. The earnings release includes a reconciliation of these non-U.S. GAAP measures to the most recently comparable GAAP financial measures. A quick reminder that any forward-looking financial 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 to update these forward-looking statements. And now onto the presentation. KNOT Offshore Partners focuses on the shuttle tanker segment. The asset is scale-specific and an integral part of the logistics supply chain. It provides a vital service transporting oil from the offshore production unit to shoreside. KNOP trades at a significant yield premium to the Alerian Index today. Our distribution is around 9.7%. It might be a little bit less now compared to the Alerian Index of 6.7%. The index represents around 85% of all MLPs by market cap. Unlike most of these MLPs, however, we are operating in a space seeing substantial oil production growth. And consequently, the supplier shuttle tankers is tightening as this demand grows. We have a young fleet and after a record-breaking set of results in the previous quarter, today, we report our latest best-ever financial results. For the fourth quarter of 2016, a very solid financial positioning. We are pleased to announce another addition to the MLP fleet, the Tordis Knutsen, for an acquisition price of $147 million on the 1st of March 2017. The vessel was delivered in November 2016 with a 5-year firm charter from the Royal Dutch Shell starting in January this year. As well as being an accretive acquisition, the vessel has a time charter duration of 5 years plus 10 further years of options, increasing our MLP charter backlog and reducing 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 stable and sustainable revenues. Before ordering a new vessel, our sponsor, Knutsen NYK, has always agreed to long-term employment contract with the charterer. Our sponsor, Knutsen NYK, according to Clarkson Platou research, is part of the largest shipping group in the world, and NYK is a major company in the Mitsubishi family. When we did the IPO, our fleet was 4 vessels. And at the end of 2016, less than 4 years later, we had a young fleet of 11 vessels, average age of about 4.75 years. Despite the reduction -- the disruption in the capital markets, we continue to grow at a pace which is in significant excess of most MLPs. Now turning to the presentation, Slide 3, Q4 2016 financial highlights and recent events. For the fourth quarter of 2016, the partnership generated our highest-ever revenues, operating income, adjusted EBITDA and distributable cash flow. We declared a stable distribution of $0.52 for this quarter. The coverage ratio has reduced a little this time from last quarter, but it's still 1.27x [ph] as the 2.5 million units that were issued in January have to be included. Distribution for the second consecutive quarter remains below the accounting results of the net revenue figure. We have a strong operational performance, 99.8% utilization in this quarter. This is in line with our strong figures ever since the IPO. We combine the addition to the MLP fleet of Raquel Knutsen for an acquisition price of $116.5 million. This was completed on the 1st of November 2016. The vessel was delivered in March 2015 with a 10-year charter to Repsol. On January 10, 2017, the partnership successfully completed an equity offering, raising net proceeds of USD 55.5 million. On the 2nd of February 2017, the partnership further issued and sold in private placement $50 million worth of convertible preferred units at a price of $24 per unit. The net proceeds from the sale after expenses was approximately $48.5 million. And although it makes our balance sheet a little bit more complex, the preference issue enables us to raise equity at a running cost of 8% so allowing KNOP to continue to grow through accretive acquisitions. There are no preemptive rights which are often common in these such instruments to the detriment of the issuer. The issue, I believe, is evidence that KNOP is proactive in finding other sources of capital at accretive terms when constrained in the equity markets. We announced the latest addition to the MLP fleet of the Tordis Knutsen for an acquisition price of $147 million, and this will be effective from the 1st of March 2017. Slide 4, the income statement. Total revenues were $45 million for the 3 months ended 1st 31st December Q4, and this compares to $44.3 million in the 3 months 31st -- 30th September, an increase of $0.5 million. Operating expenses increased by $1 million to $23.4 million over Q3, and operating income for Q4 was $21.6 million compared to $21.2 million for Q3. All of the above increases are because of the addition of the Raquel Knutsen to the fleet for one month in December. Net income is significantly impacted by realized and unrealized gains and losses on the derivative instruments, a net gain of $4 million in Q4 and a net gain of $3.6 million in Q3. It's primarily due to the long-term interest rate movements. As of December 2016, the partnership had interest rates swaps of around $446 million, paying a weighted average interest rate of 1.57% for an average duration of 3.5 years. We had also swapped forward Norwegian kroner, USD to insulate the MLP against dollar interest and currency movements over the next 3 to 4 years. This should make our financial statements and performance more predictable. Net income for Q4 was $19.5 million. And in Q3, it was very similar at $19.4 million. This equates to earnings per unit of $0.72 based on the issuance on 31st December. The net income for the year was $61.1 million. This is 51% up on the previous year, and the MLP generates a small accounting surplus over the distribution paid. Slide 5, adjusted EBITDA. In Q4, the partnership generated our best-ever adjusted EBITDA of $36.1 million that compares to our previous best ever of $35.1 million to Q3. Adjusted EBITDA refers to earnings before interest, taxation, depreciation and amortization. It is a proxy for cash flow. Adjusted EBITDA is, of course, non-U.S. GAAP measure used by our investors to measure partnership performance. With a wasting asset like a vessel, younger fleets [indiscernible] should produce lower EBITDA for every dollar invested. The annuity effect reduces the value lost in the early years, which is factored into replacement CapEx calculation for distributable cash flow. KNOP's fleet has an average age of just under 4.75 years. This will reduce to below 4.5 years with the addition of Tordis. And this compares to the rest of the industry average for shuttle tankers, excluding KNOP, of over 11.5 years. So the fleet is aging the world's fleet. Slide 6, distributable cash flow, another non-U.S. GAAP measure to estimate distribution sustainability. Today, we report our highest-ever quarterly distributable cash flow of $20.8 million in Q4, and this compares to our previous best ever of $20.3 million in Q3. We maintain our highest distribution level for Q4 of $0.52 per unit, equivalent to an annual distribution of $2.08. The distribution coverage ratio for the quarter is a very comfortable 1.27. This is, of course, in spite of the fact that coverage ratio has reduced from the last quarter's 2.5 million units that were issued in January before the record date has been factored in, and the coverage ratio has reduced. It would have been at a level of 1.38, ignoring these 2.5 million initial units. Because the MLP has an elevated yield, we have rather focused on reducing and building coverage and deleveraging rather than increasing dividend as there is little benefit to the MLP in the short term of [ph] yield over 10%. We have raised funds at between $21 and $29 a unit, and many of our common unitholders have remained loyal, so we do not want to dilute them. And we see double-digit distribution is a signal that investors would rather prefer deleveraging. That said, we have a coverage ratio of 1.27x in Q4 even with unit overhang. And so there is room for an increase in distribution, but this is something we will have to evaluate going forward. Keep in mind that the Board of Directors also like a distribution that's sponsoring 1/3 of the MLP. Slide 7, balance sheet. At the end of December, we had a solid liquidity position with cash and cash equivalents of $27.7 million and an ongoing undrawn credit facility of $10 million, this despite the $25 million drawn down for the Knutsen acquisition of Raquel. The credit facility is available until June 2019. At the end of the year, we also had $25 million drawn down on the seller credit. However, following on from both the preference and common unit issuances together with the Tordis acquisition, the seller credit, along with the revolving credit facility, has been repaid. Our treasury position is therefore extremely comfortable. And with our sponsor support through the potential use of both the seller credit and revolver facilities, these may be utilized again to acquire assets in the future to further build the MLP. We have a predictable cash flow, and we do not have any loan maturities before the end of the second half of 2018. The total interest-bearing debt outstanding was $741 million, $745.7 million net of debt issuance cost. This has increased obviously because of the acquisition of Raquel Knutsen. Annually, we currently have scheduled repayments of around $60 million. This compares to replacement and maintenance CapEx of around $31 million when computing distributable cash flow. This accounts for the current cover generated. Slide 8, stable operational results -- performance results in stable financial performance. Since the formation of KNOP nearly 4 years ago, we've had very strong levels of vessel utilization, which means continually higher and increasing predictable revenues, adjusted EBITDA and discounted cash flow as more vessels are added to the fleet. In Q4, we had record distributable cash flow of $20.8 million, and we'll make a $16.4 million distribution with the January units included in this. Since our initial public offering over 3 years ago, we have declared distributions of $7.18, so our initial investors have received a total return of over 34%. Our current yield is around 9.7%. That's a couple of days older. Slide 9, unit price and yield performance in the MLP. Since our initial public offering over 3.5 years, the KNOP yield has remained elevated to the Aleria for most of the period. And also, unit prices outperformed the Alerian Index. This has produced a significant ownership premium when comparing us to any -- the general investment in the Alerian Index. Moving on to Slide 10. KNOP growth is more correlated to the Brazilian pre-salt when it's priced off the AMZ index. So recent volatility in the unit price is being caused by a fall in the Alerian, which is correlated to both the fall in the oil price and the Baker Hughes rig count. As you can see on this graph, the solid graph is the Baker Hughes rig count; the blue line is the Alerian; the red line is our KNOP unit; and the top line there, the step line is the actual -- the Rystad the production figures for the pre-salt [ph] in Brazil. So according to Petrobras, their production in December 2016 was a new monthly record set at 1.27 million barrels per day. It reached a peak of 1.34 million barrels per day on the 29th of December, a record. This production figure for December 29 is 33% up on the average for 2016 and 75% up on the average for 2015. Now obviously, Petrobras tends to be euphoric with their figure, so I thought I'd look at the Rystad figures, and I asked them to provide me some data. And according to Rystad, in 2016, the Brazilian pre-salt production grew from around 670,000 barrels a day at the beginning of 2015 to about 1 million barrels per day at the end of 2016, quite similar to Petrobras' figures. The year-on-year increase in production was about 200,000 barrels per day. A similar prediction -- production increase is expected in 2017. Not quite as upbeat as Petrobras, I guess, but it is still pretty impressive. MLP financial performance, Slide 11. The extreme unit price movements in the Alerian Index and by extension, the KNOP unit due to market volatility has disappeared. Built by Hyundai Heavy Industries in Korea delivered in November 2016, the Tordis Knutsen is a Suezmax class enhanced DP2 shuttle tanker operating under a time charter that expires in the first quarter of 2022. It is with Royal Dutch Shell and based in Brazil. There are options to extend for further 10 years until 2032. There is escalators in the time charter of about $600 per day per year. We have agreed with our sponsor, Knutsen NYK, to acquire the vessel for the MLP for $147 million with delivery effective the 1st of March 2017. It will be part financed by commercial debt of around $95 million and also cash. The senior loan has a margin of 109 basis points with annual repayments of around $5 million a year. The net charter rate will yield around $7.9 million of net income and approximately $16.2 million of EBITDA for the first year from the 1st of March 2017. The charter has an estimate of about $600 per day applicable annually, so it's about $0.2 million in EBITDA. With this acquisition, which again demonstrates our sponsor's strong support and commitment to the MLP, our fleet will have grown 200% since the IPO in April 2013. Slide 13, stable and predictable cash development. Our treasury position with undrawn credit lines has remained stable throughout the period from the start to the end of the year, a stable distribution because of the cover ratio, [ph] refinancing. In this period, we have acquired Raquel Knutsen with a $25 million seller credit to part finance the transaction. Our cash costs have always been stable and predictable. Slide 14, long-term contracts backed by leading energy companies. Firstly, the Windsor Knutsen has been our 2-year contact from 13th of October 2015, with Brazil shipping [indiscernible], a subsidiary of Royal Dutch Shell. And when we have been informed that Shell really liked these ships, we're very confident about the option period. We have a further 6 years of extension options. It has commenced up high recently for dry dock on the 5th of February, and this will be a total of 55 days or higher, [indiscernible] dry docked the ship in Brest in Europe. The Bodil Knutsen, the largest shuttle tanker operating in the North Sea, is [indiscernible] and chartered to Statoil ASA until April 2019. There are further 5 years of options to extend. Statoil has recently been given permission to proceed with the Johan Castberg field [ph] in the Barents Sea, 240 kilometers north of Hammerfest, and this should provide medium-term employment and security for Bodil. 4 other vessels are on long-term bareboat charter to 2022 with Petrobras Transporte. These vessels are amongst the youngest in the Petrobras fleet, have been delivered between 2011 and 2012 and are heavily utilized. Dan Sabia and Dan Cisne are a unique size, and Fortaleza Knutsen and Recife Knutsen [indiscernible]. 3 of these vessels have undertaken their first 5-year special survey in 2016. And the last one, the fourth one, Dan Sabia, in January 2017. Boat costs and op hires are a charterer's expenditure because of bareboat. Delivered in 2013, the Carmen Knutsen is on charter direct to Repsol 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 Tønsberg, a Norwegian subsidiary of ExxonMobil. This will expire in the first quarter of 2024. The charter's option is to extend the charter by up to 5 1-year periods. The Raquel Knutsen was delivered in March 2015, and they operate under a time charter with Repsol Sinopec in Brazil, and this will expire in the first quarter of 2025. There are options to extend until 2030. Slide 15, the Goliat field and the Barents Sea. In the field in the Barents Sea, nearly 300 miles north of the Arctic Circle, Eni in March 2016 started to produce the Goliat platform. Production flow will eventually reach about 100,000 barrels a day, and [indiscernible] we will select the oil operators in that region. Never before have shuttle tankers have to meet such strict environmental requirements. [indiscernible]. They are on this contract heavily winterized, and the most visible difference is -- to the normal shuttle, obviously, closed deck spaces remain full [indiscernible], allowing the crew to enhance the vessels to operate in temperatures down to minus 30 degrees C. I don't know what that is in Fahrenheit. [indiscernible]. Our 2 vessels, Hilda and Torill Knutsen, have been built and chartered to Eni specifically for this project. Of the original 5-year contracts on the 2 vessels, on average, about 1.75 years remain on the firm charter period. Given their specialized nature, we would expect these vessels to operate on this field throughout its life. Slide 16, significant growth since the IPO. This is quite a nice slide. It just shows how many vessels we've added to the fleet since the IPO in 2013. You have to admit we've grown quite rapidly and quite sharply. Slide 17, the drop-down inventory. This is again outlining the 3 vessels we are chopping down. There are currently 3 more shuttle tankers we cannot [indiscernible] Knutsen NYK: 2 similar vessels to Tordis, these are shuttle -- Suezmax enhanced DP2 shuttle tankers from Hyundai Heavy Industries, the Vigdis in February 2017 and Lena Knutsen in June 2017. These are chartered to Shell; and 1 Suezmax class DP2 shuttle tanker from COSCO, Zhoushan, which will be charted to Petrobras. Our recent acquisitions, Raquel and Tordis, and all our drop-down inventory will operate in the pre-salt oilfields in Brazil. The fixed contract period for the drop-down phase is a minimum of 5 years on average. It could be longer depending on which series of options the charterer will actually take on delivery. We are not to any particular rate [indiscernible] balance of these ships, but all this accrete to drop-down inventory into KNOP in the near future. However, we currently have [indiscernible] consider further acquisition. The sponsor has already fully financed all these efforts and is in a healthy financial position, so it's under no pressure. Accretive acquisitions only occur for KNOP when either the -- we have sufficient resources or we are able to raise adequate financing at reasonable terms, no double-digit yields, as always said, as we have always communicated it. One of the reasons we have expanded our capital base, our ratio in common and preference capital, was to allow us to have a more flexible approach to raising capital, which is necessary in the current environment and now that the ships are having delivery. So Slide 18, in summary. KNOT Offshore Partners LP is a midstream, [ph] pipeline, business with fully contracted revenue streams. These are nonvolume-based. Since being awarded the first 2 contracts in 1984, Knutsen has grown organically for over 30 years as the business has been built from these 2 shuttle tankers into a sizable fleet currently 30 units, including orders. Today, supply is [ph], and the market is expanding. We have a solid and highly profitable contract base generated by our modern fleet with an average age of around 4.75 years at the end of December based -- versus the rest of the industry average of well over 11.5 years. In the fourth quarter, we again achieved record revenue, adjusted EBITDA, net income and distributable cash flow. All these records are previously set in the previous quarter. The partnership is again well placed and highly focused on expanding in the medium term now that both the MLP and the oil markets are recovering. We completed the acquisition of Raquel and are now entering into a share purchase agreement with the acquisition of Tordis Knutsen. And no one has more experience in operating this sophisticated shuttle tanker than Knutsen Offshore, and we operate these vessels with real expertise. We have a very supportive sponsor, who has a large asset base for which to build this MLP by capturing a good proportion of the expanding market. Well, that's the end of the presentation, ladies and gentlemen, and thank you for listening. And if you got any questions, please feel free to ask now.

[Operator Instructions] And the first question comes from Matt Niblack with HITE.

So on the Goliat field, could you speak to the competition for your 2 vessels there? Are there any alternatives for the producers?

Not at this point, present time. And those vessels are being -- the way they are, they're pretty specialized. There were -- there's normal lead time for a shuttle tanker of about 2, 2.5 years between placing an order and being field-ready. So we think those vessels will take even longer to manufacture than that. So really, Eni aren't really looking anywhere else as far as we're concerned. We think there's really no substitution risk there at all [indiscernible] and age of the contract and our relationship with the charterer.

Great. And then a similar question for the Windsor Knutsen. What's the competitive environment there for recontracting?

Well, interestingly, Windsor can work in both the North Sea and Brazil. So even if -- it's highly unlikely that -- the way Brazilian pre-salt's going today, that any ships moved out of that area, it's more likely to see a migration to that area from the North Sea, although I don't think that's likely because the North Sea is pretty tight as well. So we're very relaxed about the Windsor. We get great reports back from both, previously, BG and Shell. They like the ship, and we're very confident it'll be renewed. I mean, bear in mind, the charter rate on our ship is a little bit less than the new tonnage, so it's actually relatively cheap as well. So we're not -- again, we're not worried about this ship.

[Operator Instructions]

John, it's Spiro Dounis from UBS. First, just want to start off on the drop-downs. You went from a period of virtually no drop-downs, did 2 in really quick succession. Just wondering if you can comment on why that was important to maybe drive these new drop-downs back to back and maybe what that means for the pace for the rest of the year. Obviously, you got a lot in front of you.

Yes. I think we saw the improvement in the capital markets environment. We were comfortable with the unit price the way it was, and we went to raise the last [ph] deal. And we got a reasonable deal from the bank, and we thought we would like to get the unit moving again. I mean, one of the things about a block trade is it gives the opportunity in the aftermarkets for lots of your existing unitholders to basically transact often. You need to do common unit issuances at a regular -- on a regular basis so you keep the liquidity in the unit and make people comfortable -- the unitholders that they can move the stock if they want to. So what we saw with the common [indiscernible] a lot of activity after the placement, a lot more than the actual 2.5 million units we bought and sold as people made the opportunity because the market was there to liquidate or build that position. So actually, it's quite necessary to -- we do realize -- because the stock on, a day-to-day basis, in the past has been quite low liquidity, it's quite important to keep the common units flowing. So that was the key. That was key. And obviously, the preference deal is an opportunity. I feel that's really good deal. No preemptive right, $24 strike. If you were doing a common unit issuance, you need a $27, $28 pricing to get that sort of deal. So we were very happy with that one. So really, those 2 things came together. And obviously, you can't just ignore -- actually, we're paying 9% yield, but we have to drop the ships, and quite quickly.

Sure. And then just in terms of the run rate for the rest of the year, how are you thinking about drops and maybe what you need to see in the market to make that happen?

Well, I think Øystein's giving out some more detail when it comes to his Investor Day presentation. But I mean, I think it's tight, but we could -- we've got more or less enough capacity to do another drop. But again, that's something we will consider, and I think he's -- he'll go through that more on the Investor Day. But today, I'm -- we'll just -- today, the rate of fee is comfortable. It's comfortable. We could stretch again a bit.

Got it. And the second one, just on the distribution. Just trying to figure out what you need to see specifically to have an increase here. And is it really just about the yield? Or is there something more to it? And I guess what I'm getting at is it seems almost like a circular argument. It's almost as if you sort of paid a higher amount. Maybe everyone will see the growth and the stock price would go up, yield will go down. Because right now, it almost seems like the equity is not growing. It's almost like a high-yield unsecured subordinated bond.

Yes. As a high-yield unsecured note, if you look at it that way, we're still paying a hell of a yield. So yes, we could grow the distribution, but we will look at it. So I mean, we'll not -- it's not after me. The cover is going up. But because of covers, where it is today, it means we can more or less get by comfortably and to refinance, and that's quite nice. It gives us more flexibility. We will see what the refinancing opportunities are in the ships as well because, obviously, the pay-down on these ships is quite a lot quicker than the amortization in the annuity basis. So we like the cover because it gives more flexibility, and we look at the yield today and think, "Well, 9.7%, who wouldn't be happy with that in this sort of company environment?" But obviously, if you look at $27, $28 a unit, then I think we probably would expect it, but it's just the way it is. We will -- we got the opportunity to do it, but we don't really need to do it. And it creates an easier pathway for us if we don't do it.

This is Nick with Citigroup Research. Just a quick question in terms of the tightness of the market. Should we expect to see more backlog from the sponsor as a result of that tightness in terms of ship orders? And if you could talk a little bit about timing of that, that would be great.

Yes, I mean, I think Dennis [ph] have got a very good presentation on the sort of tanker market. But I mean, obviously, we are tendering for 1 or 2 ships, but not in Brazil. It's interesting. It's 1 or 2 [indiscernible] part. Because I really see that this [indiscernible] quite significant [indiscernible] in Brazil. But I guess, all the activity that's happened in the past 2 or 3 years, then the oil price dropping off, has put their plans back a little bit as far as capital investment is concerned. I mean, the Petrobras, what they do, they do tend to run short voyages on the [indiscernible] about a little bit. And basically, with the Shell ships and the Petrobras ships, the ones that are MLP, they tend to go further afield with the discharges. The Brazilian ships are small, and they tend to run and cost a bit more. But generally, I mean, you see about 70,000 barrels a day for a Suezmax shuttle tanker. So possibly, you can have a 15-day voyage. So when you think about the growth projection as much as it happened down there, it's pretty obvious they're going to be on that ship fairly soon. But we haven't seen any activity yet, so I can't answer that. It's the last [ph] of contract that you're looking at.

Well, fair enough. What about other marketplace, offshore Canada? There was a tender. I think we've asked about this before, where one of your competitors actually got a bunch of ships.

Yes. Well...

Yes. I can comment on there. Of course, we didn't like the Canadian tender. Because this was with a time charter, it was the same agreement on transportation in terms of what they are used to in shipping. So in shipping, you have, I will say, a [ph] balance. But in the Canadian contract, we thought it was a bit more skewed towards the charterer. So of course, we bid for the contract. But we bid a higher price on the -- with that contract, but we took the contract for the Shell vessels. So we're happy with those vessels -- and if you look into our financing, we did $353 million of bank debt. That's 190 basis points for those 3 vessels. Teekay managed to write $250 million of bank debt for the 3 shuttle tankers in Canada, and I think that shows a bit all the context of [indiscernible] Shell as far as the Canadian contract.

I guess, last question will be coming back to the original contract, but timing of certain things, specifically distribution growth. Is there a minimum coverage level that you're comfortable with before -- or do you need to see [indiscernible] amount of time before you actually look to increase distribution?

No, I'm not going to -- I don't need guide on that. But I think when you look at other shipping companies, we expect -- we accept the -- for the space at the moment, deals are a bit elevated. Our unit's trading at around 9.7%. I don't think many, with the quality of our organization that we have, are trading at that level, and I think we want to see a bit of growth in the unit price. And the reason for doing it, before we do it. I said before, we'd rather grow -- we'd rather reduce the gearing and -- not before since refinancing ships and just have a more gentle approach to it until we need -- we don't really see the need. We think it's a pretty good story -- pretty good yield, sorry, at the moment. I'm not going to -- we would talk about it. It's not just down to me. It's just how I feel personally. So -- but as Øystein has guided in his notes that we are actively discussing it. It's not something that's off the agenda by any means.

Brian Branbook [ph], FB Asset Management. Regarding competition and the market. Is there -- you have several charters coming due, but what is the situation? Is there -- are there many more new ships coming on the market? And would that change the usage of your ships? I mean, do you expect more competition and that's lower prices down the street because new ships are coming in from the competition?

Well, we -- there isn't much of a -- there aren't many contracts to deliver this year. [indiscernible]

Their order book is high vessels. So all those high vessels will be delivered in the next 12 months. All of the vessels are -- sits on long-term employment. So basically, they are all new contracts. So -- and then [indiscernible] all those in the order book. Hasn't been a single order for a shuttle tanker for 2 years. So we're actually seeing a gradual increase of the fleet of the shuttle tanker. So competition, there are always competition. But the market is tightening, and rates are basically going up.

[indiscernible], it's very good.

We also have our Q&A panel outdoor, so there will be more chances to ask questions there.

More questions, yes, on a more informal basis.