Good day and thank you for standing by. Welcome to the DHT Holdings Q1 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question -and -answer session. To ask a question during this session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded, Tuesday, the 10th of May, 2022. If you require any further assistance, please press star zero. I would now like to turn the conference over to your speakers today, Laila Halvorsen, CFO, and Svein Moxnes Harfjeld, CEO and President of the company. Please go ahead. Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings first quarter 2022 earnings call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available at our website, dhtankers.com, until May 17th. In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exhibit to our Form 6-K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events as detailed in our financial report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports available on our website and on the SEC EDGAR system, including the risk factors in these reports for more information regarding risks that we face. The company continues to show a very strong and healthy balance sheet, and the quarter ended with $58.6 million of cash. At quarter end, the company's availability under both revolving credit facilities was $176.8 million, putting total liquidity at $235 million as of March 31st. Financial leverage is about 30% based on market values for the ships, and net debt per vessel was $17.8 million at quarter end, which is still below current scrap values. Looking at the P&L highlights, EBITDA for the quarter was $14.4 million, and net loss came in at $17.3 million. The result includes a non-cash gain in fair value related to interest rate derivatives of $7.9 million. The company continues to show a very good cost control with OpEx for the quarter at $18.3 million, equal to $7,800 dollar per day per ship. G&A for the quarter was $6.8 million and includes non-recurring accruals related to the retirement of the previous co-CEO. In the first quarter of 2022, the company achieved an average TCE of $17,100 dollar per day. For the second quarter of 2022, 69% of the available days have been booked at an average rate of $24,800 per day, and 59% of available spot days have been booked at an average rate of $19,900 per day. On the next slide, we present the cash bridge for the quarter. We started the year with $60.7 million of cash, and we generated $14.4 million in EBITDA. Ordinary debt repayment and cash interest amounted to $7.2 million, while $3.3 million was allocated to shareholders through dividend payment, and $2.3 million was used for maintenance CapEx. Changes in working capital amounted to $4.5 million, and we ended the quarter with $58.6 million of cash. As you will note, despite the very challenging freight market, we did not burn any cash. Switching now to capital allocation. The company will pay a dividend of $0.02 per share for the quarter. It will be payable on the 26th of May to shareholders of record as of nineteenth of May. This marks the 49th consecutive quarterly cash dividend. For the three remaining quarters of 2022, we estimate cash G&A of $3.3 million and non-cash G&A of $0.8 million in average per quarter. Following the sale of DHT Hawk and DHT Falcon, depreciation for the three remaining quarters of 2022 is estimated at about $31.5 million in average per quarter. As the scrubbers will be fully depreciated at the end of 2022, we expect annual depreciation for 2023 to be about $100 million. With that, I'll turn the call over to Svein. Thanks, Laila. We have entered into agreement to sell the DHT Hawk and the DHT Falcon with the delivery set to take place during the second quarter. Price is $78 million for the pair and compares favorably to the combined price of $98 million that we paid for them some eight years ago. The sales are expected to generate some $12 million in combined profits, and we will repay the remaining outstanding debt on the vessels amounting to about $13 million in total. Following these sales, the average age of our fleet will be reduced and our AER and EEOI metrics improved. On this slide, you will find an update of our cash break-even levels for the remainder of the year. As per usual, all true cash costs are included in our presentation, i.e., OpEx, debt amortization, interest, G&A, and maintenance CapEx. The numbers are best in class with a required rate of $15,100 per day for the fleet as a whole, and importantly, $8,500 per day for the spot ships, specifically in order for the company to be cash neutral for the remaining three quarters of 2022. On this next slide, we wanted to share an observation of the peer group within large tankers. As you will see, there is a distinct change in the development of financial leverage within this group. DHT is represented by the green line and with the lowest financial leverage. As you will recall during the last upturn, not only did we return significant monies to shareholders through quarterly cash dividends, but we also invested in the balance sheet and reduced interest-bearing debt by about 60%. Despite the recent tough markets, we have retained our balance sheet strength, and you could also note that we have no new building CapEx commitments. Your takeaway here should simply be that DHT has the strongest balance sheet in the group. I will now offer some commentary on the market. We believe a market recovery to be underway, but delayed and troubled by COVID in China and geopolitics generally impacting macroeconomics. Admittedly, and given all the noise, it is very difficult to predict the near term freight market. Trying to look through all this noise, we see fundamentals developing towards what we expect to become a rewarding market for large tankers. Oil inventories are low and are now likely more pronounced as energy security is increasingly becoming an issue. OPEC is so far sticking to its plan, but with underperformance by the respective members' quotas. The much talked about Iran deal takes longer than market observers have suggested, and the Russia-Ukraine conflict is reducing supply. The U.S. have however announced release from the SPRs, a release that will offer the market a double benefit. Firstly, through additional barrels to the market over the coming six months, and a likely refill in due course. Further, we don't think it's unreasonable to expect Saudi and the UAE-led OPEC response to high oil prices at some point, maybe in the second half of this year. As we all know, ship owners make a living by transporting supply, hence the danger of talking our own book and stating the obvious, more supply would be most welcomed. The sanctions and ensuing trade disruptions coming out of the Russia-Ukraine conflict seems to be increasing transportation distances, so far most visible to ships smaller than VLCCs. If freight differentials become too wide, freight tend to flow up and down between the different ship sizes. We saw some of this at the outset of the conflict, and should regular trades see these differentials come back, the theory that the tide lifts all boats could hold true. The pop in freight rates for VLCCs that we saw a few weeks back is a good indicator that the underlying balance is not as bad as the current rates are indicating. Keep in mind that VLCCs typically transport almost 45% of all seaborne crude oil volumes, but closer to 60% on a ton mile basis. This is truly the workhorse of the oil industry. The trade disruptions are changing sourcing of refined oil products, elevating freight rates for product tankers. As this happens at the time of low in-inventories of both crude oil and refined products, it begs the question whether product tankers are front running crude tankers suggesting demand for feedstock and thus crude oil transportation to come next. There are currently too many ships in the market. The world fleet is however getting older by the day in combination with no ordering of new ships. The VLCC order book consists now of 54 ships to be delivered through the remainder of this year and next. This equals a meager 6.3% of the existing fleet, very low by any reference. With very limited scrapping, the current number of ships older than 20 years has now become significant. This part of the fleet could grow close to 100 ships by the end of the year, assuming no scrapping. We find it discouraging those older ships are not retiring from the fleet, in particular with very healthy demolition prices being offered. Until not long ago, there were hardly any commercial prospects for ships older than 20 years. Sadly, it is only sanctioned trades that keep all these older ships currently in business. These sanctions have simply developed new trades for ships that do not comply with rules and regulations. We do think, however, that something's got to give as dry docks and other capital expenditure eventually will force the older ships out of the market. In sum, all this would lead us to envisage the fleet to potentially shrink at a time when demand for transportation is expected to recover, creating a very rewarding freight environment. It would be a very bold move to bet against large tankers. With that, we open up for Q&A. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the hash key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jon Chappell from Evercore ISI. Please ask your question. Thank you. Good afternoon or good morning, Svein Moxnes Harfjeld. Gonna ask all my questions in kind of one multiparter. The vessel sales make 100% sense given the asset values, also given, you know, where equities are trading right now, and you didn't have much debt on them. The first part is what's the use of proceeds from that net $65 million? And then secondly, you know, you've kind of indicated in the past that you're not interested in buying assets at this point. Again, if you're selling, then the prices probably indicate you're not into buying. If we are in the beginning of this upturn, as you've laid out, you're probably not gonna have other opportunities to buy either. Do you kind of envision the next several quarters, the next beginning of the upturn in the cycle to be a kind of cash harvesting period and with more aggressive capital returns to shareholders and then look to purchase when we're kind of peaked or past the cycle? Thank you, Jon. Just to be clear, we didn't say that we were not interested in buying at this time, but we have not been interested in buying at some of the prices that people have been asking. There's a sort of reasonable distinction in those two sort of observations. We are always sort of looking at opportunities, and it's been really hard, we think, to find something that has made good sense. We should not really rule that out. I think with our balance sheet, we are more than able to fund any acquisitions that we sort of would like to look at without relying on additional capital. If we do something, it will certainly sort of improve the earnings in the company. As you also noted, we do like to have a sort of low leverage balance sheet. We think our business is sort of suited for that, or the balance sheet is suited for the business, depends on which way you look at it. As you also point to when it comes to capital allocation, our policy is a minimum 60% of ordinary net income. We have demonstrated in the past that when sort of earnings or cash flows have permitted, we have certainly rewarded shareholders with more than 60%. Mm. That's also possible. Of course, with sort of low cash breakevens, low leverage over time, it could, you know, put the company in position to be more generous than what the specific numbers, you know, suggest. It sort of, you know, we will not be drawn on giving a specific outcome on that. That's how we sort of think about it in general. Okay. That's very helpful. I lied before. I do have one more additional question. It seems like other segments have been more immediate direct beneficiaries of some of the new trading routes developing from what's happening in Europe right now. Are the VLCCs just a laggard in that regard? Or do you see maybe China comes back online, reverse lightering from the Baltic or the Black Sea, that could be a big VLCC beneficiary. How do you kind of see the map redrawing to the benefit or not of the VLCC market over time? Yep. Prior to the conflict, you had some four to five VLCC cargoes going out of the Baltic, and they were all loaded through transshipment in the Danish Straits. That business, of course, has become very difficult now for most people. From what we understand also, Danish pilots are not so interested in assisting that type of sort of transshipment to take place. People have moved sort of further away to try to do this. Currently it's really some of the traders buying this oil, and it's not a business that we touch. I think it's, you know, if this whole conflict situation changes, one should expect that trade to come back at some point. This has not really been the case out of the Black Sea, where you have more sort of Suezmaxes trading directly out to Asia. What we did see immediately after the conflict, we had some VLCC loadings out of the U.S. Gulf going to Europe, and with multiple port discharges, so two to three discharge ports in the Iberian Peninsula, etc. Those were done at very good freight rates, up in the $40,000 a day sort of territory. This might well sort of increase at some point, once these U.S. barrels are coming to market. There seem to be appetite for, in particular, the light crude in Europe, which is driving a lot of West African barrels now going to Europe. You know, there are so many moving parts here, and it's very hard to have a precise view on exactly how it will play out, other than just saying that disruptions and increased distances will serve our business well. I do think right now we are probably the last ship type to benefit from this, but eventually it will also come to the VLCCs, and then it should be quite forceful, we think so. That's very helpful. Thank you, Svein. Thank you. Your next question comes from the line of Chris Robertson from Jefferies. Please ask your question. Hello, Svein. Thank you for taking my questions. Of course. Morning. Morning. Yeah, you guys, have done a good job in the past with the countercyclical investing and divesting. You have a handful of ships with the same age profile as the two that were just sold. Could we see some additional vessel sales this year, or do you think that's over with at this point? You know, if we see sort of deals that we think are attractive to divest, you know, say one or two more ships, that could certainly happen. The challenging part also in sort of selling ships in this age bracket is that they are not all buyers that a company like DHT can entertain to do business with. On this occasion, this was a known entity to us, somebody we've done business with in the past, and they performed very well, and so it's a proper company. For us that sort of worked out and that in connection also with a good price. I will not rule it out, but it's not like a heavy marketing or effort in sort of getting rid of ships. You know, we have a high-quality fleet and they're also ready to dance, you know, once the music can really start. Sure. I guess just thinking about the pre-eco built ships, especially the pre-2010s, kind of what's the incremental CapEx needed to bring them up to speed for IMO 2023 and beyond? Does it vary heavily by age bracket, or is it about the same price? Well, I think, you know, for all those ships, they have large engines, and we've gone through the exercise of calculating sort of the EEXI and what we then would need to do with the ships. There will be some minor, sort of power reductions. The power reductions ends up in sort of, you know, capped speeds, which are still way higher than what is the service speed in the market. You know, basically, all these ships are designed to run at 17.5-18 knots, and we might have to, you know, cap speed at, call it 15.5 knots or maybe closer to 16 knots. Whereas the service speed in the market is 13-13.5 knots. I think commercially it would have hardly any, maybe only limited impact on DHT's earnings capability. There's not any CapEx to speak of to this. This is really a pocket money. Great. Yeah, thanks for that color. That's all for me. Thank you. Thank you. Your next question comes from the line of Frode Mørkedal from Clarksons Securities. Please ask your question. Yes. Thank you. Hi, Svein. Hi, Frode. A few questions on this vessel sale you did. Looks like a very good price you achieved. They of course include the scrubbers, right? One question I had is, did the value of the scrubbers come up in the discussions? If so, how much would you ascribe this scrubber value to be in today's market? There was no specific discussions about the scrubber value. This buyer wanted ships with scrubbers, so it was not sort of an alternative discussion. Do you have ships without scrubber and what is the price differential? It was sort of very straightforward, and we had a sort of rough idea what we wanted for the ships and they were able to and willing to meet our price expectations. You know, there's been some volatility in the spreads. It's been sort of at 100 and been up to 250, so depends what you put in. I think for sort of ease of reference at the $100, you know, spread, then the nominal value in a year on a ship of this vintage is in the sort of $1.5 million-$1.7 million incremental earnings. So then you need to have a view on how long do you think these spreads will stay. There were as I said again, there was no specific discussions on a value per se. No. Okay. The reason I ask is that if you look at the, let's say, broker quotes, they usually do not, well, it's a scrubber-free value, typically. Yeah, that's correct. Anyway, yeah. In general terms, how do you see the sale and purchase market for VLCCs today? You know, in combination with that, can you also talk about the timing of this vessel sale? I guess given the outlook you have, which seems to be quite optimistic, would vessel prices move even higher in the future? Or, you know, or do you think, like, there's the new carbon regulation that's coming into play next year has an impact for these older vessels? You know, there seem to be reasonable liquidity in the older end, but as I mentioned, on the prior question, there's not all these counterparties that we could do business with, so they might work out for a private buyer, so to say, or, you know. But there are sort of regular transactions happening in that space. For older ships, they are trading anywhere, depending on the age and the condition, from sort of the high -20s up to sort of the high -30s, as we know, or maybe even $40, as we now demonstrated. Depends on the value position, ballast water treatment, scrubbers, you know, prior history, etc. There are sort of regular transactions taking place. In the sort of very modern end, there are, you know, a few things being talked around, and one can, you know, do something if one wants to. It seems to sort of be a bit, I would say, sideways, as there are not many transactions taking place and not that many players. There's not some real big movement, and it's a bit disconnected from newbuilding prices. I think the reason for this is that the asking price from the shipyards at $120, ±, is just a derivative of what they can get for a gas carrier, LNG carrier or a large container ship. It's not really driven by strong demand to build tankers. That's really great news for our space because you don't really see a lot of people weighing in on building large tankers now, so that we just get benefit. In the middle brackets, call it ships around 10-year mark, there are very, you know, not that many transactions taking place, not much for sale or purchase. You have to sort of move over to sort of starting at 13-, 14-years-old ships before you see much movement. That has also been a bit sideways, I would say. Again, here, it depends very much on the specific ship, yard it's built at, how it's equipped, et cetera. Some of the private owners are sort of keen to venture in that area, and I understand why they do that. It doesn't sort of offer any fuel economy benefits compared to an eco ship, but it is nevertheless some quality ships in those vintages in the market, and they will also have a reasonable time, I think, in a market recovery. Yeah, sure. Thank you for that color. That's it for me. Your next question comes from the line of Robert Silvera from R.E. Silvera & Associates Marine. Please ask your question. Yeah, it's been very good job as usual. You guys are conservative and have reduced your interest costs, which is always positive. You did have extra shares outstanding of about 672,000 plus, and I was curious where those shares went. Were they in fulfillment of option buying, or where did they come into existence for? The company on a regular basis has long-term sort of incentive program for directors and officers. Okay. There are sort of allocated shares that could be typically rewarded annually with vesting criteria. That is a reflection of that. Okay. It's all management then, directors and management. Correct. Okay, good. You also note a number called, and you call it the share of profits from associated companies. Can you give us some color on what that is? We own in the first quarter 50% of our ship management company, Goodwood, in Singapore, that runs all our ships. That's an associated company. We have now subsequently in the second quarter increased our ownership position to have now economic control of the company. We also have the two or three directors of that company, so increasing our position. We will change the accounting treatment of that company going forward. That will be visible from the second quarter results onwards. Okay. That will increase profits. Can you give me color on- The company is profitable, but the change in ownership from 50%-53% is not significant, in sort of nominal sense. Right. It's a small part of the P&L in DHT. Right. In one of the earliest questions, there was a cash from the sale of the ships. What was your allocation for it? I didn't pick up what your answer was on that. Mm-hmm. What are you using that, those millions for? Initially, the cash will go into the company's sort of cash reserves. We are, you know, we have not communicated a specific use of that cash. You know, we are you know sniffing around if we can find a good investment opportunity, although we must admit they're very hard to find right now. That is one alternative. We could also do, as we have done in the past, is to prepay more debt. That's also an opportunity that we have. I think in the next quarter or two, that will become more visible to investors as we move ahead and to see what we have decided to do. Could also, of course, be a mix of both. Yeah, I like the alternative of reducing the debt. That's always a good one in my mind. One last question. You know, the large number of ships that are over 20 years and stuff, how is that playing right now with the scrap steel market? Is the scrap steel market still high and attractive to take these ships out, or has it been dropping? No, the prices to sell the scrap for the ship for demolition is still very high, which all makes it a bit puzzling that you don't see more ships heading in for the scrap yards. As I mentioned, it's really driven by the fact that they have some commercial opportunities that are almost sort of exclusively available to people willing to take these risks and. Right. Not be compliant. These sanctions have over time created sort of a separate market. You could be, maybe can be concerned that for the smaller ships, like Aframaxes, et cetera, that if Russian cargos are also now sanctioned, you could create an additional pocket for similar types of businesses in the future. It's not an ideal outcome. It's the flip side of the sanctions, which we understand why they're being made. Unfortunately, IMO and the relevant flag states are not able to really enforce these regulations and get rid of the ships, so. Okay. With your experience, though, with the ship ages that are out there, when do you see it kind of being economically forced that they be scrapped? A year out, two years out? You know, with the new regulations coming on from 2023, I think the next sort of hard line will be 2026. I think by that time it's gonna be very, very difficult, if not impossible, to operate older ships. If you look at sort of the demographics of DHT's fleet, you will note that our ships will sort of move out of the commercial picture well within that time. We have sort of a natural retirement, either by selling or also potentially scrapping in due course. We will sort of pass through that and what we will own beyond that will be a very efficient fleet, you know, assuming nothing else happens. Right. Well, thank you. Thank you very much for doing such a good job. Thank you for your support. That's it for me. Thank you. Yeah. Your next question comes from the line of Clement Mullins from Value Investors Edge. Please ask your question. Hello? Clement Mullins, your line is open. Please ask your question. As there is no answer, I'll move on to the next question. This question comes from the line of Chris Tsung from Webber Research. Please ask your question. Hi, good afternoon, Svein. How are you? Good, thank you. Thanks for the question. I wanted to ask about just your. All the good ones were taken already. Just moving on to the drydocking schedule. I think there's one left for the second half of this year. I know in 2021, in light of a you know soft freight market, you guys pushed up several drydockings. Do you guys have that slack in available if you know just for the rest of the year, or is it just one the most you can do? There's only one ship left for this year. We might start with one that's due in January later this year. If you want details, please make contact with our CFO, Laila, and she will assist you with more details. Okay, great. Just on your, the vessel sales, it looks like, you know, the outstanding debt on the two were about $13 million, given the DHT stuff, financing it $2.5 million over the remaining economic life. That to me comes out to be about two to 2.5 years remaining on these vessels. Is it right, am I thinking about it correctly, that the economic life that you guys built in is about 18 years for these VLCCs? No. What we do when we finance is that we like to cap the borrowing on the ship to be maximum $2.5 million per year in amortization for the remaining commercial life of that vessel. For a new building, for 20 years life, it will be $50 million dollar sort of maximum debt. If you buy a 10-year-old ship, it will be $25 million dollars. It's also a reflection here that we have done some prepayments on debt earlier on. There's a mix of sort of regular amortization and some prepayments. The debt was a bit lower, so. Okay. All right. That's it for me. Thank you. Once again, if you wish to ask a question, please press star one on your telephone. There seems to be no further questions. Please continue. Well, thank you very much to everyone for listening in on DHT. Your support and interest in our company is most appreciated. Wishing you a good day ahead. That does conclude our conference for today. Thank you for participating. You may all disconnect.