DHT Holdings Inc (DHT) 2016 Q3 法說會逐字稿

Good day and welcome to the Q3 2016 DHT Holdings earnings conference call. Today's conference is being recorded.

At this time I would like to turn the conference over to Eirik Uboe, Chief Financial Officer. Please go ahead, sir.

Thank you. 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, through November 9, 2016. In addition, our earnings press release will be available on our website and on the SEC's 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 including DHT's prospects, dividends, share repurchases and debt repayment, the outlook for the tanker market in general, daily charter hire rate and vessel utilization, forecast of world economic activity, oil prices and oil trading patterns, anticipated levels of newbuilding and scrapping and projected drydock schedules.

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's EDGAR system including the risk factors in these reports for more information regarding risks that we face.

I'm joined today by DHT Co-CEOs Svein Moxnes Harfjeld and Trygve Munthe. With that I will turn the call over to Svein.

Thank you, Eirik. Good morning and good afternoon and thank you for joining the DHT third-quarter 2016 earnings call. We will during the call go through our operational and financial highlights, capital allocation, financing updates and cash breakeven.

And first on to our spot earnings. Our spot VLCCs earned on average $20,300 a day, a number that is well short of what we would expect on a relative basis.

Our spot performance was influenced firstly by our tactics of fixing short when we were coming out of the second quarter. This tactic was wrong and did not pay off.

We then took advantage of the lackluster market to advance the drydockings of some of our ships which involved positioning the ships in question. This tactic was right and the ships are now out in a much healthier spot market.

However, we benefited from our time charters which insured average earnings on our VLCCs during the quarter of $29,700 a day. Year to date our spot VLCCs have earned $45,400 a day on average. For the current quarter to date we have booked 48% of our VLCCs spot capacity at $24,000 a day.

We have entered into agreement to sell the 2001 built VLCC DHT Chris for $23.7 million. The vessel is sold to a storage buyer and will, as such, retire from the trading fleet.

She is sold with her third special survey and drydock view, hence we will not spend the planned CapEx of about $2.5 million. This needs to be taken into consideration when comparing the price with broker estimates. We expect to deliver her over the next couple of months and the sale comes at a time when we are at the tail end of our newbuilding program and fleet renewals.

We will now go through the income statements. With TCE revenues of $50 million, normalized EBITDA of some $30 million and net income excluding impairment of about $1 million, it was basically a breakeven quarter. However, the decline in asset values and share prices year to date presented an indication of impairments.

As such, we conducted an impairment test in accordance with the IFRS rules, resulting in a non-cash impairment charge of $76.6 million. Including the non-cash impairment our net income was negative $75.7 million, equal to negative $0.81 per share. When determining the dividend for the quarter we have elected to look beyond the financial results and will pay a cash dividend of $0.02 per share on November 23 to shareholders of record on November 16.

Capital allocation. We have updated our capital allocation policy as follows. DHT intends to return at least 60% of its ordinary net income adjusted for non-recurring items to shareholders in the form of quarterly cash dividends and/or through buybacks of its own securities.

Further, DHT intends to allocate surplus cash flow after dividends and/or security buybacks to acquire ships or for general corporate purposes. The extent and allocation will depend on market conditions and other corporate considerations.

The updated policy includes buybacks of our convertible bond and our common in the 60% return to shareholders. We believe the updated policy to be in the best interest of the Company and its shareholders. We will apply the updated capital allocation policy starting with the fourth quarter of 2016.

Then over to Trygve.

Thank you, Svein. Let's then switch to the balance sheet. We believe that our balance sheet remains robust.

Our cash balance is up by $6.5 million since the end of the second quarter despite unadjusted net income of just $1 million for the quarter and $37 million paid in dividend and debt repayments during the quarter. Leverage is comfortable with interest-bearing debt to total assets at 49.7%. Based on ship broker valuations at the end of the quarter the ratio is 53.9%.

On to financing updates. During the quarter we refinanced four of our older ships: the DHT Ann, DHT Chris, the DHT Cathy and the DHT Sophie. These were previously financed by RBS and that facility would have come to final maturity in July next year.

The new loan is in the same amount as the old RBS facility, $40 million. The interest rate on the loan is 275 basis points over LIBOR, annual installments are $8.25 million for the four ships combined and the loan runs until August 2019.

With the sale of the DHT Chris, as Svein mentioned, the outstanding loan drops to $28 million and the annual installments for the three remaining ships will total $5.3 million per year. We are pleased with this refinancing as it increases cash flow predictability and we think it shows strength that DHT can secure conventional bank financing at competitive terms for 15-year-old ships in today's environment.

Additionally, during the month of October we signed a $50 million revolving credit facility with one of our existing lectors. The facility has a tenor of five years, is secured by two of our currently unencumbered VLCCs and is priced at 250 basis points over LIBOR. We think this is an attractive facility for DHT.

It gives us great flexibility and muscle going into a year that we think may be challenging at times and, thereby, probably also unveiling attractive opportunities for those in a position to act on them. If you add up the cash balance at the quarter end the net proceeds from the sale of DHT Chris and the $50 million under the revolver you get to total liquidity of some $133 million. And that is before cash flow generated in the current quarter.

Switching to cash breakeven, anyone who has followed DHT for a while knows that we are keenly focused on cash breakeven. With this slide we want to give you an update on expected cash breakeven for 2017, reflecting the sale of the Chris and the new financings mentioned. We estimate total cash cost to be some $179 million for next year.

The stack bar to the left give you a breakdown of the costs. In order to generate $179 million in revenue the VLCCs on average need to earn $24,200 per day and the Aframaxes $14,500 per day. However, when we factor in the revenues from the time charters we see that the spot VLCCs need to contribute only $19,900 per day in order for the Company to go cash neutral in 2017.

Further, it should be noted that this number reflects the time charter book as it stands today. We do expect that we will be able to renew time charters that expire over the next few months and if so the cash breakeven rate for the spot ships will reduce further.

So all in all, we think DHT is well-positioned for this point in the cycle. We have an attractive time charter book, low cash breakeven, moderate leverage and ample liquidity.

And with that, we are ready to provide our answers to your questions. Operator?

(Operator Instructions) Jon Chappell, Evercore ISI.

Thank you, good afternoon guys. Two questions for you today.

So on the new capital return policy it sounds incredibly prudent, I actually approve of it. But I'm trying to understand the details behind it.

So who is making the decision on the spread between dividends and buybacks during the course of the quarter? Is it that the Board makes a decision at the beginning of a quarter of how to allocate it or does management make the decision throughout the course of the quarter on buybacks and then the remaining that paid the dividend is only assessed after the quarter is finished and given what you've done in the buyback program?

I think in general it is Board that makes these decisions. But the way we operate in DHT is it is a dynamic interaction between the Board and management.

So when [we be] we will, of course, discuss relevant details. But the game plan, of course, is to have at least some idea when we move into a quarter on how this will play out. But as we all know, this market also tends to move quite rapidly up-and-down, so we might need to make adjustments as we go about it.

But I think in general, I think we've shown good discipline in pretty much everything we execute on. So I think the market should expect that we will apply the same type of discipline in this regard also.

Well, if we just use the current quarter as an example to help understand a little bit better, it looks like the stock is indicating pretty weak today. How much are you able to, not in a dollars basis, but would you be able to be aggressive now on the buyback, understanding that the next Board meeting may not be until the 4Q results are in January or February? How active are you able to be on the buyback today and take from that 60% pot work today or the next week or the next month or whatever as opposed to just holding some back for the dividend by the time the Board meeting comes around?

You may recall, Jon, that in the beginning of the year we announced that we had a $50 million buyback program in place and that's still valid and to date there has been limited activity under that program. So we certainly have the ability to go to work, so to say, on this.

And was that at the management level as well or do you need Board approval every time you are active in the market?

The Board has given guidelines for the framework that management can execute under.

Okay, all right, I understand. I will just do one more and then turn it over.

Svein, you mentioned the acceleration of some of the drydock in the third quarter which may have been somewhat detrimental but, obviously, the market's improved since that time. Can you just update us on the drydock schedule then for the fourth quarter and for 2017?

Yes, so the fourth quarter is rather light. The Chris that we now agreed to sell, she will be taken out of the planned drydock schedule. So it's essentially then only one ship that will drydock in this quarter, and then we move on to next year and we had in total six ships that will drydock through the year next year.

All right. Thanks for your time.

Spiro Dounis, UBS Securities.

I just wanted to ask about chartering. You brought it up in your prepared comments.

I believe you've got to vessels coming off-charter in the next three to six months, and I guess I'm just wondering on the one that's a bit on the younger side, I think around 10-years old, I think it is the Europe, are you expecting to re-charter that it sounds like but on the one that's about 17-years old, I think it's the Phoenix, it seems like that might be a candidate for sale. I'm just wondering how you were thinking about that one?

You are right, the Europe's anniversary is by the change of the year. But in general with DHT we tend to service customers that in general have a time charter book and you typically extend that in prevailing market conditions. So I think in general you should expect a ship like that could potentially continue but at a new rate.

The cost of the Phoenix, the time charter expires end of the first quarter. But she has index-based contractual arrangement with the same customer until her drydock in August. So she will -- she has secured employment, if you like, until August but then at a variable rate.

So beyond that it's too early to say what we will do with the ship. But despite the rates, if you like, she is in excellent condition. Her hull is in really top integrity and her performance is very good, so there's no such drivers to make a sale, if you like.

And then you have our two Aframaxes that are coming off just for the change of the first and the second quarter. That ship design seems to be popular amongst end users. So we think of these Aframaxes as time charter ships, so again we would expect to enter into new time charters on both those assets.

And this is winter market that we are now moving into presents additional opportunities given that the money is right. Then I think we will also entertain entering into additional charters, again given that the money is on the right side of what we like.

Great. That's good color.

I realize it's probably a bit early, but how are you thinking about the IMO 2020 ruling on sulfur control? Just trying to get a sense of when we can expect the shipping community to start to retrofit scrubbers and maybe will you believe the ultimate impact is going to be on the Company?

I think in general the industry has three choices. It could install scrubbers, as you mentioned; it could elect to burn low sulfur fuel; or it could also, of course, employ LNG as a fuel option. The latter is not really a high probability for large tankers.

I think when you read IMO there is one little caveat or one asterisk in the tables. And it states that it will review the availability of low sulfur fuels within 2018 and depending on the outcome of that review in 2018 it might still defer this date. So I think there's still a little bit of maneuvering room here for IMO.

But as for the DHT, I think for now it makes more sense to burn low sulfur fuel. And you would expect that refineries see this as a broader market and will start to tune their kits into delivering these fuel types to the market. And the price delta then of what we are currently burning and the future price of low sulfur fuel remains to be seen, frankly, so a little bit hard to say.

But there's all these regulatory notes. We should also add the ballast water treatment plants which are some decision that shipowners need to make over the next couple of years on the drydock ships.

And in the case of DHT, 10 of our VLCCs have already installed ballast water treatment systems onboard, hence we are not exposed to that CapEx on all our ships. And we do also have an anniversary date and waivers in place on crafts but we don't really have any big decision to make in this regard until 2019.

Great. I appreciate the color. That's it for me. Thanks, guys.

Magnus Fyhr, Seaport Global.

Yes, hi. I just as a follow-up just to clarify on those water ballast treatment systems, you say the six ships that are going into drydock next year already have the water ballast treatment system installed?

No, we are saying that 10 of our existing ships or our ships have water ballast treatment systems onboard. That is our six newbuildings and four youngest ships from the Samco acquisition built in 2011 and 2012.

Okay, so the six ships that go in next year, what's the CapEx, additional CapEx do you expect uninstalling the water ballast treatment system?

It's really related to anniversary dates of drydocks, etc. So we are not installing ballast water treatment systems on any of the ships due for drydock next year.

Okay. So that's what you say, until 2019 you don't have any requirement?

We have one ship that we need to make a consideration on and that is the DHT Phoenix. And that decision is in August next year.

Shifting gears a little bit to the charter rate or the spot rate was a little bit lower than expected during the quarter. I know it's hard to draw any conclusions on timing differences between core supporters, but with the rates moving up here, do you have more -- I mean, if you give a percentage of ships that are turning in the second half of the fourth quarter, would you say you have a majority of your ships that are available to fix at higher levels?

I think as we said just under 50% has been secured at the rates we mentioned. And if you take this very moment spot rates are hovering around the $40,000 a day level. So anything you fix today will certainly pull up the average for the quarter.

All right, okay, good. That's all I had. Thank you.

Herman Hildan, Clarksons Platou.

Good afternoon, guys. I got on a bit late, but did you provide color on why on the spot performance during Q3?

Yes we did. And as we said coming out of the second quarter our tactic was wrong as we had elected to fix shorter [waters]. That didn't pay off really.

But then we took advantage of the weakness in the market and advanced drydocking for some of our ships. So all these ships are now available, of course, in a much healthier market environment in the fourth quarter. But that did negatively influence our performance in the third quarter.

Okay, thank you. And then on the refinancing of the RBS facility, obviously it's a positive thing that you get probably roughly 50% leverage on vintage (inaudible) competitive margins.

But the other perspective also from the lending side is that the nominal amount of the loan is basically equal to the scrap value of the ships. And the question is why would you amortize a loan where that, call it, is at the scrap value rather than having a non-amortizing loan which amortizes down to 50% of scrap by 2019.

If I understood your question correctly, Herman, you are asking why we refinanced it? Is that it?

No, no, no. I mean the scrap value of two VLCCs and two Aframaxes are, call it, a rough $40 million which is the same as the loan.

And the question is why would you amortize on the debt when the nominal initial amount of the loan is equal to the scrap value of the ships? It seems to be a bit on the conservative side.

I don't think a bullet loan was available at these type of prices if that's more in answer to your question.

Yes, it is.

Now if you wanted a bullet loan I think it would be a totally different pricing.

That's a good answer. And then also on the new facility, the $50 million that you secured, I assume that that comes with some, call it, pledge in either of the three vessels that were unencumbered in Q2. Could you confirm what those vessels were?

Yes, as we said in our remarks it's secured by two vessels. It's the DHT Amazon and the DHT Europe.

Thank you. And then the final short question, DHT Tiger, obviously, due for delivery in Q4. It's still expected to take delivery in Q4 and could you, if yes, could you say when you expect to take delivery?

We still expect to take delivery of the ship in the fourth quarter.

Okay, but no more precise date whether it's December or -- okay. Thank you very much, guys.

Fotis Giannakoulis, Morgan Stanley.

Yes, hi guys, and thank you. As you know, there are certain concerns the last few days about oil demand and that has moved the entire sector lower. Can you give us your take on based on the volume that you move and the number of fixers that you have seen since the beginning of the year, how does this compare versus 2015 if you see any increase and if you can estimate how the demand is moving and especially if you have seen any major changes in the last three months?

We think the demand for tanker transportation has been healthy and robust in 2016. We think the underlying oil demand or oil consumption globally is moving in the right direction pretty much according to expectations.

I think factors behind the weaker third quarter is really the disruptions in the Atlantic basin where we saw exports out of West Africa and to some extent out of Latin America was disappointing compared to what it has been in the prior quarters. With some of that back onstream we are certainly enjoying better rates today. But as has been touched upon on many calls we are in the midst of a pretty heavy delivery program on newbuilds so that is certainly weighed in on the fundamentals as well.

So you do not see any issue in demand, demand you believe it's growing. Can you also comment about what is the availability of vessels in the two basins?

How many vessels of surplus we have in the Middle East? And also what is the situation regarding congestion that we have before? It used to be an important driver for keeping the market at very high levels.

Again, I think in the third quarter because of the outages in the Atlantic basin more VLCCs than normal were heading towards the Middle East. So you saw the four-week count getting into triple digits, which is not exactly a bullish sign. And it wasn't until the Atlantic came back on that some ships were going that direction instead and all of a sudden you see four-week count down in the 70s and 80s, and that's important for the recovery that we have seen in rates.

And maybe also fair to add that you should this year there's a distinction between demand for oil transportation and demand for oil. And over the past couple of years, of course, you've seen inventories growing and that has supported the demand for oil transportation. If that trend is not reversing but fading off of it then the general demand for transportation might not grow at the same pace but still grow in accordance with growth for oil demand.

And my last question it ties more towards the product tanker market, we have seen product tanker rates they have underperformed even the weaker third quarter for crude tankers. You have a number of newbuilding vessels that you took delivery recently.

Can you tell us if the first voyages of your vessels they were taking products if this is contributing at all in the product tanker weakness? And what are the requirements to go from product to crude and crude to product?

You are right, you have seen the number of newbuildings this year picking up a gas oil in particular and taking it to the Atlantic basin. And, of course, these big ships they are coming out of the yard, they are clean in the tanks so they are able to take these clean products or refined products.

This is a first voyage phenomena, so once you then go back go to dirty there is no cleaning procedures as such, but you are not going from dirty back to clean. So these tanks are not coated, so these ships are not really built to carry refined products.

We at DHT have not entertained these first two gas oil voyages when the ships are new because they typically also involve a fair amount of storage or idle operation (inaudible). And with a new ship eco-design, brand-new painting and all that we want to expose, have a minimum exposure, if you like, to hull growth or fouling that will pull back of the performance of the ships. So we are not really -- we have not done any of this.

Thank you very much for your answers.

Mike Webber, Wells Fargo.

Good morning, guys. Just a couple of questions. I wanted to jump back to, I guess it was an earlier answer, around the guidelines for the distribution policy, and I think you mentioned that there was some Board guidelines associated with how you guys could execute on a buyback.

It's not hard to imagine a scenario where rates improve, equities lag and you guys are left with a fair amount of capital to play with and to deploy. So can you give us a bit of color around what those Board guidelines are in terms of how assertive you guys can be with the buyback within the framework of that new policy?

There is no (inaudible) on what we have stated. But in our quarterly financial reports we will then update on what we have been doing in the preceding quarter.

Okay, so we can just track it via a normal authorization, I would. I guess just one more, and you have already touched on this a bit, but around the idea of fleet replenishment.

Given your all's rate outlook and I guess the longer-term optimism in the space, the idea behind older assets it seems like it would make more sense to acquire older, cheaper assets and at a steeper discount than on an asset basis than you would necessarily see on rate, you guys are replenishing your fleet kind of to the contrary. And I'm just curious how much of that fleet replenishment program is driven by servicing your client base versus the value prop necessarily that you guys see for older assets call it 13-years old and beyond?

And then I guess within the context of that buy and sell decision within that older asset base, are the environmental factors you mentioned earlier in terms of the scrubbers, in terms of ballast water treatment, is that actually having a tangible impact right now in terms of your divestment decisions around those assets? Or is that still too far out in the future and you've got broader economics that are staring you in the face that are a bit more immediate?

I think that's a relevant question, Mike, that if you have a 15-year-old ship fresh out of their special survey it's only about two and half years until you are going to go into drydock again. And under current regulations you are obligated to put in ballast water treatment plant to the tune of $2.5 million or so for a VLCC.

And it becomes a bigger hurdle if you are going to actually do that or if you are going to recycle the ship at that point. So it's an additional uncertainty factor for how you are going to run your discounted cash flow models on an older ship.

You can argue that the pricing of the ships in the older spectrum is somewhat efficient because there is some CapEx uncertainty and then that's already taken into account by people.

Right. And I guess what I'm asking is your decision sell asset this past quarter and any future decisions to bring new to fleet and maybe even within this calendar year that forward CapEx associated with those environmental regs, that still sounds like that's out in the distance and it's an uncertainty factor but the current value prop is still driving that decision? If you're not able to put a number or you are not actually putting numbers around what the costs are associated with ballast and with the scrubbers in terms of the economic decision to sell that asset?

We are not putting any explicit price tags on any assets out in the market as such. But we have an opportunity to retire the Chris from the trading fleet now at what we feel are market value more to the CapEx, so that $2.5 million CapEx has to be added on the sales price, if you like, to get a par-for-par comparison.

We are in general open to opportunities at any time in the market for anything. But we look at value where we think we can position, best possibly position the Company. So we are not displaying particular ships or targets or prices in advance.

Okay. That's helpful. Thanks for the time, guys.

Ben Nolan, Stifel.

Yes, thanks. I know it's been a long call, I will be quick.

First of all on the new capital distribution program, I take it to mean that in terms of buying back securities that could be either the equity or converts. Is that correct?

That is correct.

And then my next question relates to the impairment charge that you took in the quarter. How do you -- I guess would you categorize that as now, in your view, the book value of your assets is fully reflective of the current market value of the assets or how closely do those two things marry? And is there any risk or possibility that there might be further impairments down the line at some point?

You know, the IFRS requires that you use higher value in use which was, in essence, a discounted cash flow value or the market value. So as we said in our opening remarks if you look at our leverage on book values we were at basically 50% and if you adjust for market broker market assessment we're at 54%. So it's not a very significant difference between broker values and book values at this point.

Okay, that's helpful. And then lastly for me, with respect to the vessel that you sold into floating storage that you said or to be converted into storage, I'm curious what's the depth of that market? How often do those opportunities arise to be able to sell an older vessel for further use as storage relative to just scrapping it?

Are there specific requirements that the vessels would need to have been ordered to be suitable for that sort of thing? And do your vessels meet those criteria to the extent that they exist?

I think year to date you have a good handful of ships being sold for these type of projects. It's typically Asian operators that store a variety of products for the distribution in their local markets.

I think yes, there are some particular features on ships that make them more suitable for these projects and others. And not to bore you with too many technical details here but, for instance, that the ships have got two boilers rather than one.

Most of the Japanese ships that we typically see sold in the secular market they have one boiler. All our ships have got two boilers and meet those criteria.

Secondly, buyers would prefer ships that have coating on the tank top and underneath the deck as these are areas that typically are exposed to corrosion. So with that type of coating you are better positioned and you avoid steel renewals and so forth for conversion projects. All our ships have coating on the tank top and underneath the deck, so as such again they meet the typical criteria of these type of buyers.

So we still see some of these operators out there sniffing around inspecting ships. And so I would not be surprised to see another handful of ships maybe going in the next 12 months or so for the same type of business.

Okay, that's perfect. Nice answer. Thank you.

[Robert Silveira], Silveira & Associates.

Good morning, gentlemen. First of all, I'd like to comment that you need some serious caution. The trading pattern on your stock yesterday shows strong indications that information leaked out.

And by that I would say it opened at $4.14, it shot up very quickly to $4.40, was almost a 10% and then by the end of the day it made a 52-week low at $3.98. And all of this volatility on the day that you are going to announce earnings after the close. These kind of things attract a lot of attention to the SEC, etc.

And you say in your presentation you want to be a respected Company. That's one of the factors that's very important, obviously.

Anyhow let's go on to another question. The percentage of ships you now have on long term, what is that number?

We currently have eight ships on fixed income, six VLCCs and two Aframaxes.

Okay. What do you consider an ideal percentage looking ahead at the market for the next 12 months of ships on long-term contract for the business?

As we have said on numerous times for us it's about, holistically it's about the numbers you can obtain, the quality of the counterparty and so forth. So we don't have a specific ratio of our fleet that we would like to see fixed on time charters.

When the market was healthy we secured the business that was available to us at what we thought was attractive rates. Had there been more charter opportunities at those type of rates we probably would have done more. But since then the market has moved and the rates aren't quite as attractive as they used to be.

The percentage of ships that are not in drydock that you have but are on the water working, what percentage is that and what percentage are idle at any given time on average for you?

I think currently all our ships are basically operating. We had four ships in drydock for periods, so say up to 30 days in the third quarter. And we have one ship that we will drydock during this quarter.

But if you look at the front page of our quarterly result you will see two lines, one saying unscheduled off hire, which are minor issues over time that not permits your ship to trade. And these percentages are, as you will see, all well below 1% of our capacity. The next line you will see scheduled off hire and that is drydocks that is off hire that is planned for.

I'm just curious on any given day you generally have 95% of the ships active in employment, so to speak.

Yes, I mean, we never really have any -- we don't really have idle ships. Ships are trading all the time.

Okay, good enough. Just what do you feel right now in the marketplace is the scrap value of your type of ship, your average type of ship?

Sure. This is reported widely in all kinds of reports that the rate being paid for lightweight ton today is about $300 and the VLCC weighing some 42,000 lightweight or thereabout gives you a value around the $12 million mark. But I think in this call has been going on for some time, so I think operator we need to move on to the next --

Well, wait a minute. You said then that the average scrap value would be about $12 million per vessel?

Correct.

And currently our stock is bid $3.42. That puts figuring only 21 ships, that puts us below $5 million per ship with the number of shares we have outstanding.

I would say then that that you said that you are open for stock buyback. It looks like an ideal time with the prices of the stock in the early market bid at $3.42. Would you agree?

Well, as we have stated we have updated our capital allocation policy. And this 60% includes buying back our securities be it our convertible bond or the common. So the Company will pursue this and act on this policy and we will report quarterly on this activity.

Right, because now the market is valuing our ships at less than $5 million apiece. That's pretty --

Excuse me, sir. But we are not privy to the detailed map that you have in front of you.

We have to take this up off-line with you yourself, so you may contact the Company if you want to go through your model with us separately. But if we could move on the call, operator, with all due respect.

Sure thing. Okay, thank you very much.

Noah Parquette, JPMorgan.

Actually, all my questions have been answered. Thanks.

We have no further questions at this point.

(Operator Instructions)

We have no further questions at this point. So I'd now like to hand the call back to the speaker for any additional or concluding remarks. Thank you.

No, we just thank everybody for your continued interest in DHT. Thank you and have a good day.

That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.