SFL Corporation Ltd. (SFL) Q1 2022 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Q1 2022 SFL Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand over the conference over to your speaker today, Mr. Hjertaker. Please go ahead, sir.

Thank you, and welcome all to SFL's first quarter conference call. I will start the call by briefly going through the highlights of the quarter. And following that, our CFO, Aksel Olesen, will take us through the financials, and the call will be concluded by opening up for questions. Our Chief Operating Officer, Trym Sjølie, will also be present for the Q&A session. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. Forward-looking statements are not guarantees of future performance. These statements are based on our current plans and expectations and are inherently subject to risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, but are not limited to, conditions in the shipping, offshore and credit markets. You should, therefore, not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for more detailed discussions on our risks and uncertainties, which may have a direct bearing on our operating results and our financial condition. The announced dividend of $0.22 per share is an increase of 10% over last quarter's dividend and represents a dividend yield of around 8.8% based on closing price yesterday. This is our 73rd quarterly dividend and over the years, we have paid more than $28 per share in dividends or nearly $2.5 billion in total. And we have an increasing fixed rate charter backlog supporting continued dividend capacity going forward. The total charter revenues were $166 million in the quarter with the vast majority from vessels on long-term charters and only 20% from vessels employed on short-term charters and in the spot market. The EBITDA equivalent cash flow in the quarter was approximately $119 million. And over the last 12 months, the EBITDA equivalent has been approximately $455 million. And the net income came in at around $47 million in the quarter or $0.37 per share. There was also a positive mark-to-market on interest rate swaps and equity investments but only a small portion of the total economic effect of the swaps flow through our profit and loss statement. Most is defined as hedging accounting and the book effect would have been around $10 million higher otherwise. In the quarter, there were around $1 million higher operating cost in the quarter due to additional crew rotation costs linked to COVID restrictions in some areas and increased airfare and also higher legal expenses in connection with the Seadrill bankruptcy and redelivery of the rigs. We expect this to come down when travel restrictions ease and the rigs are redelivered to us later this year. Our fixed rate backlog has increased significantly and stands at approximately $3.6 billion from owned and managed vessels after recent acquisitions and charters, which provides continued cash flow visibility going forward. The backlog figure excludes revenues from the vessels traded in the short-term market and also excludes future profit share optionality. In March, we announced a $540 million added backlog on our 6 large 14,000 TEU container vessels. The vessels will finish their initial 10-year charters to Evergreen in 2023 and '24, and we have now added another 5 years to Hapag-Lloyd, taking the charter coverage to 2029. Hapag-Lloyd is the world's fifth largest container line, and the transaction highlights the value and importance of our strong operational platform and our time charter strategy enable us to build strong customer relationships with industry-leading counterparties. In connection with Seadrill's Chapter 11 process, we agreed to take over the charter contract on West Linus with effect when all government approvals are in place. Based on current charter rate, around $500 million was added to the backlog. But given the market adjusted charter rate, this could increase if the drilling market strengthens. West Hercules will be redelivered when the current drilling assignment for Equinor in Canada is finalized towards the end of the year. Thereafter, that rig will be managed by Odfjell, a market-leading operator of harsh environment drilling rigs, and we will drop the West prefix on the rig names. The sale of the last 2 VLCCs on charter to Frontline marks the end of an era and demonstrates the transformation SFL has gone through. Initially, Frontline was our only customer and the fleet consisted of nearly 50 crude oil tankers. The 2 remaining vessels were 18 years old and we sold them after the quarter end for approximately $70 million, including a compensation from Frontline. We expect to book a gain of approximately $2 million in connection with the sale. And subsequent to quarter end, we have also delivered the 19-year-old 1,700 TEU container vessel to MSC Alice, which has been on a hire purchase agreement to MSC for the last 5 years. This transaction illustrates the value of having optionality where the final payment was intended to be marginal as the vessel had effectively been paid down over the 5 years, but we negotiated a profit share agreement into the deal at the time. And while we, of course, hope that there would be some value in that option, we didn't expect it to be more than $1 million or $2 million. Assuming 5 years forward to today, the very strong container market currently meant that we ended up with a profit split of nearly $12 million instead. The vessel was debt-free and SFL expects to record a gain of approximately $12 million in the second quarter. Excluding the drilling rigs, the backlog from owned and managed shipping assets were $3.6 billion at the end of the quarter, up from $2.8 billion in the previous quarter. Over the years, we have changed both fleet composition and structure, and we now have 71 maritime assets in our portfolio after these transactions. Over the years, we have gone from a single asset class chartered to 1 single customer to a diversified fleet and multiple counterparties. And over time, the mix of the assets and charter backlog has varied from 100% tankers to nearly 60% offshore 10 years ago to container vessels now being the largest segment with nearly 60% of the backlog and tankers only at around 10%. Most of the vessels are on long-term charters, and in the quarter, only 12% of hire was from vessels in the spot market. Also, we have nearly 90% of charter revenue from our shipping assets on time charter contracts and only 11% on bareboat or dry lease arrangements. We have also had significant contribution to cash flow from profit share over time, both relating to charter rates and fuel savings. The aggregate profit share was $22 million last 12 months and $4.5 million in the first quarter. We do not have a set mix in the portfolio, focus is on evaluating deal opportunities across the segments and trying to do the right transactions from a risk-reward perspective. Over time, we believe this will balance itself out, but we try to be careful and conservative in our investments with a focus on technology and transition over time to more fuel-efficient vessels. SFL owns 2 harsh environment drilling rigs, the West Hercules and West Linus, which have been chartered to subsidiaries of Seadrill since new. We have now been through 2 Chapter 11 rounds in Seadrill. And while we have been paid charter hire during the processes, we have decided to end our chartering relationship with Seadrill. The long-term drilling contract for West Linus with ConocoPhillips will be assigned to us as soon as customary Norwegian regulatory approvals have been obtained, currently expected to be completed in the third quarter. Thereafter, the rig will be managed by Odfjell Technology, a leading supplier of our offshore operations who is already performing extensive drilling services for ConocoPhillips on the fixed installations. The West Linus has been drilling for ConocoPhillips at the Greater Ekofisk Area since it was new in 2014, and its contract runs until the end of 2028 at market index charter rate. It was ordered against the contract and has several features which makes it particularly effective at the Ekofisk field on the Norwegian Continental shelf. The Ekofisk field was the first oil discovery in Norway and has produced more than 6 billion barrels of oil equivalent since its start-up in 1971. Recently, the production licenses in the Greater Ekofisk Area was extended from 2028 to 2048, and the area's license partners has recently announced new significant investments in future productions given the size and proximity to European markets. The harsh environment semisubmersible rig, West Hercules, will remain on charter to Seadrill, while it finalizes a drilling contract with Norwegian oil major, Equinor, in Canada. This is expected through the fourth quarter this year, and thereafter, the rig will be redelivered to SFL in Norway. It will then undergo a scheduled 5-year special survey estimated to take around 3 months before the rig is ready to work again. Odfjell Drilling, a market-leading harsh environment drilling rig operator will perform commercial and operational management of the rig after redelivery from Seadrill. The rig is only -- is one of only a handful rigs fully equipped to drill in the harshest Arctic environment. And market analysts are positive to market prospects after the strong oil price development and the realization that there has been a fundamental underinvestment in the segment for a number of years. We follow the market closely, of course, and will announce future employment in due course. The strength of our counterparties and diversification is key when you assess our portfolio and quality over contracted backlog. And the list speaks for itself with market-leading operators like Maersk, MSC, ConocoPhillips, P66 and Volkswagen to name a few. Relatively few of our customers are intermediaries where we have less visibility on the use of the assets and quality of operations. Strategically, this also gives us access to more deal flow opportunities such as the repeat businesses with Maersk, MSC, Evergreen and Trafigura, for example. Our strategy has therefore been to maintain a strong technical and commercial operating platform in cooperation with our sister companies in the Seatankers Group. This gives us the ability to offer a wider range of services to our customers from structured financing to full-service time charters. And with full control over vessel maintenance and performance, including energy efficiency and emission minimizing efforts, we can impact improvements to our vessels through the life of the assets. and not only be passively owning vessels employed on bareboat where the customer may not always have an incentive to make such improvements. In addition, we can retain more of the residual value in the assets when we charter out on a time charter basis. And in the current environment with rising raw material costs and inflation driving replacement costs for vessels, this value is for the benefit of SFL and our stakeholders. For bareboat deals, this mass value is usually retained by the charterers through fixed price purchase options. And with that, I will give the word over to our CFO, Aksel Olesen, who will take us through the financial highlights of the quarter.

Thank you, Mr. Hjertaker. On this slide, they've shown a pro forma illustration of cash flows for the first quarter. Please note that this is on a guideline to assess the company's performance and is not in accordance with U.S. GAAP and also net of extraordinary and noncash items. The company generated gross charter hire of approximately $166 million in the first quarter, including $4.5 million of profit share with approximately 85% of the revenue coming from a fixed charter rate backlog, which currently stands at $3.6 billion, providing us with strong visibility on a cash flow going forward. In the first quarter, the liner fleet generated gross charter hire of approximately $88 million, including approximately $4.4 million in profit share contribution related to fuel savings on some of our large container vessels. Following the company's recent acquisitions and charter extensions, vessels liner fleet backlog increased approximately $2.5 billion with an average remaining charter term of approximately 5 years or 7.7 years if weighted by charter hire. A small container vessel, which has been on a hire purchase arrangement during the last 5 years, was delivered to the buyer subsequent to quarter end against a total purchase price of $13 million. SFL expects to record a gain of approximately $12 million in the second quarter, the vessel was debt-free. In the first quarter, SFL had a fleet of 16 crude oil, product and chemical tankers, with the majority employed on long-term charters. Our tanker fleet generated approximately $30 million in gross charter hire during the quarter compared to $17.5 million in the previous quarter as additional Trafigura vessels joined the fleet. The net charter hire from the company's 2 Suezmax tankers employed in a short-term market was approximately $2.3 million compared to $3.1 million in the previous quarter. Subsequent to quarter end, SFL sold the 2004 built VLCCs to Front Frost and Front Energy, and simultaneously agreed to terminate the vessels charter arrangements with a subsidiary of Frontline. The sale price was approximately $70 million, including a compensation from Frontline for the early termination of the charters. SFL expect to record a gain of approximately $2 million in the second quarter as a result of the sale. During the quarter, the company had a fleet of 15 dry bulk vessels of which 10 vessels were employed on long-term charters and the other 5 are trading in the short-term market. The dry bulk fleet generated approximately $26 million gross charter hire in the first quarter, including approximately $100,000 in profit share contribution from our Capesize vessels on charter to Golden Ocean. The 5 vessels trading in spot and short-term market generated approximately $8 million in net charter hire compared to approximately $8.6 million in the previous quarter. SFL owns 2 drilling rigs, which have been charted out to subsidiaries of Seadrill on bareboat terms. In the first quarter, the company received charter hire of approximately $21 million from the rigs, including approximately $7 million in lump sum payments relating to termination of the West Linus charter. This summarizes an adjusted EBITDA of approximately $119 million for the first quarter compared to $121 million in the fourth quarter. We then move on to the profit and loss statement as reported on the U.S. GAAP. As we have described in previous earnings calls, our accounting statements are different from those of a traditional shipping company. As our business strategy focuses on long-term charter contracts, part of our activities are classified as capital leasing. As a result, a portion of our charter revenues are excluded from U.S. GAAP operating revenues and instead booked as revenues classified as repayment of investment in financing leases and vessel loans, results in associates and long-term investments and interest income from associates. For first quarter, we report total operating revenue according to U.S. GAAP of approximately $152 million, which is less than approximately $166 million of charter hire actually received for reasons just mentioned. During the quarter, the company recorded profit share income of approximately $100,000 from our 8 Capesize dry bulk vessels, and addition of approximately $4.4 million from fuel saving arrangements on some of our large container assets. The operating expenses of our fleet is up compared to the previous quarter due to a combination of new vessels entering our fleet and expenses related to COVID-19 related logistical challenges. In addition, we also saw increase in depreciation due to new additions to our fleet during the quarter. Furthermore, the company recorded a $7.3 million gain related to positive mark-to-market effects related to interest rate swaps and $2.5 million gain related to positive mark-to-market effects related to equity investments. So overall, and according to U.S. GAAP, the company reported a net profit of approximately $47 million or $0.37 per share. Moving on to the balance sheet. At quarter end, SFL had approximately $149 million of cash and cash equivalents. And with the sale of 2 vessels subsequent to quarter end, our cash position increased by an additional approximately $48 million. Furthermore, the company had marketable securities of approximately $24 million based on market prices at the end of the quarter. Following the sale of a small container sold subsequent to quarter end, the company had 4 debt-free vessels with a combined charter free value of approximately $73.5 million based on average broker appraisals. The approximately $247 million of remaining CapEx on 4 car carriers under construction is expected to be financed by senior debt facilities similar to SFL's other assets with long-term charters. So based on the Q1 numbers, the company has book equity ratio of approximately 28%. Then to summarize. Board has declared a cash dividend of $0.22 per share for the quarter, an increase of approximately 10% compared to the previous quarter. This represents a dividend yield of approximately 8.8% based on the closing share price yesterday. This is the 73rd consecutive quarterly dividend. And since inception of the company in 2004, more than $28 per share or $2.5 billion in aggregate has been returned to shareholders through dividends. Last year, SFL successfully committed more than $1 billion towards accretive investment. And so far, in 2022, we added more than $1 billion to the backlog which now stands at $3.6 billion, providing strong visibility on future cash flow, debt service and continued distribution capacity. With a strong balance sheet and approximately $200 million in cash, SFL is very well positioned to execute on new accretive investments. In addition, we have seen a strong recovery in the offshore drilling market since the beginning of the year. And our 2 harsh environment drilling rigs are well positioned to benefit from the increased activity level in the sector. One rig is employed on a long-term market adjusted charter rate, while the other rig is available for new contracts in 2023. And with that, I give the word back to the operator, who will open the line for questions.

[Operator Instructions] And the first question comes from Greg Lewis from BTIG.

I did want to talk a little bit about the fleet management and how we should be thinking about additional potential asset sales. I believe the smaller -- what was that I think a feeder, intermediate container ship, there was a purchase option on that, which was exercised. As we look out over the next -- and correct me if that's not right, as we look out over the next handful of quarters, is there any way to think about other potential vessels that may have those options attached, just given the strength in the overall market that probably a lot of those will get exercised if there are any.

Yes. Greg, this is Ole. Yes, we have some, call it, older, I would say, sort of smaller midsized containerships. One was just chartered for another 3 years with Maersk at a fairly high rate, reflecting the current market. We have 1 more that will come open and will be available for chartering again in a few months. No options relating to either of those 2 assets. We also have a couple of older 4,100 TEU vessels and 5,800 TEUs. Those are on and have been on long-term charter to MSC which -- and they have been effectively structured, you can call it as hire purchase type deals. And therefore, we don't haven't really got that, call it, market exposure. I think I would be very, very surprised if those options were not exercised, but that was also the design at the time. But if you look at the assets where we have more capital at risk, you can call it, that's predominantly on the larger ship -- container ships from 9,000 and up, and they're all built from 2013 onwards, which means that they are all the new generation electronically controlled engines and designed after the financial crisis, which means that they have a configuration that we believe will be long-term viable in that market. There, on those vessels, we have the first coming off for rechartering in -- potentially in '24, but there are extension options at similar levels. And -- and based on where we see the market and where we see replacement costs for assets and even if you adjust for a new vessel being marginally more efficient than any sort of vessel on the water, we think that there is a very high probability even in a more normalized market that those charters will be exercised, which means that we will take those charters then effectively out through well into '25 and some of them all the way into 2028. So I think generally, we have very long charter coverage on our larger, call it, significant container ships. And particularly now when we chartered the 4 -- sorry, the 6 14,000 TEU forward starting '23, '24 and fixed them all the way through to '29.

Okay. Great. And then I'm not as familiar with the car carrier sector. I mean clearly, the contract with Volkswagen is great. As we try to think about that opportunity, right, I mean, like for us, like we look at global trade, we can kind of see the strength in the container market. As you look out at like the car carrier sector, is -- are there opportunities in that market to continue to find and deploy capital? I'm just not -- like I said, I'm not really familiar with that. It seems like a great sector for you guys. It's a little bit -- there's only a handful of vessels in there. But is that an area where like there could be opportunities to continue to deploy capital there? Or was that just kind of like a couple of niche one-off projects where you were able to step in and set up some good contracts. Trym Sjølie: It's Trym Sjølie here. Well, the car carrier market is very interesting for us, as you say. It's a market where SFL has an edge, I would say. You can typically -- I mean the operators have an industrial view and they have long-term fleet planning. And there is a huge space there now for fleet renewal. You have all the ships being sort of redundant due to new emissions regulations coming in, where they either have to be replaced or where they have to reduce speed quite drastically in some cases. The fleet today is about 700 vessels in total, and there's quite a big number of those. I think at least a couple of hundred ships would have to be sort of built in the next 5, 6, 7 years, just to replace the current fleet. So we see as quite interesting. So the challenge is finding the right vessels, the right new building slots and the right counterparties, but we feel we have a nice share.

Okay. Now that's great to hear. Yes. Like I said, more of the -- just not as familiar with the car carriers, so like to have any color around that. It's always super helpful. And then I did want to touch on the offshore rigs. I mean, clearly, the West Linus is on long-term contract in a very attractive position. But I was kind of curious how maybe we're thinking about the West Hercules, what I -- it looks to me that asset prices are firming for that type of rig. Like is -- how is the company -- is there opportunities to monetize that? Or is it really we're just working with our -- using our rig relationships to try to find that rig at home and get it on contract. And then once it's on contract, maybe then we could revisit maybe potentially monetizing that asset?

Yes. It's a good question. We -- our focus on that rig is to recontract it. We have hired Odfjell Drilling who is I would say, world leader in harsh environment operations. The rig is one of very few rigs that can work in Arctic conditions through the winter, which is quite unique. And then we have a market dynamic right now where we -- where I think a lot of the players and all companies realize that it's been a fundamental underinvestment in the segment for a long time. And we see an energy squeeze, I would say, particularly in Europe, who has been so reliant on gas -- natural gas from Russia now needing to source that from elsewhere. And of course, the North Sea is very close. There are lots of pipelines, but you need to do a lot of drilling to get that production going. So that's just one area. We also see a lot of, call it, focus on deepwater. It could be deepwater of Brazil, deepwater West Africa where that rig also would be fully compatible. You wouldn't utilize, call it, the winterized sort of features of the rig, but it would still work perfectly well also in normal sort of harsh environment type areas. So I think it's a rig with a lot of flexibility. I don't think this is the time to necessarily sell that rig, if that that's what you alluded to. I mean our focus is cash flow and get it contracted and build backlog also on this unit. And we are, of course, encouraged by the strong oil price and the fact that we finalized our negotiations with Seadrill in February and then as we all know, oil prices topped 50% after that. So market has changed quite dramatically over the last few months.

And the next questions come from Chris Robertson from Jefferies.

Congratulations on a lot of positive developments here. I just had a question related to the Linus. On the $500 million in revenue backlog that you talked about, how sensitive is that to the market index rate? And can you kind of talk around that?

Absolutely. I mean that was basically based on the market index rate at the time. We currently have bareboat rate with Seadrill during the transition period, where Odfjell is applying for a DOC, which is applicable on the Norwegian continental shelf. I think if you look at the market rate development, going forward, that is positive, and it's also supported by recent fixtures of same type designs from -- by Maersk drilling to Aker BP on 5-year deal. So as you see kind of that market index rate potentially increasing going into '23 and '24. That will, of course, have a positive impact on kind of the backlog number.

Okay. That's fair. Then on the Hercules going into special survey, how long do you expect that will take? Will that commence during the first quarter of next year? And how long do you think it will take before I guess it's secured on a new charter after that?

In terms of -- I'll start with the timing of redelivery from Seadrill. I think that's currently estimated to this end of the fourth quarter. Exact date is still to be confirmed. Then we are doing the necessary preparement with Odfjell Drilling for the SPS. I think base case, I mean, we will kind of assume about 90 days for the SPS. And then we are currently now marketing the rig for various employment opportunities and an exact commencement date is not confirmed yet. I think what I can comment on is that if you look over the last couple of months, the tender activity has increased significantly, both in kind of the harsh environment area, but also potential worldwide operations. But our focus, having I think, first-in-class exploration harsh environment rig is to kind of keep the rig in kind of Norway, potentially Canada or U.K. sector.

And then with respect to the current deployment in Canada, it just started drilling a couple of days ago. And therefore, we will not know until the first well in that program of offshore Canada is drilled. We don't know exactly how long time it will take to finish the rest of the work. And therefore, we have to await that before we can sort of be very specific on timing for when we -- when the rig will be redelivered in Norway and therefore, when the SPS process can start. But it should be around year-end. At least that's our expectation. And this is also -- has also some bearing on sort of, call it, contract discussions we have for employments after redelivery after SPS.

Okay. I guess my follow-up question to that would be the travel time from Canada to Norway, and then if it's redeployed back into Canada, what the travel time would be.

I think that somewhat depends on the weather. I think that could be 2.5, 3 weeks, give or take, kind of in normal circumstances, but the rig will be at least on the base case now being we're kind of finalizing operations in October. At that time, kind of the weather in the North Atlantic can be a bit choppy. So I mean it all depends, I think it's approximately estimated 3 weeks kind of transfer back to Norway.

And the next question from Richard Diamond from Castlewood Capital.

Yes. Ole, I have 2 questions for you this morning, 1 is philosophical and 1 is directional. And on the philosophical question, in certain segments, such as dry bulk, could we potentially be entering a super cycle given the lack of new building, the restructuring of trade routes such as coal coming from Australia to Rotterdam, et cetera, et cetera? And the second question is, looking forward, what areas do you think are the most interesting to allocate capital in the future?

Thank you, and thanks for calling in. Yes, I would say the dry segment, it looks very interesting. I would say both the dry segment and also the tanker space. I mean, in both segments, you have sort of what you see historic low order books, at least in recent history. I think for tankers, you have to go back 20, 25 years to see similarly sort of low order books. And as we all know, the shipping market, in general, has always been heavily influenced by owners sort of destroying their own markets, i.e. when market seems reasonably good, everybody runs out and orders vessels. And when those vessels are finished at the shipyard, there are suddenly too many vessels available and the market crashes. A good example of this was how the dry bulk market worked in several years after the ordering boom in 2014, where you had a consistently nice high growth in demand, but they were just ordered way many more vessels, and therefore, it took several years to catch up. As you point out, you have the yards basically full for -- if you want to order at least series of vessels, you're not talking late 2025 and into 2026 to get them delivered. So in either of the dry bulk market and also the tanker market, if you really want to sort of order a series of vessels, you have to wait quite a long time. So -- and in the meantime, of course, it could be a very interesting market, given that there is a lack of supply. Also, what could impact the market going forward from 2023 is the new CII regulations that would potentially limit or reduce the ton mile capacity because order vessels, less energy-efficient vessels, may have to reduce power to be sort of approved and therefore -- and this is based on IMO, the new IMO regulations and therefore, effectively take out transportation capacity from the existing fleet. This is also an effect you see on the tanker side, not to the same degree as on the dry bulk vessels. And maybe as car carriers was a question here earlier, car carriers are probably the segment where you could see more of this effect because you have a relative low deadweight cargo capacity compared to the size of the vessels because they carry typically cars and rolling equipment. So I think generally, in several of these segments, there are very interesting market dynamics. And then on top of that, if you are worried about the potential inflation risk, owning vessels that's, in many ways, an inflation hedge because they are real hard assets. And if there is inflation, that will pull up also the value and residual value of these assets. Then turning to your second question, where do we see investment opportunities. And I would say we see -- we do see investment opportunities in all these segments. We have to be -- we cannot comment specifically on what we look at, but we are looking at many opportunities in several of these sectors. And -- but we try to be careful when we invest. You have to have a certain degree of paranoia when you make investments in volatile markets. What we try to do is charter-out vessels to end users that are typically industry leaders and larger entities because we think that, over time, will give us a less -- lower risk in the portfolio and therefore, higher probability of a very strong long-term return. So I hope that answers the question you had there.

Thank you very much for your questions. I will now hand back the call to the speakers for the closing remarks.

Thank you. Then I would like to thank everyone for participating in this conference call and also thank the SFL teams on board the vessels and on shore for their continued efforts in delivering value for our stakeholders. If you do have any follow-up questions, there are contact details in the press release or you can get in touch with us through the contact pages on our web page, www.sflcorp.com. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.