Good day, and welcome to the Scorpio Tankers Fourth Quarter 2024 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your Touch-Tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to James Doyle, Head of Corporate Development and IR. Please go ahead. Thank you for joining us today. Welcome to the Scorpio Tankers Fourth Quarter 2024 Earnings Conference Call. On the call with me today are Emanuele Lauro, Chief Executive Officer, Robert Bugbee, President, Cameron Mackey, Chief Operating Officer, Chris Avella, Chief Financial Officer, and Lars Dencker Nielsen, Chief Commercial Officer. Earlier today, we issued our Fourth Quarter Earnings Press Release, which is available on our website, www.scorpiotankers.com. The information discussed on this call is based on information as of today, February 13th, 2025, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For 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 www.scorpiotankers.com and sec.gov. All participants are advised that the audio of this conference call is being broadcast 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 presentations. 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. Good morning or good afternoon, everyone, and thank you for being with us today. We are pleased to report a strong quarter and a strong year of financial results. In the fourth quarter, the company generated $105 million in Adjusted EBITDA and $30 million in Adjusted Net Income. For the full year 2024, we've generated $842 million in Adjusted EBITDA and $513 million in Adjusted Net Income. 2024 was another transformational year for Scorpio Tankers, financially, operationally, and strategically. We have significantly strengthened our balance sheet by reducing indebtedness by $740 million, expanding our revolving debt capacity, and lowering our daily cash breakevens to $12,500 per day. Our liquidity now stands at $1.3 billion, comprising of $531 million in cash and $788 million in undrawn revolving capacity. For clarity, this excludes our investments in DHT. Recently, we increased our stake in the crude tanker company DHT, capitalizing on its share price lag relative to improving market fundamentals and rates. We continue to view this as an attractive investment opportunity. Our outlook for both crude oil and refined products remains positive. With low leverage, strong liquidity, and a young fleet, we believe we are exceptionally well positioned. With this, my remarks are concluded, and I would like to turn the call to Robert Bugbee. Thanks, Emanuele. Good morning, everybody, or good afternoon. I think this morning what we're going to do is try and sort of separate what we know about, what we believe, our beliefs that we have strong conviction about from, let's say, the things that we really don't know, that are speculative or even hypothetical. What we know about our company is that on the Q1 book guidance, we can see that we are operating cash positive and profitable. The operating cash, remember, is what's actually given to us as shareholders. The operating cash for us is the most important metric as opposed to EPS. We have very strong current liquidity. We have even stronger undrawn liquidity. We are fully financed for years to come and have no new building CapEx requirements. We are complete, as Emanuele said, we are completing an extensive period of dry docking this quarter, which will result in lower dry dock costs, more on-hire days, and more efficient vessels over the next three years. So think of that in comparison to the last 15 months. This is an asset going forward. We have very low cash breakevens, operating cash breakevens, and we will work even to take those lower. This is what we're very know and sure about, about the company. We also know that we have created optionality to make the best of the opportunities ahead. We are very constructive on the product market itself. However, we are also cognizant of our inability to either control, predict, or even understand right now geopolitical events or various announcements, changes in emotion, etc., or different tweets or policies. And it is not that we do not know. It's not just that we do not know the answers. It is in many cases that I do not think right now we even know the questions. So we see no urgency nor necessity to have nor to give clarity on capital allocation other than to say our present thinking is as follows: we will not change our dividend policy. We will not pay out an extraordinary dividend. We are not thinking of ordering nor acquiring ships. We are ready, however, to buy our own shares if we think we should. We are willing to invest a small amount of capital in adjacent market companies. This is not an either-or choice. We can see from our balance sheet that we could have, if we wanted to, bought our own shares in addition to acquiring DHT. They are different, however. The former acquisition of DHT remained on the balance sheet as an asset. It's an asset. So for us, it's okay to go ahead and do this because it remains as an asset. We had prioritized very clearly creating an extremely strong balance sheet with great liquidity and the ability to take advantage of any opportunities. We will continue to monitor changing policy events and focus on the safe operation of our vessels. We simply cannot trade a change in short-term sentiment and emotion, but we do expect to be a beneficiary as the risk premiums in the future come down. Thank you very much, and I'll pass this back to James and Chris. Thank you, Robert. If we could please go to slide seven. As Emanuele and Robert highlighted, the market outlook is constructive. And at today's rates, product tankers are generating strong free cash flow. Recent shifts in political leadership, coupled with tariffs, sanctions, and other geopolitical developments, have increased uncertainty not only in our markets but across global markets. This has created a volatile start to the year, but the underlying market fundamentals remain positive. Demand for refined products remains strong. Global inventories are below their five-year average. Refinery closures are accelerating, and the fleet continues to age. All of this contributing to a constructive outlook for the product tanker market. Slide eight, please. Demand continues to grow. This year, we expect demand for refined products to increase by close to a million barrels per day. We are seeing this demand strength in seaborne exports, which averaged over 20 million barrels per day in January, near record levels. Furthermore, it's not just the volume of exports that has grown, but the distance these barrels are traveling has also increased. Slide nine, please. Compared to 2019 levels, last year, ton-mile demand increased 15%, excluding Russia, and 18% when including Russia. Much of this due to changes in refining capacity, which have been reshaping global trade flows over the last decade. This year, two million barrels of refining capacity is expected to close, and many of these older refineries require significant capital investment to remain operational, and this makes it harder for them to compete with newer refineries in regions like the Middle East and Asia that have lower operating costs. As a result, we expect more refining capacity to close, which will add incremental ton miles as lost production is replaced with imports. Slide 10, please. On January 15th, Israel and Hamas agreed to a six-week temporary ceasefire. In response, the Houthis announced a pause in attacks on non-Israeli vessels transiting the Red Sea. This situation remains fragile, and it's unclear how the temporary ceasefire will evolve and how the Houthis will respond. As of now, product tankers continue to bypass the Suez Canal and transit around the Cape of Good Hope. Slide 11, please. Last week, the U.S. announced 10% tariffs on Canadian and 25% tariffs on Mexican energy imports, which were then postponed for 30 days. Although the U.S. is the world's largest producer of crude oil, most of its output is light sweet crude, while the domestic refineries are optimized for heavier crude blends. The U.S. currently imports 4 million barrels per day of heavy crude from Canada and 500,000 barrels per day from Mexico. Of this, 1 million barrels per day arrives via ship and the other 3.5 million via pipeline. Seaborne crude imports could be replaced from further away, but it would be difficult to replace Canadian pipeline imports into PADD 2. From a product standpoint, increasing the crude costs for PADD 2 refiners could reduce refinery runs and require additional seaborne product imports to the Northeast U.S. The U.S. also imports 260,000 barrels of refined products from Canada each day. If disrupted, imports would likely need to be replaced and come from Europe. In addition, the U.S. exports 570,000 barrels of refined product to Mexico each day, which, if diverted elsewhere, would increase ton miles. Mexico, in turn, would also then need to replace from more distant suppliers. While the final status of these tariffs remains uncertain, they could significantly reshape crude and product flows by increasing shipping distances and shifting trade patterns. Slide 12, please. In early January, OFAC announced sanctions on an additional 157 tankers, which were predominantly carrying Russian crude and some refined product. In 2024, China and India imported 3 million barrels a day of crude oil from Russia, 60% of Russian crude exports. And last week, Trump announced sanctions targeting individuals, companies, and tankers involved in shipping Iranian oil to China. These actions are consistent with Trump's strategy to put pressure on Iran and reduce its oil exports. Under Trump's last term, Iranian crude exports fell to 300,000 barrels per day, while rising to 1.7 million barrels per day under Biden. Today, the total OFAC sanctioned tanker fleet is almost 11% of the crude tanker fleet and 5% of the product tanker fleet. Any reduction in sanctioned vessels transporting crude and refined products is constructive for non-sanctioned vessels and can also accelerate the scrapping of older tonnage. Slide 13. Since the EU's February 2023 price cap on Russian refined products, European imports have declined from 1.1 million barrels a day to 400,000 barrels per day. Nevertheless, Russian exports have remained steady, with Africa, Latin America, and the Middle East absorbing more barrels. 489 product tankers have carried Russian products since 2024, many of which are older vessels and predominantly loading Russian product. If there is a peace agreement, it's unclear whether Europe would increase Russian product imports, and if they do, many of the vessels which have been predominantly serving Russia will have a difficult time serving Western markets, given their age, trading history, maintenance, and insurance limitations. The 1.4 million barrels of Russian product exports per day could benefit non-sanctioned vessels which have not been trading in Russia. Slide 14, and relevant to this, the total addressable market diminishes as vessels age. The trading pattern of MR vessels built in 2004 clearly demonstrates this decline. At 12 years old, these vessels carried 3.2 million barrels of refined product per year. By the time they reached 20 years old, they carried 1.9 million barrels per year, a decline of 40%. One could argue that without the Russian volumes, this number would probably be closer to 1.2 million barrels, a decline of 60% compared to 12 years old. By 2027, more than 1,000 ships will be older than 20 years. Thus, even without scrapping, effective fleet growth could be lower than anticipated as older vessels transport less refined product. Slide 15. While the order book now accounts for 20% of the fleet, half the order book is LR2 vessels. Today, 45% of LR2s operate in the crude oil market, and we expect this to continue given the larger crude oil trade. By 2027, including all the new builds, 25% of the fleet will be older than 20 years. Many are underestimating the impacts of an aging fleet and overestimating the capacity of the current order book. Slide 16, please. Last year, ton-mile demand increased 8% and over the last 30 years has increased at a compound annual growth rate of over 3%. If all new-built LR2 vessels were to operate in the clean market, fleet growth would average around 4% annually over the next three years. However, effective fleet growth could be closer to 2.8% per year when factoring in LR2s servicing the crude oil trade and mild scrapping as a proxy for reductions in older tonnage. Several catalysts, such as tariffs, sanctions, and broader geopolitical developments, could further tighten supply and increase ton miles. Nevertheless, even without these factors, the supply-demand balance is favorable and supportive of our constructive market outlook. And with that, I'll turn it over to Chris. Thank you, James. Good morning or good afternoon, everyone. Slide 18, please. This past year, we have generated $842 million in Adjusted EBITDA and $669 million in net income on an IFRS basis. Our net income for the year includes a $177 million gain on the sale of 12 vessels. Most of these vessels were older vintage, with 11 of the 12 vessels being almost 10 years of age or greater. These vessels were sold at cyclically high prices. These results have enabled us to continue to strengthen our balance sheet by reducing our debt levels by $740 million. In addition to this, during 2024, we have paid $84 million in dividends and purchased $336 million of the company's common stock in the open market. Next slide, please. During the fourth quarter and thus far in the first quarter of 2025, we have continued to take steps to strengthen our balance sheet. The chart on the left shows our liquidity profile. We have access to over $1.3 billion in liquidity as of the date of this press release. This is over $1.4 billion if you include our investment in DHT. This level of liquidity was made partially possible by the recent execution of a new $500 million revolving credit facility, which is secured by 26 of our previously unencumbered vessels. While it is currently undrawn, this facility bears a low cost of debt with a margin of 185 basis points when drawn and a seven-year tenor with no amortization for the first two years. Through the execution of this facility, we have locked in access to low-cost secured financing through February of 2032. The chart on the right shows the progression of our net debt since December 31st, 2021, which has declined almost $2.4 billion to a net debt balance of just $537 million as of the date of this press release. While having low leverage is a demonstration of financial strength, this capital structure also affords us the flexibility to move quickly when windows of opportunity present themselves to further optimize our cost of capital. Our entrance into the Nordic bond market in January of this year demonstrates our willingness to seize such an opportunity. Next slide, please. The chart on the left of this slide shows our outstanding debt by type. As we have previously emphasized, our strategy has been to shift away from expensive, low-flexibility lease financing into more flexible, lower-cost bank lending. Moreover, we have sought a diverse capital structure with multiple sources of funding and flexibility. As we previously announced, we recently issued $200 million of five-year senior unsecured notes at a 7.5% coupon in the Nordic bond market. A portion of the proceeds from this bond offering will be used to redeem our existing $71 million senior unsecured notes, which are due to mature in June of this year. While these bonds could have easily been retired using our existing liquidity, the refinancing of these bonds with a bond issuance in the Nordic markets was a compelling opportunity for us to diversify our capital structure into the Nordic fixed-income market. Over the past year, corporate credit spreads have tightened given developments in the interest rate environment and the strengthening of corporate balance sheets. This is all set against the backdrop of robust economic conditions around the world. The combination of these favorable macro conditions, coupled with a knowledgeable investor base in the Nordic markets, opened a rare opportunity for us to lock in unsecured financing at a favorable cost and with favorable terms and conditions. This bond issuance was a testament to our efforts on strengthening our balance sheet and credit profile over the past three years, as it was well oversubscribed and set the record for the lowest credit spread for any shipping company issuing U.S. dollar-denominated bonds in the Nordic bond market. The chart on the right shows a bridge of our outstanding debt through the end of March of 2025. This bridge shows the deployment of a portion of the net proceeds of the Nordic bond to redeem our existing senior unsecured notes, with the resultant gross debt balance of $989 million. $353.7 million of this debt balance is drawn revolver debt under our $1 billion credit facility and $225 million credit facility. The enhancement of our liquidity position through the issuance of this Nordic bond has given us the ability to pay into these revolving credit facilities at our discretion, which would potentially have the combined effect of keeping liquidity readily available to redraw as needed and reducing debt service costs of both principal and interest to keep our cash breakeven rates low. Next slide, please. Our debt repayment obligations through the end of 2025 are highly manageable at less than $15 million per quarter. This does not take into account any unscheduled repayments into revolving credit facilities that have not been committed as of today. Additionally, the company has recently completed the periodic special surveys on over 50% of the fleet throughout 2024. Not only does this set the company up for a lighter dry dock schedule for 2025 with far fewer off-hire days, but the work performed during these dry docks is expected to enhance the operating efficiency of each vessel going forward. Next slide, please. The strength of our balance sheet enables us to continue to generate excess cash flow even in challenging rate environments given our low cash breakeven levels. Further to this, our operating leverage positions us to benefit from spikes in spot rates that have been commonplace over the past three years. To illustrate our cash generation potential, at $20,000 per day, the company can generate up to $271 million in cash flow per year. At $30,000 per day, the company can generate up to $632 million in cash flow per year. At $40,000 per day, the company can generate up to $994 million in cash flow per year. This concludes our presentation for today. Thank you, everyone, for your time. With that, I'd like to turn the call over to Q&A. 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're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Omar Nokta from Jefferies. Please go ahead. Thank you. Hey, guys. Good morning. Good afternoon. A lot of things are happening on the geomacro front. Robert, appreciate your comments about basically sticking to the Scorpio strategy that's been ongoing given all the unknowns. I guess maybe just sort of in terms of the sanctions that we've seen. James was talking about this in the presentation. Clearly, a few weeks ago, a big chunk of sanctions were put in place, especially on that mid-size Aframax and LR2 segment, which, if we count them, basically negate all the new buildings that deliver this year. So I guess kind of the question is, have you noticed any change in trade flows as a result of this, whether from Russia or Iran or anything that suggests that there's been an impact thus far? I'll let Lars answer that. But the only comment I would make is that all these sanctions are, there's the headline, but the actual implementation and effect on the shipping rates is delayed. And Lars, you'd like to add whatever you think? Yeah, I would. Hi, Omar. First of all, this is the second round of sanctions, right? If we look at the first one, we only had 34, 35 ships that were of interest under the first sanctions round. And that had obviously a massive impact on the market. And as Robert said, it takes a little bit of time as that filters through. The second round of sanctions is hitting a lot more ships, in particular the ships that are in the mid-size region. And there is no doubt that we have seen ships turning around, finding other places. There is an increase in storage. Other ships are rerouting, floating off in the Mediterranean, waiting for STS off Turkey or Brazil, etc. I think also it's going to be interesting to see as the wind-down period, in particular for India, which has been kind of a massive buyer of the Russian crude, how that is going to start to pan out as we move into March. There is no doubt that it's a lot of ships that are being sanctioned. There's a lot of ships. I think it's 7% of the entire fleet, and of Aframaxes, I think it's probably overall 13.4% of the sanctioned fleet, and we can see for sure that this, as we move into kind of the next phase where suddenly this is being implemented in full, that you will start seeing that there is going to be a constraint in supply in that segment, so it is one to follow. We're not really seeing the actual hits on the rates yet, which did not anticipate that either, because this follows kind of more or less the same kind of way that the first sanctions were hit as well. So you put the OFAC sanctions on Russia, and you've got the Iranian angle, or you've got all the different angles. There's no doubt that there is certainly a lot of interest in where this market might be heading. Thanks, Lars. Yeah, it makes sense. So it's still early in the process and something to stay tuned on. And just a follow-up separately, you underwent the dry dockings last year, I think 54 ships, if I recall correctly. That's more than, I think, the 27 that you were planning, at least at the start of the year. So it sounds like you clearly brought a bunch forward. Can you give a sense of what drove you to do that last year? Lars come. Yeah, I can take that. Omar, obviously, there's a fair bit of planning that goes into dry docking, and one of the primary issues is positioning an asset in the right place at the right time, given that you have the Red Sea unavailable to us and a rather binary position about whether we're going to try and dry dock in parts of Europe or head out to China, is our, say, our most favored position, so given all that planning and the collaboration with chartering about the commercial opportunities that exist at the time, we, on average, will try to move them up if the situations allow, and it also depends on our view of the market at the time, like a 60-90-day forward view. Okay. I'd like to add something. I'd like to add on that. I mean, just probably from where I sit in terms of when we look at this forward planning on dry dock, which, of course, every shipping company has to undertake, it's obviously a big undertaking. And this is probably one of the largest extensive dry dock cycles that we've ever undertaken. Doing 54 ships in 2024 is a massive effort. And clearly, once you get over that hump, you've positioned yourself quite well for the future. We still have some additional dry docks in the first half of 2025, but there's no doubt that we're steadily moving ahead where we're coming to a point where the majority of our fleet is freshly dry docked and obviously optimized for the future. Thank you. I appreciate the comments. I'll turn it over. The next question comes from Jon Chappell from Evercore ISI. Please go ahead. Thank you. Good morning. Chris, Robert said in his comments that you're going to continue to drive your cash breakevens lower. You've already done a ton of heavy lifting on the expense of lease financing. You've taken the new bond in Norway. There's cost inflation in the business. Can you help me understand how you get any lower from the current levels from here? Is there anything you have to do with the capital structure, or is it more along the lines of maybe efficiency of the fleet, etc.? Hi, Jon. Yeah, well, efficiency of the fleet is one thing. I mean, I think you have to take into consideration that vessels coming out of dry dock are going to operate more efficiently, but the main thing is really in the financing, and I mentioned this, that we have over $350 million of drawn revolving credit, and some of that is amortizing. So if we take our liquidity position and pay into that, we could drive down our breakevens even further, and I think that's really sort of the area we would target going forward just on those two credit facilities. Okay. And then, James, for you. Listen, I understand there's a lot going on right now. Get your point on the supply side maybe being overestimated. But rates are lower today than they were last year at this time. And basically, that's been the same thing for the last six months. So on slide nine, you have a nice ton-mile demand chart that goes back to the beginning of 2019. It's clearly off from the peak. So I guess the question is, is that cyclical in the sense that it continues to grind lower, especially if there is a change in the geopolitical landscape, including Russia? Or do you think it's found kind of a higher floor here where maybe we don't revisit the 2019 levels from a ton-mile demand standpoint? James, maybe if I do that one. First of all, Jon, I think that we don't even know the outcome, for example, of Russia and a peace deal. We have no idea if they'll be peace, what form it'll take, whether that peace will hold, and indeed whether or not it'll affect ton-miles. It's just there's like the Russian product trade is like, well, we'll make an assumption that everything goes back to where it was before, and that's negative. And we don't necessarily buy into that. And as I said before, we cannot speculate on that part. I think that. You're right. I wouldn't use a base case that you're going to get rate explosions and super high rates that we've had for two, three years. That's not a thing that we would have in terms of our forecast, and that's also why we've been so focused on operating cash breakevens, but we don't need when we're taking down our operating cash breakevens so much and doing the things we need to do and deleverage the company, we don't need those rates that we had before to make good money, so a $30,000 rate today or a $25,000 rate today gives us much more bang for our buck in terms of operating cash than we've done before, so people can choose their own assumptions, but I think a wise assumption is that you may get periods because there's no guarantee we'll have any peace anywhere, for example, or even that a peace in one place will be good somewhere else. You may have periods that you get very superior rates, but that's not a working position. You can see that in the time charter market going forward, which is still very healthy. But people aren't paying time charters up in the 60s, 70s on LR2s. And that's the way I'd look at it. But at the same time, the stock is in the 80s. And neither are other product tanker 80s. They're much more secure than where they were two years ago in terms of their leverage. And their price has come off behind. That doesn't mean you can't get great returns at lower rates. Okay. Understood. Thanks, Robert. Thanks, Chris. The next question comes from Ken Hoexter from Bank of America. Please go ahead. Hey, great. Good morning and good afternoon. Maybe Robert or Emanuele, can you talk about your investment in DHT, your thoughts on moving into the crude market, but why them particularly in terms of your expanded investment? Is that a view on management? Is it a view on net asset value on that part of the fleet? Maybe just some thoughts there. Sure. We've seen a period of two, three years where VLCCs' earnings have just been disappointing. There's been a lot of hope from analysts, the actual VLCC owners. And we've always stated, we've stated consistently up until quite recently that we expected even some of our smaller MRs to outperform VLCCs. And that was the case. And however, historically, VLCC rates and product tanker rates, especially the big product tankers, have not surprisingly worked together in tandem. And what we're seeing is the dynamics where the crude market can actually break out. The sanctions are there, that Iran isn't going to be producing the same amount as it did before. And for other reasons, you will get an expansion of the ton-miles in the crude oil. And that won't be at the expense of the product market. So we're expecting VLCC rates to lift and get better. We say, "So that's a good investment." We look at DHT, and DHT is, in our opinion, like a best-in-class. It's had a very predictable way of managing things. They perform very well commercially. That we think is a good investment in that place. That's what it is. It's an investment. All right. And forgot to say, I guess, upfront, Chris and team, great job on reducing debt. Obviously, we've watched this for years. So what a different position. Robert, I want to follow up on maybe Jon's question, or actually maybe Omar's on kind of Russia. And I get you're not commenting on the news, but yesterday, we obviously saw Trump hosted calls with Zelensky and Putin. So I just want to understand if we step back, maybe can you give us a view on what does change if peace hits Russia, Europe, Ukraine? Does that mean the 15%-17% of vessels that are now in the MR world and 8% of LR2, do they come back to the market? Is it unknown what happens? Do half of them come back and half of them go to scrap? Is there just a concept of anything like this ever happened in the past or history that you can point to? No, there's nothing you can point to. But it's highly doubtful that you get a return to the complete past in any form. It's a nice thought for shorts to get everybody whipped up to help positions or whatever. But it's not the realistic thing that we're going to wake up and next week everything's going to be back into its place just on the actual demand part. There is, for a whole host of reasons, there is a likelihood that even if there is a peace treaty, that you can't really imagine that Europe goes straight back to where it was before in the dependence of Russia. I mean, that's a little bit hard to imagine. And definitely, you're not going to have that dark fleet serving. So either way, you're going to have a much more muted response to any trade route change between those two factors. But it really is a wait and see. It's a long way. I mean, you can make the statement, "I want peace." You can make the statement that you want to build holiday resorts in Gaza, but there's a long chain of events between the actual statement and deliverability. Yeah. If I can just get one quick follow-up, sorry, but did you push out on the dry dock question? Did you push out dry docks, or did they go faster than expected at the end there? It seemed like there was the expectation for perhaps even more delay days than you had, or off-hire days. Sorry. No, I think there was a... Sorry. Please, Ken. The timing of dry docks is driven by classification society. Essentially, they're regulated, so you cannot extend special surveys beyond a window. You could move them around within plus minus 30, maybe 60 days, but not beyond that. Okay. Thanks for the time, guys. The next question comes from Greg Lewis from BTIG. Please go ahead. Hey, thanks. Good morning and good afternoon, everybody. I kind of had more of a market question. Obviously, what's been going on in the Red Sea has been kind of an issue. And it's great for us to speculate, but I imagine that the Houthis and the drones are potentially there to stay longer. As you have conversations with insurance companies that have to insure these cargoes, realizing that it's fluid, what's kind of the general view from some of these insurers? Are they chomping at the bit to get back there and start insuring cargoes through here? Or is this something that I think some of your guys' comments earlier could have a long-lasting impact on that trade? I can give that question a shot. The insurance market doesn't care. The market is the market. And it's been very, it's been very efficient insofar as its responsiveness to different changes in the environment. So the insurance market, like any market, is agnostic. There are buyers and sellers at any price. That being said, a cynical point of view is insurers like to handle claims. So there is an idea that, yes, there's been less volume, and they'd like to increase their volume or market share through competitive pricing. But in general, you can count on the insurance market as agnostic to risk. I think it's also important, sorry, Greg. I'm just going to add here, if I may. What the insurance companies also do, they obviously price their risk. And if you say, "Well, the price of risk is equivalent to risk to some extent, and the price goes up or down," all I can say is that generally, the price has not come down. So that reflects that the risk is still reasonably high, irrespective of what your moral conundrum might be. Okay. Understood. And then as I think about, you kind of alluded to, and I guess one of the questions that people are having is, "If I'm going to order an Aframax tanker, why not just coat it? It costs me an extra $2 million." And we all see the LR2 order book. Is there any kind of way, or have you guys done any work on realizing that even a company like Scorpio can trade back and forth between product and crude over a period of time with their vessels? Is there any kind of way to parcel out how much of that LR2 market from new builds has been ordered historically by crude tanker operators versus product? Any kind of thoughts or views around that? That would be a difficult one, Greg. No. We don't really have an idea. I think the best thing to look at is just recently, over the last seven, eight years, 70%, maybe 80% of LR2 Aframax orders have been LR2s. So higher cost of the coating is not really that big of an issue in terms of the optionality that it gives you. And I think today, 40% of the LR2 Aframax fleet is LR2s, yet the market for crude in the Afr market is four times the size. It's 14 million barrels a day versus 3.5 million of product. So it's impossible to not have some of these vessels servicing that crude oil trade. Okay. Great. Thanks, guys. The next question comes from Ben Nolan from Stifel. Please go ahead. Yeah. Appreciate it. So actually, I've got a couple of things, maybe following on both of Greg's questions. So first of all, on the crude versus product, I know in the past there has been, well, actually, in the recent past, VLCCs and Suezmax have traded product. Any update on that? And then as you think about the Red Sea, is there, I know some other classes of ships are starting to dip their toe into going through there. I don't think that you guys are yet, but any thoughts on sort of how you're approaching that? Ben, I can take the second part of your question first. You've probably seen yourself that a lot of eyes on the Red Sea are waiting to see how phase two of the ceasefire evolves. We don't have a window into the negotiation, but I think any casual observer of the headlines would say it's highly, highly fraught. So again, we're not as big as some of the global container players, but I think the industry as a whole, the Western industry, is taking a very, very cautious approach about resuming transit to the southern Red Sea. And maybe James will. I can try and, yeah. Sorry. Go ahead, James. As far as you take it. So when the LR2 market was extremely strong in the beginning and throughout the second quarter, the differential between kind of LR2 from the Middle East going west to a VLCC for a similar type of voyage was so substantial that probably the spread between using one to the other ship and putting on three LR2s and one cargo probably had a margin of $20 million. So the incentive to clean up and take the cargo risk of moving distillate on a VLCC was pretty apparent. Now, as the VLCC market has moved up, Suezmax has as well to a larger extent, and also the LR2 market has kind of drifted down, that margin is no longer there. So in terms of the clean, dirty kind of cannibalization that we have talked about in the past, there is certainly data to suggest that is not happening as the point is right now. There is the actual change between Aframax to LR2 from different pockets and different areas where you could load condensates, but that's at the margin. And then the second part, which is also interesting, is what happens then with the new buildings that are coming out of the shipyards at the beginning of the year, which tends to be the case where we in the past have seen a lot of new buildings moving into with virgin tanks into cargoes moving out of the North Asian markets west or out of the Middle East going west. And that has also kind of come at a discount relative to the LR2 market general. Point one here is that for all of 2025, there's only four VLCCs being delivered, so that really is not at the market, and then you've got the Suezmax market. The Suezmax market is potentially kind of a contender on this cannibalization, but, to be honest, this is something that we contend with every single year, and it's not something that changes anything in terms of our outlook. I think the thing that's interesting is that there's only four new building VLCCs and what that actually kind of means in terms of supply-demand balances going forward. Got it. Appreciate it, Lars. And then my, let's call it second question. Well, first of all, let me say, Robert, I think in your prepared remarks, that was absolutely the most scripted that I think I've ever heard you be in any environment, and very helpful, by the way. My second question, though, relates, and maybe this is again for Lars, but the Handysize rates that you guys are getting tend to be below what we would see in broker reports. And I suspect that's because historically, especially for the ice-class vessels, they tended to do a lot of Russian trade. And so if you blend that in, something that you guys aren't doing, then it creates a little bit of a differential. But can you maybe just talk to how you think about sort of, and again, appreciating that you don't really know what's going to go on with Russia, but is that the category that might benefit the most if there was a normalization? I think it's important to say that we control 14 Handysize vessels. All 14 of those vessels were drydocked in 2024. There's no doubt that that has an impact on the tradability and kind of the earning potential for the ships with all the dry dock time that's taken out, plus the positioning that was mentioned by Cam earlier on, etc., etc. So as we're moving into the second week of February, all 14 ships have now been completed. So in terms of where you think the market was and so on, then I would count it to say that considering the size of dry dock that had to be done for all of these ships, it's pretty good going. To the second part of your question, it's quite clear that in terms of ice, then in the past, and this is before Ukraine, we did a lot of business out of the Baltic in Russian ports, Finnish ports as well. So today, we are kind of constrained with only loading maybe stuff out of Finland, etc. So it's more of a non-ice market for sure. So there's obviously less earnings potential. But at the same time, I will also say that there are a lot of ships in the Handy market that have ice classification. I think the more interesting point on the Handy market is if you look at the average age on the fleet, it is a very aging fleet with very few ships being kind of introduced to the fleet for this segment. All right. Well, I appreciate it. Thank you. I also think that that's a large degree. That's sort of exactly the sort of place that has the highest restrictions for many reasons related to age and operation. So those charters, like the Shells, the BPs, the Totals, that's what we're talking about, and that's the difficulty about this assumption of return to the past because these operators that you're talking about, where the markets are going at the moment, they have very, very little hurdles for people to get in. Whereas the traditional past European receivers have the highest hurdles there are in the world to get into trade. Right. All right. Well, very helpful. Appreciate it. Thank you, guys. The next question comes from Chris Robertson from Deutsche Bank. Please go ahead. Hey, good morning, everybody. Thanks for taking my question. I know we're getting towards the end of the call, so I'll just ask one and try to make it quick here. Just looking at the European market for a minute, not with regards to the sanctions of the vessels trading in Russian volumes, but just curious on how the FuelEU and EU ETS and emissions regulations are having any observable impact on the product trade at the moment, and I guess given this regulatory dynamic, though, what percentage of the dark fleet or gray fleet would even qualify to trade into Europe regardless of the greater geopolitical issues? Don't. Do you have any idea? Yeah. I can take a shot at it if you like, which is number one is I think what you were asking about in the second part of your question was to what extent do we anticipate should sanctions ease, the dark fleet somehow come and start to compete in the Western market? And I'd harken back to comments we've made on previous calls, which is regulations are certainly a bar that we have to pass, and we're happy to clear that bar. But really, in our industry, customer expectations are far and away the most stringent hurdle we have to clear. And when you really look in detail at some of the ships in the dark fleet, they are operating beyond the realm of any Western standards, whether that is insurance, classification society, general maintenance and repair, seafarer compensation, and welfare. So you're looking at assets that have a very, very long distance to go and a lot of CapEx required for them to ever be even considered to trade in the West. Again, not because of regulations, but because of customers and their demands and their risk tolerances. So we're skeptical that you'll see many of those vessels come back, and that's before you get to the age and the relative merits of the type of investment you're talking about. Sorry. And then your first question, can you repeat it? Just what the observable impact today is on the product trade with the existing regulations and kind of the step up into 2025. Lars may be a better place to answer that, but what I will say is, of course, it's been a big adjustment for the market in general, and what you're seeing, not just in EU ETS or FuelEU, is added degrees of complexity around competition. So this, along with other things that have happened in the regulatory environment over the last several years, just makes it harder and harder for smaller ship owners to compete. So I would, above anything, say, "Look, the market's adjusting, but it does have a consolidating impact," and so you'd expect that the bigger owners and operators get bigger, and the smallers are really struggling with the scale and the cost and the complexity of these regulations. Got it. That's really helpful. I'll give you a number here, Chris, which is quite interesting. If you have an LR2 and you're going to trade it from the Middle East and you're going to trade it to Europe, including the UK, the difference between an EU and non-EU port in terms of what you're going to have to pay from the EU ETS perspective is $150,000. Got it. Okay. Appreciate that. All right. I'll turn it over. The next question comes from Frode Mørkedal from Clarksons Securities. Please go ahead. Thank you. Hi, guys. Just a quick question on that. Hey, on the order book, we discussed it, but it's an important topic. So the slide on page 16 is great. At least when I talk to a lot of investors, they seem to assume that all these LR2s head all into the clean market, right? But I think you laid out the compelling case that there's going to be, let's call it, switching, right? So my understanding is the crude Aframax order book is just 5.9%, right? So clearly, there's been very few orders in that segment, and maybe by owners that should have ordered a crude Aframax but opted for an LR2s, right? So the question is really, how do you think this plays out, this transition, right? Are these LR2 new boats directly going into crude, or do you think there will be some type of crowding out of older ships that then switch into crude? Lars, do you want to start? Yeah. Yeah. I'll just start with kind of some interesting kind of data on this. The time charter market that we have seen was quite busy in parts of the year last year, and there's been a bit of a resurgence kind of as we move into February. There is no real difference in terms of the charterer when he's looking for an Aframax if he wants to have an Aframax or LR2. From an owner's perspective, they are not concerned about taking the LR2s and fixing it as an Aframax. The fungibility between those two markets is very clear. It's clear in the spot market when there are spread differentials over $750,000 that they will start moving from one to the other. This is great for both markets. It creates the fluidity that you want. The volatility is then impacted on both. So it is very important that if you want to look at LR2s or Aframaxes, you have to look at those in unison. So when you look purely at LR2s and you say, "Well, the LR2 book is huge," whatever the percentage is, 20 or whatever it is, I think you're making a grave mistake if you do not look at this in conjunction with Aframaxes, and particularly with kind of the aging fleet of Aframaxes to look at these together. Yeah. And I would just add, Lars is making a great point. So even today, there's, I think, 23% of the Aframax fleets older than 20 years. And the Aframax fleet is a lot larger than the LR2 fleet, especially as you look at that older tonnage. So I think what you'll see is maybe some of the new builds trade in the clean market and then have some of the older vessels move into the dirty market. But Lars is absolutely right. You have to look at them together as you have as well, Frode. And when you do, it certainly tells a story that there's definitely demand for both assets in a way where this supply growth looks substantially less than the 20% it may appear. Yes, indeed. Thank you. That's a great update. My final question is on the Red Sea potential reopening. I guess, do you think this might be having a positive impact on this east-to-west arbitrage flows, which I think appears to have diminished somewhat in the past few months? So maybe that could be a positive thing. So I'll start with just making a few points here. Number one is that you look over the last few months, you've been through a huge turnaround in the refineries in the Middle East. That's then completed. And then suddenly you had a more or less shut diesel hub over kind of December and the first part of January. So there was no real incentive to move cargoes, moving cargoes west. That suddenly has flipped where suddenly the diesel hub has opened again. And then on top of that, if you then add on the Jazan refinery that is completing turnaround by end of February, I would say that you've got a lot of outlets in terms of cargo being produced both in Red Sea and also in the AG where cargoes will start flowing and supply deployed to Europe. Great. Sounds good. Thank you. The next question comes from Liam Burke from B. Riley. Please go ahead. Yes. Thank you. Robert, in light of your cash flow and strong liquidity position, I guess your most recent sale of a vessel was a relatively new LR2. Are you still looking at opportunistic divestitures, or are you pretty much happy with the size and the positioning of the fleet? Both. I mean, we're very happy with the size and the positioning of the fleet, and I think for anyone on this call, their entire careers, they've been willing to opportunistically sell vessels if they think they're getting good value. Okay. Thank you. James, you've talked about refinery realignments globally and the shutting of older, less efficient ones. This has been a multi-year event. How do you see this thing continuing to play out until it reaches sort of a normal steady state of heavily weighting refinery capacity in China and in the Middle East? Look, I think it's going to continue. So look, the best part about the refining story is the lack of new capacity coming online in emerging markets. So everybody has focused a lot on Dangote, but that was starting construction or supposed to in 2013, and it's 2025, and it's still not at full capacity. So I think that in terms of the longer medium-term product trade is really powerful. Then the other side of it is this older refining capacity that probably should have shut before COVID. And then you had this strong crack environment as world demand came back, and you're starting to see those closures again. So during our last earnings call, I think we said that we expected 1 million barrels of capacity to close this year. Now it's two. And so going forward, I think there's still more capacity in the U.S. There's more in Europe. There's certainly more in China that can be closed, and you're going to have to make up that lost production, and most of the time, it's going to be carried on a ship, so I think it's very constructive going forward. We haven't had any necessarily new announcements since kind of the California refineries and Phillips 66 in December, but something we monitor closely and something we think is going to be impactful for our industry going forward. Good. Thank you, James. Thank you. This concludes our question and answer session, and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.