Hello, and welcome to the Scorpio Tankers Inc. second quarter 2023 conference call. I would now like to turn the call over to James Doyle, Head of Corporate Development and IR. Please go ahead, sir. Thank you for joining us today. Welcome to the Scorpio Tankers second quarter 2023 earnings conference call. On the call with me today are Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; Brian Lee, Chief Financial Officer; and Christopher Avella, Chief Accounting Officer. Earlier today, we issued our second quarter earnings press release, which is available on our website, scorpiotankers.com. The information discussed on this call is based on information as of today, August 2nd, 2023, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release, as well as Scorpio Tankers' SEC filings, which are available at scorpiotankers.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcasted live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the investor relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at scorpiotankers.com on the investor relations page under Reports and Presentation. The slides will also be available on the webcast. After the presentation, we will go to Q&A. For those asking questions, please limit the number of questions to two. If you have an additional question, please rejoin the queue. Now, I'd like to introduce our Chief Executive Officer, Emanuele Lauro. Thank you, James, and thank you for joining us today, everybody. We're pleased to report another quarter of strong financial results. In the second quarter, the company generated $235 million in EBITDA and $133 million in adjusted net income. The product tanker market has been and continues to remain strong, to put this into context, over the last six quarters, the company has generated $1.6 billion in EBITDA and $1 billion in adjusted net income, during which we have reduced our leverage by $1.3 billion and repurchased $582 million of the company shares. Deleveraging and returning capital to shareholders has been our primary focus. In the second quarter, we repurchased $260 million of the company shares, which is almost half of our total repurchases since July 2022. The increase in share repurchases reflects the progress we have made on deleveraging and refinancing the balance sheet. We view the repurchases as valuable for our shareholders, given that the shares are trading at a large discount to the company's net asset value. Our balance sheet continues to improve. Today, we have $683 million in liquidity. In July, we closed our $1 billion term loan and revolving credit facility. We are in the process of closing a new $94 million credit facility. These new facilities combined lower the company's interest margin, accelerate the repurchases of more expensive lease financing, and increase the financial flexibility of the company. Looking forward, we expect low global inventories, robust demand, and limited fleet growth to support strong product tanker fundamentals. We would like to thank you for your continued support, and I would like now to turn the call over to James for a brief presentation. James? Thank you, Emanuele. Slide seven, please. We've seen an elevated rate environment since Q1 of last year, and as Emanuele highlighted, over the last 6 quarters, we've generated a little over $1.6 billion in EBITDA, and since July 2022, we have repurchased $582 million of the company's shares and paid $49 million in dividends. We have 15 vessels on time charter out contracts and the remaining 97 vessels operating in the spot market. Slide eight, please. We continue to repurchase vessels under expensive lease financing and have started to refinance some of these vessels under new bank facilities with lower interest margins. To the right, you can see the list of vessels that have been repurchased and are upcoming. As of today, we have repurchased or repaid the outstanding debt on 46 vessels. In July, we closed our new $1 billion term loan facility. We are in the process of closing a new $94 million bank facility. The margin of lease financing ranges from LIBOR, + 350-525 basis points. Our new loan facilities have a margin of SOFR +1 70-197 basis points. Slide nine, please. We've made significant progress in reducing expensive lease financing from $2.2 billion to one, to $1 billion today. Timing differences between repurchasing vessels on lease financing and drawing down on new facilities means that at times it appears increasing. Vessels with lease financing have periods in which they can be repurchased. The majority of vessels under lease financing can be repurchased within the next 12 months. There are additional vessels that we expect to repurchase this year. We will continue to reduce our leverage. I just wanted to highlight the timing. Given the strong earnings and proceeds from new facilities, we expect to have an elevated cash balance, but keep in mind a portion of this will be used to repurchase more vessels on lease financing. Today, as Emmanuel mentioned, we have $683 million in cash. Slide 10, please. While gross debt will increase slightly in the third quarter, net debt has remained around $1.5 billion-$1.6 billion over the last three quarters, and as of today, it has declined and is currently at $1.4 billion. With no new buildings on order, we have minimal CapEx and feel very well positioned. Slide 11. The company has significant operating leverage. In Q2 so far, including time charters, the fleet is averaging $26,000 per day. As you're aware, rates have increased significantly over the last two weeks, and MRs are now at $34,000 a day, and LRs north of $40,000. At $30,000 a day, we generate almost $800 million in free cash flow per year, and at $40,000, close to $1.2 billion. These are certainly exciting times. Slide 13, please. In the second quarter, significant refinery maintenance, lower refining margins, and reduced arbitrage opportunities led to lower trading activity and a decline in rates. LR2 saw a larger decline as Asian refinery maintenance, limited naphtha arbitrage opportunities, and competition from LPG reduced long-haul volumes going from the Middle East to Asia. MR rates remain much more stable, reflecting the strong underlying global demand for consumer fuels such as gasoline and jet fuel. Despite these headwinds, rates remained well above cash break-even levels, and many of the headwinds in Q2 are in the process of reversing. Refining margins have seen a large increase through July and remain at very strong levels on a historical basis. The naphtha LPG spread has improved, and the forward curve suggests naphtha substitution for LPG will occur over the next several months, which is very constructive for the LR2s. Unplanned refinery outages and historically low inventories create a scenario where any supply disruptions will lead to increased volatility and higher rates. Lastly, rates have increased significantly over the last two weeks, and we think they're going to remain strong through the rest of the year. Slide 14, please. Global inventories are well below their five-year average for gasoline and diesel. It doesn't matter what region or, or what product, they're, they're extremely low. Typically, diesel inventories build in the summer months ahead of a strong winter demand season, and we have seen minimal builds if any. This is very constructive for a tight market in the back half of this year and highlights how robust demand has been. Slide 15, please. Forecasts for refined product demand for the second half of this year and next year have been revised upwards. Second half 2023 demand is expected to be 2 million-3 million barrels a day higher this year than last. In our view, this is one of the most bullish drivers for strong freight rates, 2 million-3 million barrels of additional demand year-over-year against historically low inventories. While diesel demand is expected to increase at a slower pace due to lower trucking activity, the demand for gasoline, jet fuel, and naphtha are expected to see large increases. We are seeing this demand on the water today. Seaborne volumes remain extremely high and are averaging 1 million-1.5 million barrels a day more than 2019 levels. Given low global inventories, the increased consumption will continue to be met through imports, with product tankers reallocating barrels around the world. Slide 16, please. While demand is above pre-COVID levels, refining capacity is lower and more dislocated. Regional capacity changes are structural and will continue to drive ton miles and flows for the coming years. The impact of new export-oriented refineries coming online, like Al Zour in Kuwait, have led to an increase in exports out of the Middle East. We are also seeing the impact of European sanctions on Russia. Europe has increased its imports from the U.S. and Middle East by 600,000-1,000,000 barrels a day. All of these changes are driving an increase in ton miles. As ton mile demand increases, vessel capacity is reduced and supply tightens. Slide 17, please. Over the last few months, Russian exports of refined products have declined to more normalized levels. The gray fleet, are vessels that are servicing Russian volumes, has increased significantly to 353 vessels today, of which 277 are Handymax and MR vessels. Vessels which move into sanctioned trades reduce the supply of vessels in non-sanctioned trades. The impact of vessels servicing Russia is expected to have a significant impact on the capabilities of the global fleet going forward. Many of the vessels which have moved in this trade are 13-15 years old and will likely not return to the premium trades, given their age and trading history. Slide 18, please. Over the last 18 months, we have experienced a strong rate environment, evidenced by the volatile blue line in the graph. From a cyclical perspective, hopefully, we're in, you know, July 2003 or even July 2004. You know, historically, as product tanker rates increase, so do orders for new vessels. Thus, it's not surprising that we have seen additional orders. The rationale for ordering a strong spot market, healthy long-term time charter rates, constructive demand outlook, and aging fleet is a good reason. It's also a good rationale for investing in product tanker companies. Slide 19, please. The increase in the order book has largely been driven by LR2 orders, 49 vessels year to date. While LR2 orders are elevated, MR orders are below their five-year average this year and well below historical averages. Up until this year, LR1 orders have basically been non-existent, with only 12 LR1s ordered from 2016 to 2012. Part of the increase in LR2s is to compensate for the aging LR1 fleet, similar to how MRs have largely replaced Handymax vessels. With an LR2, you have the optionality to trade it in a crude market. Less than 50% of the LR2s on the water today are trading clean products. In addition, there are constraints to ordering new vessels. There are long lead times for the delivery of new-build vessels. Orders placed this year were for the earliest slots at the shipyard. These slots are now gone. New builds are expensive compared to historical levels, and the cost of capital is higher with rising interest rates. A new build LR2 for $71 million, with the 2026 or 2027 delivery date, will require a high break-even rate and needs a constructive market. Lastly, there are still concerns about different propulsion systems, which are required to meet future environmental regulation. All of these factors act as a constraint. Slide 20, please. When thinking about new building orders and fleet growth, the age and trading profile of the fleet must be considered. The product tanker fleet continues to get older and age, and this is important because as a product tanker becomes older, the coatings, which make them a product tanker, develop issues. Every product tanker on the water is not trading clean products. Only 60% of the Handymax and LR2 fleets are trading clean products, and 70% of the LR1 fleet. Older vessels move into trading dirty products or crude oil. Although you do see LR2 vessels move into these trades earlier, it does need to be accounted for. Given the age of the fleet, we expect more vessels to move into these crude oil trades as they get older, while the increasing number of vessels 20 years and older become scrap candidates. By 2026, the product tanker fleet will have 954 vessels that are 15-19 years old and 811 vessels 20 years and older, an increase from 349 today. These changes will have a material impact on the fleet. Last, scrapping is at an all-time low, and we do expect scrapping to increase as vessel age and environmental regulations increase. Slide 21, please. Putting this all together, despite an increase in orders, the order book remains modest. Using minimal scrapping assumptions, on average, the fleet will grow less than 2% a year over the next three years. Using higher scrapping assumptions, due to fleet age and upcoming regulation, the fleet will grow less than 1% per year. Seaborne exports and ton mile demand are expected to increase 4% and 11.9% this year, and 3.4% and 6.3% next year, vastly outpacing supply. In addition, one and three-year time charter rates remain at high levels, evidence that our customers' outlook is one of increasing exports and ton miles against a constrained supply curve. The confluence of factors in today's market are constructive individually, historically low inventories, increasing demand, exports and ton miles, structural dislocations in the refinery system, rerouting of global product flows, limited fleet growth, and upcoming environmental regulation. Collectively, they are unprecedented. With that, I would like to turn it over to our President, Robert Bugbee. Hi, good morning, everybody. Thanks so much for joining. This is on behalf of all the management, this is a great time to be invested in STNG and, you know, a great time to be further invested in STNG. We're happy with all the buybacks we've been able to do. I'd just like to point out a couple of things that I think, that we think is really important to focus on is, first of all, the liquidity, and the financing that's being done. That gives us tremendous amount of flexibility going forward. we've shown during this quarter that we're, we're willing, we're wanting to sell older vessels to improve the arbitrage as well, opportunity between NAV and the stock price. The other thing is the rates, is I think, I'm gonna borrow from John Chappell here, one of our analysts, but, you know, it's most important where the market is going as an investor, as opposed to where it's been. The market right now is going up. It's inflecting upwards from a very, very, you know, strong, weaker period that we've had for, you know, a couple of months. I mean, to average what we've averaged in our booking and what is the weakest part of the, of the year is fantastic. For many, many years, that would be, you know, a high number, the average that we've got. The next part of it is we're already earning a very large number, as James has pointed out, you know, the 30s, mid-30s in the MRs, moving through into the 40s on the LR2s. The LR2s continue to go up today, so that creates a lot of confidence for the company going forward. With that, I'd just like to, you know, thank you all again and open it up for questions. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Omar Nokta with Jefferies. Please go ahead. Thank you. Hey, guys. Good morning and good afternoon. I wanted to follow up a bit on just, Robert, your comments about where rates are, and also, I know, James, you touched on this. You know, it seemed that product tanker rates had settled in here into the typical summer doldrums that we, that we've seen in the past. What we've actually seen over the past, say, two to three weeks, is a real resurgence, and it's really across all the product segments. This is happening while we've seen some weakness, or further weakness, in the crude tanker side of things. Just wanted to ask, you know, maybe a bit more, if you could just dive a bit deeper into it. You know, what's been driving the market here recently? What's behind the, the, the latest jump, and, and, and what can we expect going forward here? Sure, James, I'll go first on this. I think that, look, the first thing we've seen is refinery margins really widen to the positive here. We've seen, let's say, you know, a change, a big change in sentiment. I think we've moved from, "Oh, well, you know, it's, we really like a recession review on, on oil and, and consumer demand in, in products," you know, with it, as, as expressed by the paper market into the physical market now overwhelming things. I mean, is it refutable that demand is going up now? We're seeing this in this constant drawdown. As the, as the prices of oil moved upwards, and the prices of refined products moved up even higher than the price of oil, people are starting to, you know... They, They, they can't just sit there and do anything, nothing at that point. They have to start to engage in the market. I think, as usual, all these things, except in periods of, you know, hurricanes or war, this is being demand led. We had a market that was very tight anyway, as explained. The, the, the, this weak or sort of doldrums was at very high levels with very high utilization. As soon as you put this demand in, that was going to, you know, move the rates higher. Thanks, Robert. That's helpful. Then maybe just as my second question as a follow-up. You know, given the market strength in Scorpio, you guys have a sizable critical mass across the LR2s and MRs. You know, you in prior quarters, were able to put away some of your ships on period contracts. How would you, you know, think about it now? I think it was 15 ships now that you've got on TCE. What does the liquidity look like for that market at the moment, given the sort of run-up we've been seeing, and is there appetite for Scorpio to add more? Well, I think we've seen that the, you know, one of the other kind of encouraging things, and it's supportive to James' view of the long-term fundamentals here, is that three-year forward rate has hardly changed in this, in this period. So again, the physical market that just moved through this period, not referencing to the paper market. You know, right now is, this is a very, very strong move, and it's, you know, it's surprised us. We've had to act very quickly to do this. We, you know, we knew the market would go up. You can never find that, actually work out that exact inflection point. Then inflection point started happening 10, 12, 13 days ago. Right now is just not the time to, you know, look to put ships out on time charter. You've got to let this come because, you know, really Europe has exposed itself now on diesel. The United States is becoming, you know, exposed everywhere, everywhere. We've got the movement. If we start seeing more movements from the Middle East of product and more movements from Chinese exports, then, you know, this market could really run as we start to move into the stronger season. Right now is not the time to negotiate time charters out. Thanks, Robert. Makes sense. That's all for me. I'll turn it over. Our next question comes from John Chappell with Evercore ISI. Please go ahead. Good morning. James, I wanted to tie together a couple of points that you brought up going in the second half of the year, both the low inventory starting point and then also the 2 million-3 million barrels of incremental demand. You know, we've been early before, with inventories drawing below historical levels. Where's the incremental 2 million-3 million barrels of supply gonna come from? When you think about that from a global map perspective, does it continue to extend the ton miles that we've seen over the last six quarters, or is there a chance it could be a bit more regional, just given the, maybe panic going into the winter, to meet that demand? Well, I, I think, you know, we have this scenario now where inventories are so low, and we, we saw it last year, where any type of supply disruption, so there's been some impacts to some refineries in the U.S. Gulf, for example, will have to be met with imports from different places. I'd say it's gonna be a combination of long haul and regional. I think if you're looking at remaining places with capacity, it's really the Middle East and China. Robert did mention that we could see Chinese exports increase here if they, they issue a new batch of quotas, which seems likely. I think you, you do have some more capacity out of the Middle East. We, we have seen, for example, Al Zour Refinery, which has two out of the three CDUs up and fully running, have a material impact on the export market. I do think, you know, given how strong demand is, it's gonna have to be a collective effort. Okay. Just to be clear, I mean, you do expect that, that incremental demand to be met with supply and not kind of further inventory draws below five-year averages? The projections we're looking at, it's very close. Okay. Obviously, for example, you, you know, if you were to lose more Russian barrels or there were to be more disruptions in European or U.S. refinery, things could be very difficult. You could see draws, and we're seeing a lot of draws in the crude side right now as well. Okay. Second question relates to the fleet. You sold the vessel just recently. As I look at the fleet age, there's still a handful that are over or at or over 10 years old, and then, of course, a much greater handful to become 10 next year. When you think about the arb of the current stock price, and asset values right now, should we expect more maybe monetizing of a bit of the older vessels, as we go to the back half of the year, if this arb remains? Yes. Yeah, as we stated on the last call, that the, the last quarter, and as we've evidenced by the sale of the first one, we're, you know, we're, we're, we're willing to do that. Okay. Okay. Thanks, Robert. That would be disruptive. We're doing it slowly. Yep. All right. Thanks, Robert. Thanks, James. Our next question comes from Ken Hoexter with Bank of America. Please go ahead. Hey, this is Nathan Ho dialing in for Ken. I, I just wanted to follow up on Omar's original question on, on sort of the bifurcation between the crude and the product tanker markets. I mean, over the quarter, we've, we've heard of some tankers dirtying clean product vessels. Maybe, maybe if we could just get some comments on just firstly, the economics there and how, how we should think about the capacity tailwind that represents for, for the product tanker market. James, you want to try that one? Sure. Well, Nathan, a lot of the switching from LR2s was really started kind of in Q4 last year. I'd say you've probably seen, you know, at least 20 vessels move over into this trade. You have had a strong Aframax market. I think for these smaller crude vessels, there's a lot of new capacity coming online from Latin America, Africa, the U.S., which benefit these vessels, and ton miles have obviously increased. I think on the clean side, what you've seen is obviously a challenging market due to kind of the naphtha arbitrage, and then obviously lower distillate volumes, but we see those things reversing. I think as we look forward, we expect both markets to be tight, especially on the product side, which we know more about. On the crude side, obviously, we know a little bit less. Got it. Okay. Just as a follow-up on, on capital strategy, just want to get a sense on how the team is looking at deleveraging from here. Obviously, you know, a lot of debt being shed over the past year and the past few quarters. Is there, is there a target leverage level, or, or is this more of a target vessel breakeven TCE goal that we're, we're trying to achieve here? Maybe just also update us on where that 17,000 level could potentially trend, say, into 2024. James, why don't you deal with the, the 17,000, and I'll deal with the other responses. Yeah. We, we, we expect the breakevens to come down. They're probably a little bit higher than that 17 because of, of the timing of the lease repayments. With the, the leases, we have to give notice, and there is a specific period or time of the year which you can repurchase the vessel. As much as we'd like to go off and repay those vessels today, we can't do that. The good news is most of the lease debt, around $1 billion, can be, and those vessels associated with it, can be repurchased over the next 12 months. You will see continued announcements from us that will give you better insight as to how many vessels and the timing on that, but right now we haven't disclosed it yet. Obviously, over the next 12 months, we do expect breakevens to decline. You have had higher interest rates as well during this period. Robert, I'll pass it to you. Yeah. With, with regards to the debt level, that, that's not a question that we're ready to answer. You know, we can see from the terms we got, anyone can see from the terms of lenders, historically, the debt level already is, you know, is, is very low on a historical basis. You know, we will. The question of how you can reduce, continue to reduce the debt level is, we've mentioned potential further sale of vessels. We've said how confident we are in the, the, the, the rate environment going forward. I think that those two combined, combined things will, will lead to, you know, the ability to both repay, both lower debt plus do whatever else we want to do. Got it. super helpful. Thanks, Robert. Thanks, James. Thanks. Our next question comes from Sam Bland with JP Morgan. Please go ahead. Hi, morning. Thanks for taking the question. I've got sort of one question with two parts. First one is, could we just touch on the disruption and market tightening from sort of the Russian sanctions impact? Whatever the impact is related to Russia, is that now done and we've sort of seen the full impact of that? Or is there some further market tightening related to Russia that may come through, whether it's from the dark fleet or anything else? The sort of the second part, which is related to that, is I see on slide 21, there's another 6.3% ton mile demand expected in 2024. Where do you think that comes from? Is it general global growth, or is it related to Russia or anything else? Thank you. James? Yeah. The next year's forecast for ton miles of the 6.3%, about 3.4% of that is just exports, and the, the difference, 2.9% is, is ton miles. That's really gonna be driven by Middle Eastern exports and the capacity coming online, as well as some potential closures in Europe and, and emerging market demand. That is not including any displaced Russian volume. I still think there's more upside to the, the dislocation as a result of the conflict in Russia and Ukraine, but we have seen a majority of that impact. I think the biggest contribution from, from that will be what happens with the gray fleet over time. There's a lot of vessels, say, 12-15 years old, that have moved in to service these trades. These vessels are older, and they'll have potentially a dark trading history. I think as you look forward and look at the fleet, I mean, we're talking, you know, 10-11% of the MR fleet is servicing this trade. It's gonna have a longstanding impact on fleet supply and trading dynamics, and that part I don't think we've seen yet. In terms of the volumes moving to the Middle East, Latin America and Africa, I think we have seen those. Obviously, we highlighted, we've seen an increase in exports from the U.S. and the Middle East to Europe. I'd say that, that part we have, we have seen. Yeah, understood. Thank you. Our next question comes from Frode Morkedal with Clarksons Securities. Please go ahead. Thank you. Hi, guys. Good presentation and. Hi, Frode. Discussion so far. Hey. Yeah, I guess the, the key word so far is demand, and you mentioned demand lead. So I guess there's certainly many moving parts to demand, right? You have the Chinese product exports that may return, Russian product exports, ton mile shift, new refining capacity, refiner maintenance, seasonality, oil demand, of course, crack spreads, arbitrage trades, low inventories, and on and on, right? So many, many demand factors. The question really is, which one is the most important one, or should have the greatest impact in the near to medium term? Yeah, I would say headline demand. I mean, I think we're that the headline demand, it creates comfort for, for all of the, the players and creates urgency for those players who are, who are perhaps short. If we move, continue to move from this first half recession fear that oil demand, the headline oil demand and, and product demand will fall as a result of recession, and we move towards a understanding and admittance by various sort of participants, whether they're governments or anything else, that that's happening, then that it creates an environment where if you're short products, if you're short diesel, for example, in Europe, going into winter, well, you better come forward and start buying. So that, I think, is the most important thing because it forces the market to sort of act in a sort of a cohesive way. It's too difficult to estimate anyway on a day-to-day basis, whether that's gonna be coming from the Middle East or China or, or wherever. I would start there. James, any comments to that? Makes sense. Nope, I agree. Okay. We'll keep an eye on the oil demand. My second question is on, on the Russian trades. You know, appears that crude exports are coming off, the boys, so to speak. How, how's the situation for products now? You, you've seen similar to crude, you've seen products come down to the more normalized levels. Part of that's probably due to OPEC, I think part of it is the, the increase we saw right after sanctions, kind of in, in March, where exports hit 2 million barrels a day, was, was kind of a buildup that, that they had had and, and trying to put more on the market. Obviously, refineries have to go through maintenance, and even in the U.S. Gulf or, or other export regions, you can't, you know, run at 95% and high 90s for, for an extended period, which would suggest kind of the exports that they had. I think we're gonna see them at a more normalized level, similar to what, what we've seen kinda historically, maybe around 1.5 million barrels a day. And this is needed in the market. Yeah. As far as I think what be interesting, too, is we, as we approach autumn, winter is, is watching Europe now, because last year they were able to, let's say, pre-stock ahead of Russian sanctions. And they, and at the same time, had a very mild winter. If you go into the winter with lower inventories than the, than, let's say, last year in October, and or more or less the same as last year, and you have the Russian situation that you, you, James had described, it's, it's going to be, plus, the sanctions are in place, it's going to be much harder to pre-stock to winter. Thanks. Great color. That's it. Our next question comes from Sherif Elmaghrabi with BTIG. Please go ahead. Hey, good morning. First, drilling down a bit more on, on what's going on with Russia. Certainly, there's potential for more upside, but with Russian oil crossing the price cap, are you seeing some tankers return to other trades? 'Cause the Aframax rates look like they've, they've cratered in some places. Or are some LR2s switching back to the clean trade, or is it too soon for that kind of shift? We haven't seen. Sorry, Robert. I think it's way too soon for that. You know, it's just not easy anyway to take a crude ship and throw it into, and clean it up. You're not going to do it at the present spread. The older the ship is, the more difficult it gets, and may be really difficult. Then some of these vessels that have traded to Russia, you know, are almost certainly not going to be accepted by the charterers involved in the, in the, let's say, the, the free market, clean petroleum trade. Mm-hmm. Then, thank you. There's two things. You gotta, you gotta, you gotta clean up, and then you've got to be allowed to allowed to trade. Right. Product itself. Hmm. Then, maybe to follow up on vessel sales, that we've seen the pace of new build orders really pick up with, pick up over the last few months. How are you thinking about fleet renewal at this time, if you're thinking about it at all? I realize new build prices are looking pretty full. You, you mean STNG itself, or just general? Yeah, yeah, you know, we could do both, but I was meaning STNG specifically. Oh, we're not thinking about new builds for STNG at all. I mean, it would be a, you know, very, very low down on the capital allocation list. It's so much better to buy your own stock than to order a vessel that, you know, probably wouldn't come until 2026 or whatever anyway. I think that's the thing you have to realize here, is the way that the new building order book has been elongated in time, too. Yes, you know, there are more orders, but you haven't shifted what's coming in 2023, you haven't shifted what's coming in 2024, and you haven't shifted what's coming in the first half of 2025. If you just do the simple math of, you know, take $1, do I wanna spend that $1 and have a vessel delivered in 2026, or would I take that $1 and put it in, you know, STNG, Hafnia, or Ardmore, for example? All right. That makes sense. You're getting a benefit to the cash flow right at the front. It's not a comparison, especially with STNG has such a new fleet anyway. Okay. Thanks, thanks for taking my questions. No problem. Our next question comes from Liam Burke with B. Riley FBR. Please go ahead. Thank you. Back on capital allocation, you've been clear about debt reduction, your buybacks. Earlier, last quarter, you bumped your dividend from $0.10-$0.25. Is this a dividend you anticipate paying through the cycle, or are you going back and looking at that payout as possibly bumping it or maintaining it? I think a lot of that depends on where the stock price is, you know, right now. Again, at this particular point, you know, I, I think an investor, an investor as opposed to, you know, a speculator or whatever, would, would, would, would really want the company to use the cash flow or, or use the marginal dollar right now, in stock buybacks than, than paying out a dividend that everybody gets taxed on. You know, the, the dividend part can wait. This is a situation where the company has just had a fantastic quarter. It's created great cash flow. It's refinanced everything. The market is, is going upwards. We're going into a great future dynamic. You know, we just felt that it just wasn't right to increase the dividend at this point, with the stock trading at such a dislocation to the fundamentals. Fair enough. Thank you. I guess this is for James. Things are getting a lot better at the macro. We're looking at a creeping order book here. Some of the offset would be recycling, but what gets that activity going? We haven't seen that in a few years. No, it's a great question. I think just the number of vessels that will turn 20-25 years over the next three years is so massive that you're gonna have vessels that kind of serve tertiary markets or trades, and those vessels are going to be scrapped. I really think you're gonna see it first as a part of environmental regulations as well. Just it's a staggering, staggering number of vessels. I think it was around 900 or 800 vessels will be 20 years and older by 2026, up from 350 today. It's a massive number, so we do think those will be scrapped. I think you also have to factor in the age of the fleet, right? There's a lot of vessels that are kind of 15- 19, that are going to move into the crude oil trade. We still think the, the order book's modest and, and fleet growth is, is extremely low, especially on a historical basis. Great. Just as a follow-on, as, as your vessels age into that category, I mean, it's been a while, do you ever think of the trade-off between selling it to arb the NAV versus just throwing it into the crude market? That's what we are doing. That's what we have been doing and what we just said we will continue to do. Okay. Thank you, Robert. Thank you, James. Our next question comes from Chris Robertson with Deutsche Bank. Please go ahead. Hey, good morning, everyone. Thanks for taking my questions. James, you know, you kind of outlined minimal CapEx this coming quarter, as well as next, and I'm wondering, what does this translate into in terms of off-hire days? Are there any utilization factors in terms of ships moving in and out of the pools in the coming quarters that could impact operating days? Chris or, or Brian, would, would you like to take that? Sure. We have the off-hire. Go, go ahead, Chris. Sure, Brian. Yeah, the off-hire days are minimal. We don't have many dry docks in the next half of the year, in the next two quarters. We as you see in the table on the press release, fiscal 2024, it's more escalated because of just the number of vessels coming due for their special surveys. You know, so for that reason, the CapEx is minimal, you know, in the coming quarters. Okay. Then in terms of the utilization, any impact there with regards to ships moving in and out of pools? I wouldn't say that's material. Okay. My second question is just around the, the step up in vessel OpEx from 1Q to 2Q. Do you guys see any further cost inflation or pressures expected for the remainder of the year? I think Q2 is going to be a more normalized run rate for the remainder of the year, as opposed to Q1. Okay, great. Yeah, that's it for me. Thank you. Thanks, Chris. This concludes our question and answer session. I would like to turn the conference back over to Robert Bugbee for any closing remarks. Thank you, everybody. We appreciate your support and your interest. Everybody enjoy the summer, and we look forward to speaking to you again in the autumn. Thanks very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.