Welcome to the Navigator Holdings Conference Call on the Third Quarter 2014 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer, Mr. Niall Nolan, Chief Financial Officer, Mr. Oeyvind Lindeman, Chief Commercial Officer and Mr. Tommy Hjalmas, Chief Operation Officer of the company. (Operator Instructions). I must advise you the conference is being recorded today Tuesday, November 4th, 2014 and I now pass the floor to one of your speakers today, Mr. Butters. Please go ahead, sir.

Thank you, Jennie and good morning everyone and welcome to Navigator's third quarter earnings conference all. With me this morning as mentioned is Niall Nolan, our Chief Financial Officer, Oeyvind Lindeman, our Chief Commercial Officer and Tommy Hjalmas who is overseeing our new building program. Last night Navigator released its operating results for the quarter ending September 30, 2014. It was a solid quarter quite in-line with our own expectations. Earnings per share of $0.43 per share represented a significant 79% uplift over the $0.24 earned in the same 2013 period. It was accomplished by the way on a share count that was almost 20% greater. Our third quarter earnings per share also represented a 23% improvement over this year [Technical Difficulty]. Now Niall Nolan will delve more deeply into the numbers and Oeyvind will follow up with a market review. I would like to cover some of the factors that are driving our current and future performance. The handy-sized semi-refrigerated LPG tanker market -- we define that market to be between 17,000 and 25,000 cubic meters -- that sector we operate in and we dominate it in terms of market share. And it has currently experienced a good and growing demand for the movement of both LPGs and petrochemical gases. This demand growth is coming from both our traditional international markets and from a recent activity surrounding the export of shale gas liquids from the United States. The net result is that Navigator operated essentially at full capacity during the quarter with good and improving charter rates. We would expect this firm market to continue into the near and intermediate term. And this is precisely the kind of market that we had hoped for when we agree to acquire the 11-vessel fleet of AP Moeller Maersk some two years…

Thank you, David and good morning. The third quarter's results for the three months ended September 30, 2014 were probably one of Navigator's strongest with charter rates continuing to climb and Navigator's utilization back up approaching the 100% mark and above our 7-year average. Operating revenue was up 25% compared with the third quarter of 2013 at $80.6 million. Of this $16.4 million increase, $7.4 million was as a result of the increased number of vessels in our fleet compared to the third quarter of 2013, $5.1 million resulted from an improved utilization rate and $3.7 million from increases in charter rates with costs in-line with expectations and bank interest reduced as a consequence of prepaying $120 million against one of our bank loan facilities. Net income increased by over 100% to $23.7 million for the third quarter of 2014 compared to $11 million for the third quarter of 2013. We operated a total of 25 vessels throughout this third quarter following Navigator Atlas's delivery on June 20. This is compared to an average of 21.4 vessels trading during the third quarter of 2013. As I just mentioned, utilization too contributed strongly to these third quarter results with average utilization for the three months to September 30, 2014 at 98.4%, giving utilization for the nine months of 2014 of 98.2%. This compares with only 90.9% for the third quarter of 2013 as we were receiving the various vessel deliveries from AP Moeller Maersk and getting them to work in our own chartering program and 93.9% for the full nine months ended September 30, 2013. As David mentioned since the end of this third quarter, on October 14, a second vessel, Navigator Europa was delivered from Jiangnan Shipyard in China and loaded her maiden cargo in Taiwan five days later. This…

Thanks, Niall. But I would like to pass it over to Oeyvind who will give us a flavor of the current markets and the market we experienced in the last three months.

Thank you, David. Just very briefly, today 25 ships, we took two ships on delivery during the quarter. And there is a split -- that we maintained our opinion of 70% time charters and 30% spot has been the flavor of the month. And what is kind of new is because of the high utilization, as we've been hearing, we are operating on kind of a two-month forward-looking program. If a charter has a cargo then we will book forward two months and that shows you the tightness of the market. Freight rates are creeping upwards as Niall mentioned, both on spot and time charters. During the quarter apart from the time charters, we did 23 voyage charters most of which are in the LPG segment being LPG exports from the U.S. We carried a total of 1.5 million tons -- 1.3 million tons being LPG, 200,000 ammonia and the remaining being petrochemicals. What is interesting is that the Navigator Aruba, once she was delivered from the yard, she immediately loaded a full cargo propylene, a petrochemical gas from Taiwan to U.S. showing this triangulation effect whereby U.S. is short certain products and long on other products, predominantly being LPG. So the plan is of course when the Aruba arrives in the U.S., discharge propylene, she will be able to reload LPG. And that is the benefit of these sophisticated vessels being semi-refrigerated with or without ethylene capacity to do these kind of trades to reduce ballast, and it goes to show that it is actually happening. So that's just a short flavor of what has been going on here in the quarter.

Thanks, Oeyvind. Now before handing over the call for a question and answer period I would like to take a moment to address a question that we’ve been getting since crude prices broke down. In one form or another, the question is at what price does crude corrupt or influence the slowdown and the momentum of LPG? For Navigator, this is not a good question and reflects a lack of understanding in the nature of our business although it may have some small relevance to the LPG shipping companies that operate larger vessels. Now let me explain LPG shipping has often been described as supply driven in that LPG being primarily a bi-product of some other activity such as LNG production, oil refinery or oil and gas production and as such have a clearing price that will be close to the marginal cost of production which can be nearly zero. Take, for example, LNG, typically an LNG production facility, there is about 6% to 8% of the output coming in the form of LPG. The liquid methane or LNG is customarily sold under the long term contracts and production is not really interrupted by oil price fluctuations. The LPG on the other hand is normally delivered into the spot market. Since LPG by volume is a relatively small component of the overall hydrocarbon universe and can be used as a substitute for oil and gas as a power generation fuel or a petrochemical feedstock it will find a clearing price. It will be sold and it will be shipped. Looking more specifically at the impact that the lower crude prices have had on demand to the shale gas liquids pretty much what can be said is that if the LPGs are available they will be moved as long as the…

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

I have a few questions and maybe I'll circle back around if I need to, but with regard to the new vessels that you guys just ordered, was curious if you could maybe elaborate on the dynamics there. Are these vessels materially different from your existing new buildings? Also this is a new shipyard for you guys. Why was the customer interested in putting new buildings on order with contracts as opposed to something that was already available or would be available in the market? If you maybe could elaborate on that a bit.

But responding to the charterer's interest to maintain the confidentiality of what they are trying to accomplish, so with all due respect, I would like to pass on that -- details of that question. These are good, very much core type of vessels that we already operate, but design features distinguish them separately from other vessels and for competitive reasons. They don't want people to know what they're pursuing. Is that fair enough?

I suppose I'll leave that one alone. Another real quick question, you guys obviously have the one charter and vessel that comes off contract here shortly. Any thinking as to whether or not you will -- we should be modeling to extend that or would you expect to let it go?

Sorry. Would you clarify that a bit? Because -- which vessel you are referring to, Ben?

Yes, what's it, the Maple 3 I believe, that chartered-in vessel.

The Maple 3 comes off charter in January next year and we do not envision to extend her at any material period. So she, in our opinion will come off.

And then could you maybe also David, talk to -- and you didn't mention it much, but how things are developing on the ethane front? Either for the three unchartered vessels or potentially larger vessels. I mean, have discussions continued to move forward? Has the falling oil prices changed the dynamic for the ethane trade at all in your opinion? Where do things stand in that respect?

Things are as bubbly as before. We’re constantly and regularly in conversations Ben, across the board both on 35s and of course in developing a business for the very large ethane carriers. I detect no serious pushback whatsoever on the conversations or the intensity and interest in customers focusing on importing U.S. ethane. We just came back from Houston last week on a conference a 2-day conference, 400 industry delegates, producers, everywhere from Marcellus to Eagle Ford who are producing ethane and also a myriad of interested parties across the world who are interested in importing that stuff. It was a very vibrant group. We were in intense meetings and there was a constant level of sidebar meetings with potential users. I detected absolutely no easing or lack of interest in that -- we had conversations. My guess is, if I were to guess that within the next six months we will have solidified our 35s and believe that within a year's time and it may take that long, most of the business related to the LECs would be concluded. But let me have Oeyvind because he was -- he and I were both in Houston and Oeyvind would you characterize that the intensity as high level of interest?

Yes. I mean we were one of the sponsors of the conference Navigator Gas because it was the first ethane export, U.S. ethane export conference and we’ve as David said, a myriad of meetings and spin-off meetings from that, but I concur, both the Europeans, now also South Americans and also Far Eastern, Southeastern Asia as well very keen, very interested, but these discussions, it takes time. Why? It's because of lack of infrastructure. So people need to get comfortable with U.S. production levels of ethane and once they are comfortable with excess of ethane or the export opportunities and they are agreeing on the pricing formulas with the suppliers then I think things will happen very quickly. But as David said, it will take over the next 6, 12 months for most of the contracts to be done.

One thing was interesting and I think it might help resolve any issue about where price clearance or whether the ethane or LPG is coming out of the United States. And I think the incident or the event is right on. Last week, Sasol announced that it was going to build a 1.6 million ton ethylene cracker in Louisiana at a cost of about $8.5 billion. That's pretty significant. And it's especially significant when you look at the total market capitalization of Sasol of around $25 billion. So they're betting one quarter of their market capitalization against an ethane feedstock ethylene plant in the United States because they believe that ethane is so cheap in the United States and the products that it will produce will be so cost advantaged that it can leach into the international markets at a very competitive price. Now I don't think you build plants that take four or five years and cost that kind of money that involve 2500 welders and so on without having looked over the various hills and valleys of pricing and say where, in 4, 5, 10 years is the ethane market going to be in the United States. There is a great cost advantage today and we expect it to be. So I mean if they're going to do that, they're going to be importing ethane because it's the same concept of cheap feedstock's feeding into a global business that's priced at a much higher rate. So I think that was very constructive and informative business.

And then last question from me quickly Niall, following this most recent order, these two vessels, could you maybe give me some idea of what your capital availability is to build or fund new projects without needing any additional equity?

As before, we believe that we can finance these from existing available cash, new bank loans and cash resources over the period between now and '17.

Okay. Any idea how much in excess of even that for these two might be available for subsequent projects?

Not a lot. These along with the other 11 that we’ve now on the build will pretty much use up all our equity.

Thank you very much indeed, sir. Now for your next question, that comes from Evercore from Jon Chappell. Your line is now open.

I want to ask a little bit more detail around one of Ben's questions and that's regard to timing of the ethane initiatives. First on the VLECs, you had mentioned in the conference call over the summer that over the next six months we’ve a pretty good idea whether you're moving forward or not with this initiative. So I just want to see, has that been pushed back at all given some of the uncertainty in the commodity price world? Are you still having conversations with the shipyards as far as the technology that will be used for the ships? Just trying to get a better idea for timing of any announcements on VLECs.

We're always thinking it's going to be tomorrow and tomorrow keeps being pushed out. Not that we're losing any business, but it just takes more time, more processing more reviews by various committees etcetera than one would expect. But again, I would emphasize that we do not see that the volatility of the crude price today is going to impact the desire and interest on the part of potential users of VLECs primarily because we're not talking about major new construction. Greenfield ethylene plants that may because of the size and magnitudes in say for example, China may require a lot of thought process. The projects that we’re talking whether they're in Europe or in the Far East, involve relatively minor modifications, principally, storage facilities and some small modifications. So you're not looking at a very high level of capital expenditures to implement and again, to me, it's very informative and eye opening to see Sasol take a position to spend that kind of money because they believe in the long term that ethane is going to be extremely competitive. So it is not at all off the table by any stretch of the imagination and I think we're getting closer. I believe again that most of the deal, most of the VLEC business will be up and known, the supply contracts signed, the shipping arrangements done within the next 12 months. I think if it's not done in 12 months it probably won't get done. That's my view because the sense that the urgency is there and the momentum is there. I believe we're in discussions with everybody who's in discussion with the Enterprise with (indiscernible) for supplies. So we are there, we're working hard at it. I feel reasonably good. I think we’ve a reasonable chance, but it's still a competitive world out there.

And then also, I hadn't thought about the talk about the terminal until you brought up the cost -- year-over-year cost of change. Last year you had a fair amount of cost that went into the terminal idea. This year there isn't any, should that lead us to believe that the terminal is somewhat semi-permanently on the back burner right now or is it still something that you're looking into?

We are still looking into it, Jonathan. We do have an intellectual and emotional involvement in that concept. We’ve not given up attempts to be a party to development of the infrastructure that's required to move significant amounts of Marcellus particularly liquid volume and we're going to see where it comes through. We're not engaged however in major expenditures at the moment, but it's not dead.

One last quick one, the returns in your business as Niall mentioned with the new builds just below the mid-teens, the contract at the spot market whatever you want to call it about $1 million a month those are pretty compelling returns as well. And you don't have the same volatility that the VLGCs have for all the reasons you spoke about utilization. Do you see the competitive landscape changing at all? Are there new entrants coming into the market and threatening market share or over-capacity?

It's always going to happen, that's always a threat. And we certainly face that, any time you can make the markets provide you with a good opportunity to make the returns that we are currently making and it appears that we will be able to continue to make over the next couple of years, that has to open up the eyes of competition who think (indiscernible) that they can step in a be part of it. They may be mistaken. Handy-size, semi-refrigerated market is a tough market, you have to know what you are doing. The technology and experience and know-how of operating these complicated gas ships is no small task. In fact, for the most part we do not get long term charters and therefore you have to work aggressively into the spot market, that's a challenge. We are fortunate in being able to build up a sizeable fleet so that we can utilize contract of a freightments [ph] and triangulation to improve our returns. Owners of two to four vessels cannot do that. So life is full of challenges and markets are always tough and you cannot get high returns without some degree of risk, but I think we're equipped with the talent, the right kind of fleet and a strong balance sheet that we can meet challenges if they come. And hopefully if it presents a problem, we can turn that problem into our advantage by acquiring vessels down the road at attractive turns. We don't know. But yes, listen, the world is competitive and we're part of it.

Thank you very much indeed, sir. Now from Wells Fargo, your next question comes from the line of Michael Webber. Your line is now open, sir.

David, I wanted to follow-up on the acquisition that was noted in the release and then another question on ethane. But I guess first off on the vessel value, you don't have a lot of great of apples-to-apples comps. I think the last deal balance was for a full year assets [ph] but the price looks like it's moved up quarter-over-quarter, even month-over-month, I'm just curious. I know the vessels seem like they're built to spec. Is that elevated price a function of the asset spec or are we just seeing a significant appreciation on asset value because rates are so firm?

Tommy if you're on the phone, you might comment. Tommy is covering -- he's in the shipyards all the time pricing vessels in Korea and China and so on. So maybe Tommy, you could comment about what the trend is, generally, on ship pricing and what kind of new technology is being applied to vessels that might change the price.

The gas segment in new building price, there are very few shipyards that are building these kind of ships and the price we see is very, very stable. It does not follow directly the major order books of both carriers and container ships, but the pricing right now is therefore for our type of high quality, high-end vessels is good for us as a buyer.

Okay. I can dig in a bit more offline. I wanted to touch on the charter. So they are pre-chartered for five years and then there is an option for five additional years, but it looks like a pretty early-dated option if you have to decide by May of '15. I'm just curious to what dynamics kind of drove that early option and then there is maybe -- how that business came about and whether there's more business along those kind of lines of 5 to 10 year fixed rate for mid-sized assets kind of floating around out there right now.

Mike, we love you but we're sensitive. We're responding to charterers' requests that most of the details of the charter arrangement and ship design be kept somewhat confidential and we’ve to do that. Look, its good business, solid business returns. It's a business and the kind of vessel that we know how to operate. It's not out of the woodwork of some unique type of features in it. So could we leave it at that and we'll be happy to?

No. Fair enough. Just to move on to ethane for a second. I know this has kind of been picked over already, but I just kind of want to be clear, when you're thinking about the opportunities, say in terms of ethane exports and you look at the level of rejection right now and the produce kind of tie in, kind of match up with those volumes, you're primarily, you're just talking EPD, target and (indiscernible) and if we were to kind of aggregate those volumes right. So you're not talking anything beyond that or any additional level of ethane that would be impacted by lower end of year prices that would limit investment and lower rejection. So that's the opportunity set that you're referring to, correct?

Yes. There is plenty of it right now.

I am just listening to the major producers up in the northeast, if you go on the websites or trying to get all their forecasts about range resources Taro, Chesapeake, all the boys up there. They're showing very robust growth opportunities in the NGL production and saying that even gas has been very, very low prices. They'll still drill for NGLs because that pays their bills. So just the northeast alone, very promising, and then you aggregate everything else that is happening in the U.S. and you get significant volumes. So that has attracted the likes of target resources to look into adding potential jetty number six with Galina Park using ship channel to add to their tank capacity. And now talking about having another 100,000 barrels a day on top of what they have. Other companies as well looking to increase East Coast and U.S. coast and therefore -- and this is a response industry, response to their potentially challenging the lack of infrastructure that's there. The volume as expected to increase and therefore they have to have an outlet and we being ship owners and the terminal operators we’re responding to this.

No, that's good color especially around the lack of sensitivity to the falling prices. Just one more for me, David and I'll turn it over. You mentioned a couple of times that there are kind of Greenfield projects specifically within China and others that might be kind of a lower quality source of demand and we have seen some VLEC orders that look like they've been placed, possibly on spec or for projects that it's tough to determine whether there is actually been any sort of longer term off-take agreement that's been signed. I guess to your knowledge, do you know if there have been VLEC tie or long term off-take agreements signed beyond reliance at this point?

I don't know. I mean, I know there was this publicity of some vessels in -- that (indiscernible) and Oriental, but most of that I believe was just all on subjects, I believe because we're not involved. And the different pieces that have to be put together, of course with the supply agreements for the ethane which I don't think that's in place now and I'm almost confident it is not. They have to get the financing involving in building the crackers. There is a lot that needs to be done. So I'm not involved, so these are speculative observations on my part. The only firm one I know would be the Reliants, but the concept of building a major Greenfield-type of ethylene plant or a PDH as a matter of fact right now my only observation is with the price, one might hesitate, do a little bit more studying, do a little bit more forecasting view of where crude prices where the spread, the arbitrage would be in 4, 5, 6, 10 years from now. Right now the spread from everything we can understand, is sufficient to draw most of the business we are talking to, draw it out and create the projects that we are looking for. And I just raised the issue that if Greenfield projects were to come out whether that would be any different. We're not talking -- everything we’ve been talking about whether in Europe or in the Far East they're all just supplemental ethane projects to existing facilities requiring relatively modest capital expenditures.

Thank you. Now from Clarkson Capital, you now have a question from the line of Omar Nokta.

I just had a couple of questions, not much on my plate. But did want to ask with your comments about the ethylene cracker capacity in the Gulf Coast, any thinking here on the three uncontracted ethane carriers? Any maybe shift in strategy of just foregoing sort of turning those on long term charter and maybe just having them trade in the ethylene market on delivery? I know it's still a ways out, but just wanted to get a sense if there is any change in thinking on that front?

So I'll go back and tell you my thinking when we ordered the vessels. When we ordered the vessels 6, 9 months ago we were looking at a situation where we had pretty much in-line one particular customer and it turned out it was Borealis. And we knew that they were seriously discussing a long term contract with us for ethane from the U.S. out of the east coast to their cracker in Sweden, but we were also discussing a number of others with existing petrochemical companies in Europe. The question is do we move forward and exercise the options we have and build those values without the contracts? The thought process we had was the following. Yes, we would like to do long term ethane if we can get it and we think there is a high degree of probability that over six months. So we'll be able to tie down good long term contracts for ethane movement and that would be our first choice and be our first choice because they provide steady, dependable, industrial shipping that adds nicely to the kind of business that we do in the handy-size which is predominantly spot business. So that would be great. And we could obviously take that type of stream of income and apply various types of financing from it, whether it be MLP or just stand-alone debt financing whatever have you. If that did not work, there is a very strong likelihood that the U.S. will produce some excess ethylene because of the expansions in the Gulf Coast are dramatic. Everyone is expanding or building Greenfield ethylene plants and nothing is more dramatic than what I just mentioned is a Sasol, 1.6 million tons. Now it's going to be a lot of ethylene. Now I believe predominantly will…

And then just one final question, more maybe micro-specific. Just on the Navigator Atlas, the first ethylene carrier you took delivery of this year. Have you noticed any -- it's still early, presumably, but have you noticed any change or any earnings power difference between this vessel and what you’ve in the existing operating fleet?

She's obviously a new ship with the latest vessel design, propulsion efficiency so yes. I mean, she is ready [ph] in terms of running costs -- less running costs and therefore, if the rates are equal, we will use an older vessel or the new vessel, then the time charter equivalent earning power on the newer one is better.

And do you expect -- and I'll ask Oeyvind a question myself, would you expect ethane-capable or ethylene-capable vessels to be able to earn more money than the comparable semi-refrigerated without ethane-capable? I think that's the question Omar that you want to get to.

Yes, certainly on the spot market because of these efficiencies. It doesn't matter about if she is trading LPGs or petrochemicals. But on the long term, we believe yes because of the sophistication, there is lack of ethylene tonnage out there particularly in this size and therefore with the glut of ethylene as we discussed. And all of ethane, we believe they will find a very lucrative home.

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

Most of my questions have been answered, but I would like to ask David, what is your view over the U.S. exports the next couple of years? We've been hearing a lot of numbers about the export capacity reaching around 40 million tons in a couple of years. But what would be the actual exports versus export capacity that you’re envisioning? And also given the lower oil prices you implied earlier that there might be an impact on larger vessels because of the potential delay over some petrochemical plants in Asia, how will this change the route direction for the cargoes?

Okay. Well again for us Fotis, it has no impact what's going on. I mean to the extent that those PDH plants whatever and I'm just theorizing. I don't know if anything will be delayed or cancelled, I just don't know. I am theorizing and I was trying to theorizing as to any potential impact on Navigator and I don't see it against Navigator because we don't do that business. It's an Atlantic Basin type of business and it's sophisticated a lot with one product etcetera. But I don't know -- the numbers are always changing and I cannot tell you what today's potential capacity versus demand for the export facility is. I know that there is no let-up in interest in the people who are expanding their current term link operations. I know that there is no hesitation whatsoever in continuing building the new facilities that are being built. The amount of incremental capacity is significant that's coming out. Most of that is going to be to the benefit of the very large crude carriers. It is not necessarily to our benefit although we will be a participant in just about every one of those terminals, but the real beneficiaries are the very large gas carriers. And our business is again not so U.S. centric. We’ve a global business. We move stuff in Northwest Europe, the Far East, Latin America. The U.S. is just one component part of a bigger mix of complicated transport of these petrochemical gases that we move. So I don't know and I can't give you a specific number for this, but there is more than enough for us to handle and I see no -- again what I really wanted to stress is I feel no let-up in interest or desire to continue to build and expand the export capacity because it needs to be built and benefit everyone. And that I think Jennie our time is up, and I don't think we can take any more question.

I understand, sir.

And anyone has any further questions of course, they can call us directly. And thank you for joining us today and we look forward to meeting you back here in a few months' time.