Frontline Plc (FRO) 2018 Q3 法說會逐字稿

Good day, and welcome to the Q3 2018 Frontline Ltd. Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Robert Macleod, Chief Executive Officer. Please go ahead, sir.

Thank you very much, and good morning, and good afternoon, everyone. Thank you very much for dialing in to Frontline's earnings call for the third quarter.

I will start the call by briefly going through the highlights of the quarter. Following that, Inger will run us through the financials. We'll then look at Q3 earnings, and I will guide you on our Q4 numbers. We would then move on to the current tanker market and the outlook. The call will be concluded by taking your questions.

So let's get started and look at the company highlights. Net income for the quarter was $2.2 million. Adjusted for noncash items, we recorded a loss of $8.4 million. Hemen Holding extended the $275 million facility by 12 months, another indication of the continued strong support of Frontline's largest shareholder. Our results are, obviously, not where we would have liked them to have been, but given the market conditions, we feel it was a strong quarter for Frontline, driven by a good chartering strategy. We held back ships, as we did to during the period in 2017, with a less satisfactory result, but we got it right this time. Our performance thus far in Q4 shows that we are on the right track heading into 2019. For the Vs, the spot TCE on modern ships was $22,000 in the quarter, which is very close to our cash breakeven. Q4 bookings are at a much better level, 74% of days are booked at $35,000 on the ships under 15 years.

With that, I will hand the call to Inger to take us through the financials in detail, please.

Thanks, Robert, and good morning, and good afternoon, ladies and gentlemen.

Let's turn to Slide 5 -- 4 and 5 and look at the financial highlights and the income statement. Frontline achieved total operating revenues net of voyage expenses of $89 million and an EBITDA adjusted for certain noncash items of $47 million in the third quarter. Frontline reported a net income of $2.2 million, equivalent to $0.01 per share, and a net loss adjusted for certain noncash items of $8.4 million, equivalent to $0.05 per share.

The noncash items this quarter consisted of a $7.2 million gain on the termination of the leases of Front Page, Front Stratus and the Front Serenade, a $1.4 million unrealized gain on marketable securities and a gain on derivatives of $2 million. The third quarter shows an improvement of $19 million against adjusted EBITDA of $28 million and adjusted net loss of $28 million in the second quarter of 2018. This improvement in the result in the quarter is mainly explained by an increase in result on time charter basis of $17 million due to the increase in TCE rates in the third quarter compared to the second quarter, but also by a net decrease in expenses of $1.8 million.

Then let's take a look at the balance sheet on Slide 6. Changes to the balance sheet as of September 30 from June 30 is primarily relating to a decrease in cash of $47 million, explained by net cash used by operating activities of $1.8 million; net cash used for investment of $6.9 million and net cash used for repayment of debt of $38 million; a decrease in vessels of $24 million due to depreciation in the quarter; further a decrease in vessels on the capital leases by $81 million due to termination of the leases on Front Page, the Stratus and the Serenade and depreciation in the quarter; also we had an increase in other current assets of $20 million; and lastly, an increase in other long-term assets of $7.6 million.

On the debt side, we had a net decrease in debt with $25.4 million in the quarter following $66.8 million in repayments, $30 million in drawdowns and $10.1 million in relation to long-term promissory note due to Ship Finance for the termination of the leases on Front Page, Front Stratus and Front Serenade.

In addition to that, we had a decrease in obligations under capital leases with $99.5 million due to lease terminations of leases on Front Page, the Front Serenade and the Front Stratus plus also we had some amortization of profit split and lease repayments.

As of September 30, Frontline has $166 million in cash and cash equivalents, including the undrawn amounts under our unsecured loan facility, marketable securities and minimum cash requirements. Our remaining newbuilding CapEx requirements amount to $112.5 million, and this is relating to the 2 VLCC newbuildings that is expected to be delivered in January 2019. And we have approximately $110.5 million in debt capacity under our newbuilding credit facilities to finance this debt.

We have no near term debt maturities. The first debt maturity is in November 2020 when our senior unsecured loan facility of up to $275 million matures. We have drawn down $181 million under this facility as of the end of September. And following repayment of $10 million in October, we currently have drawn $171 million under this facility.

Then let's take a closer look at cash breakeven rates and the OpEx on Slide 7. We estimate average cash cost breakeven rates for 2018 -- the remainder of 2018, sorry, of approximately $22,400 per day for the VLCCs, $18,600 per day for the Suezmax tankers and $16,400 per day for the LR2 tankers. These rates are the all-in day lease rates that our vessels must earn to cover budgeted operating costs and drydock, estimated interest expenses, TC and bareboat hire, installments on loans and G&A expenses. Every $1,000 per day in achieved rates in excess of our cash breakeven rate translates to approximately $19 million in incremental net income per year or $0.11 per share, showing the high importance of maintaining the low cash breakeven rates. In the upper right-hand graph, we show Frontline's historical VLCC cash breakeven rates along with average VLCC spot earnings in the period from 2005 to 2017.

Looking back in the history, it is only the years 2009 and 2011 to '13 where the cash breakeven rates were higher than the average VLCC spot earnings at that time. The current cash breakeven rates are considered below the current average VLCC spot earnings.

The operating expenses per day in the first quarter 2018 were at $8,300 per day for the VLCCs, $6,800 for the Suezmax tankers and $6,700 for the LR2 tankers. We did not dry -- sorry, we did not drydock any vessels in the third quarter, and we have no vessels scheduled for drydock in the fourth quarter 2018.

With this, I leave the word to Robert again.

Thank you very much, Inger. Let's turn to Slide 8, please, and we'll look at the Q3 performance and our Q4 guidance.

The spot earnings for the overall VLCC fleet in the quarter were just under $20,000. We have booked 77% at $34,000 in Q4. Our Suezmaxs made $13,500 in Q3, a relatively weak number, but we had many ships repositioning from Asia. Our Q4 bookings are significantly stronger with 65% done at $24,000. On the afras, we made $14,300 in Q3, but again, our Q4 bookings are stronger with 56 -- 59% done at $17,000. The boats trading dirty have outperformed and continue to do so, as we wait for the LR2 rates to improve further. As you can see from these figures, tanker rates are improving and we believe that the markets are beginning to rebalance.

Let's move to Slide 9, and then we'll have a look at the VLCC fleet growth. At the start of 2018, the global crude oil tanker fleet was expected to grow by 8.3%, with 57 VLCCs scheduled for delivery. So far in 2018, 36 fleets have been delivered. This compares to 35 VLCCs reported recycled year-to-date. High scrap prices combined with a very weak freight market drove recycling to a near record pace. We expect that the net effect will be virtually 0 VLCC fleet growth in 2018. We also expect vessel recycling to continue in 2019, despite the stronger spot market, but at a slower pace than seen in 2018. 20% of the VLCC fleet is over 15 years, 64 of these are scheduled for delivery in 2019 and the current order book equals approximately 14.5% of the global fleet.

Let's move on to Slide 10, and look at oil price volatility and freight. The price of crude oil has declined significantly since the middle of October. While shares of tank companies do get dragged down by declines in crude oil prices from time to time, there is actually a little correlation between oil prices and freight rates. Oil volume versus supply of ships is the actual key. In fact, lower crude prices, particularly, of course, by excess supply of crude, rather than diminishing demand can be very healthy for tanker markets. Our daily fuel bill is, of course, lower as well. Low oil prices have also historically helped to stimulate demand, and demand is ultimately a critical factor in tanker markets.

Next one please, and we'll look at world oil supply and demand. The world oil supply is growing faster than expected. Global supply of crude oil is up around 3.25 million barrels per day so far in 2018 compared to 1.6 million barrels annual increase at this point in 2017. Although there is current talk of OPEC cutting back on production, we see volumes as healthy heading into 2019. U.S. volumes continue to rise and oil exports from the U.S. are generally long haul trades, which have a positive impact on ton mile demand.

While demand for crude oil has remained strong throughout the year, continued crude inventory draws saw inventories decrease below 5-year levels reducing the demand for crude tankers. The pace of inventory draws has now decreased and crude oil supply-demand forecasts imply that inventories will remain relatively stable over the next several quarters.

Sanctions on crude oil imports from Iran, notwithstanding any short-term waivers, have the potential to create significant dislocation in the crude oil markets, leading to periods of strong volatility as the market adapts to new trading patterns.

Let's move on, and we'll look at some hard proof that tanker markets are reacting. As the chart shows, 2017 was an absolutely abysmal environment for tanker owners, especially the second half of the year. We continued along the bottom of the 5-year average for the first half of this year before rates slowly started to creep up in the middle of the third quarter. This is reflective of the inventory draws I mentioned as well as a market absorbing a large amount of incremental vessels at the start of the year.

As we progress through the year, inventory draws slow down, fleet growth practically vanished as a large number of vessels were scrapped, and the market reached an inflection point. The one constant has been supply and demand. Thus far in the fourth quarter, we are seeing a market rebalancing occur. There is strength and there is volatility. These are both good signs of an improving market.

Let's move to the last slide, and we'll summarize. As we've seen over recent years, oil demand continues to be strong and new supply continues to come from the U.S. As a result, new trade routes have been established. The U.S. export market is important and a large percentage goes to Asia, resulting in increased ton miles. While there is still a large order book for next year, we said the same at the start of 2018, as it turns out, rather than experiencing substantial fleet growth, scrapping offset deliveries. We can't expect the same to occur every year, but we believe that a number of vessels will be scrapped next year.

Finally, inventories have now come back into balance and it is unlikely that destocking will have a great effect on tanker markets next year. But on the flip side, the order book is substantial and scrapping activity could slow down. Trade wars could also disrupt global growth or demand could be hit in a higher price environment. Contracting has grown significantly, helped by increased ordering activity in other shipping segments, but this could change.

To conclude, following 18 months of extremely challenging conditions, we are increasingly optimistic that the tanker market will generate profits going forward. Frontline will continue to maintain cost efficient operations and strive to deliver significant value to our shareholders.

With that, I'd like to move to the Q&A section, please.

(Operator Instructions) We will now take our first question from Mr. Randy Giveans from Jefferies.

So quick question on the aframax crude trade. So obviously, tanker rates on the aframax are on the rise. How many of your LR2 products tankers are operating in the crude trade?

Currently, we have 6 out of our 18 owned ships trading dirty.

Okay. And then plans for the other 12?

At the moment, we are considering 1 or 2. It's something we look at daily. We don't have anything in sort of next week or 2 that could go dirty, but we're monitoring it constantly. And now, last few weeks, the afras have come down a little bit and the LR2s are showing some improvement. So we are -- we don't have any immediate plans, but it could well happen.

Okay. And then switching over to your investment in Feen Marine, it looks like you're able to acquire that 20% interest for $6 million. Is there any additional CapEx needed? And what is the expected EBITDA generation of this investment in 2019?

We're not going to comment on the numbers on Feen Marine on this call. We have full focus here on building the company and the prospects are looking very, very good. We've orders coming in and the company is doing well. But we'll come back on more specific numbers on a later call.

All right. Then, I'll switch over to the scrubbers. So you have 20 scrubbers in -- ordered. Which vessels are those going on? And are they going on those 2 newbuildings?

Certainly, 2 newbuildings are -- will be installed with scrubbers. And so we're doing 6 Vs, and we're doing 8 Suezmaxs and we're doing 4 afras or LR2s. These are ships that are -- we were doing that ships that we'll be docking in the next 12 to 14 months. So these we've decided on, and then we'll look at doing more. We'll -- we've got time, so we'll look at that later down the road, and being co-invested in Feen Marine, obviously, gives us flexibility. So we have full flex going forward. But I reckon that there will be more orders coming from us.

Sure. And the last question I'll have, what is the lead time on that? Like how early do you have to order it to get it on the vessel?

Generally, in the market, it's 12 to 15 months, but we can go significantly shorter than that, given our position in the company.

We will now take our next question from Fotis Giannakoulis from Morgan Stanley.

Robert, you saw the spectacular fourth quarter performance based on your advanced bookings, probably the best compared to your peers. Can you tell us if the market has changed the last few days after the discussion of the potential cuts from OPEC? Are you concerned that this momentum that has started been building in the tanker market might be put on hold? And if that will happen, when do you expect to see the impact on tanker supply-demand?

First of all, thanks, Fortis. We are happy here with Q3, and we're happy on the guidance. Obviously, we are reporting later than many of our peers -- or most of our peers. But I think, despite that, we are ahead here. So that's positive. So in terms of what's happening in the market, I'll say to start with the afras, they've shown volatility here since May, June and that was the first sort of sign that the tanker market was about to react positively; down a bit here now, but good volatility. So I think, afras would do well. The Vs have had a couple of quiet weeks and there's been a big event this week in Dubai. So a lot of market systems have been there, so generally a quiet market. But looking at the number of fixtures done for December, I think, we've seen a small correction, but there's going to be lot outstanding. So I think, it would be very interesting next week, but I think, the market has held up well on the Vs. So let's see, but I'm optimistic for the balance of the year and going into '19. On the Suezmax, I think, it's fair to say that that's the market that's showing the most strength. TD20, which is the WAF index, has been pretty strong here for the last 12, 13 days. It was up yesterday, and the Black Sea is showing a lot of delays. It's a busy Suezmax market. So that's the most well -- best-performing market here. So overall, optimistic, stabilized. It came up quickly and stabilized over the last 2, 3, 4 weeks, which is a good sign of a strong market. So I think, there's a good reason to be optimistic.

And can you comment about the potential cuts? If this will come, do you think that they will have any impact? Or this is something that even the strength of the market that will not slow down the momentum of the tanker market?

I think if you look at the overall growth in supply this year at 3.2 million barrels, it's been tremendous. It's double of what we had at the same time last year. So there's a lot of attention on the OPEC cut. Obviously, it's negative. Obviously, it's like -- we've been given 3.25 million additional here and some will be taken away from us. So obviously, the best for the market would be that it doesn't happen, but now let's see what the meeting on December 5 concludes. But if it's 0.5 million, I don't think that's going sort of turn this market and that -- anywhere close to where we're coming from and it might have a small impact, but I don't think that then, obviously, will be negative, but I don't think it's a huge factor. I think the balance in the tanker market, the fundamentals speak for themselves. We will see more delays in the worldwide fleet here going into winter in the Northern Hemisphere. So let's see, but I don't think it's going to be a showstopper.

And moving to the favorite topic of the year, the IMO 2020 and scrubbers, can you give us your estimates of how many vessels or how -- what is the percentage of the supply that will be removed for scrubber installation? And also, if you have a view of the approximately whatever 2 million or 2.5 million barrels of incremental low sulfur fuel oil that will be needed, what kind of impact it's going to have on the market? On the one hand, we are going to have the need for more crude runs for crude tankers, but on the other hand, we're going to have more movement of low sulfur fuel. Is this low sulfur fuel all going to go with product carriers? And what kind of routes and ton mile impact do you expect to have in the overall market?

So I'll take the first one first. Looking at next year, this -- obviously, we've got balanced order as well, right? So IMO 2020, there's a lot of ships that will install scrubbers. The interest of scrubbers and the ordering activity after Posidonia in June has exploded as we know. So we also know that even if you're doing it concurrent with drydocking, you will exceed the normal time. So in Q2 and Q3 of '19, I think, we can have a variance in market. It will be upside down to the norm, where a lot of capacity will be taken out because of these 2 factors. And, obviously, if you do the docking before September '19, you will get a 5-year waiver for the balance work treatment non-U. S., U.S., of course. But a lot will be taken out and that could mean that we will have a very different from the norm, where it starts easing off in Q2 and then Q3 being the weak quarter. When it comes to the crude runs, yes, as you are saying, the demand for crude here -- for the crude runs will increase due to the need for more diesel, so that's an overall positive for the market. When it comes to the new trade routes and how this will impact, I think the oil traders will have some good talks ahead and there'll be more trading, and I think there could be some very good margins. But exactly how it's going to play out, I'm not going to give you sort of a view on that, because I simply don't know. But what I can say is that I think it's going to be very, very positive for the overall market. Also of course, our LR2s will see some new interesting trade routes being the sort of VLCC of the product market. So I expect that to be much more interesting here in '19 because we've gone now 26, 27 months without product -- the product market giving any sort of really good earnings. We've had some small spikes here and there, but nothing strong over time.

Robert, one last thing. For the company that they do not have scrubbers, do you expect any change in the logistical process of refueling? Do they have -- do they need to make any extra investment in segregating the tanks or to have -- to spend more time in refueling, if fuel is not fully available at every direction? Is this something that we need to consider?

Obviously, there are certain areas, I think, in the goal tick where we already have these rules, and yes, you have to reconfigured bunker tanks and do some things here and there, but I'm sure, the ones that have decided not to go for this, I'm sure they're planning well ahead. So I'm sure it's going to be sorted. And generally, I think, the bunker market here will be very challenging for everyone. We need to start planning. It's rather than being a petrol station with 1 or 2 grades being offered, it's going to be much more complicated. So it's something sort of bunker planning needs to be taken very seriously. And let's put it this way, it's one of our top priorities here heading into 2020.

(Operator Instructions) We will now take our next question from Magnus Fyhr from Seaport Global.

Just a question on the vessels that you have with Ship Finance. I mean, you've been continuing to sell the older vessels and, I guess, you sold one after the quarter ended as well. Has your view changed at all there? Or what should we expect going forward with the market strengthening here? I guess, you have two 2004 builds coming in for their third special survey in 2019?

I mean for the '04s there, we're likely to carry on with them. They still have some earning potential, and then the other ones, I think, we'll keep on trying to renew. And I think it's fair to say that values have increased on these ships, along with most other ships, although there has been very few transactions. I think if you look at the fleet or the values, they came down on very few transactions, now we are moving up on few. But overall so, I would say that they had to stay with us for a while, and we are also planning to put scrubbers on both those ships.

Okay. And then a question for Inger maybe. You sold a couple of vessels during the third quarter. Looking on the balance sheet and other assets, what were the proceeds for those in current other assets? I mean, there's about $209 million as of quarter-end. How much of that was related to the assets sales or are they in current?

Magnus, I don't think we sold any asset -- any vessels, but of course, Ship Finance sold vessels.

Okay. Well and the...

But we terminated leases on the Front Page, the Front Serenade and the Front Stratus, three -- these 3 that were leased in from Ship Finance.

Okay, all right. Thanks for clarifying that. And just one more question on the balance sheet. I mean, you've been pushing out the maturities all the way to 2020 now and strong expected cash flow from operations near term. Should we expect you guys to go back to kind of a full payout policy here? Or has that view changed at all?

I mean, this will be up to the board here to decide, Magnus. But I think, we've -- given the 18 months of tough market, I think, we need to look into this and see how we're structured on and see what we need to pay down and so forth. So I think that should be the first priority.

(Operator Instructions) We will now take our next question from Mr. Greg Lewis from BTIG.

Robert, you touched on it a little bit, but clearly the Suezmax market has really picked up here over the last few weeks. Could you just provide a little bit more color around what you are seeing in the market is driving that? And now with -- is there anything we should be thinking about now that Suezmax rates are actually higher than VLCC rates, what -- is that a sign of maybe V8 Vs coming in and chasing those rates down? Or just a little bit more so we can understand a little bit more about what's happening in the Suezmax market.

I think, the -- there are factors to look at. The volume in West Africa is a definite driver. The amount of Suezmaxs going east is another driver. And both these trades, they are trades that the VLCC can do. But the other flexibility, as you come to the east with 1 million barrel ship versus 2 million, there's a lot more ports you can go to. As a trade, you have much more flexibility. So they've been in high demand, the Suezmaxs, and that has been a big driver here. And also the Suezmaxs can do stuff that the Vs can't, like loading in the Black Sea. The Black Sea is very, very busy. So overall, there's high demand for Suezmaxs. They are showing good strength. If you look back 2 years ago, it was not looking, fleet wise, it was not looking good with lots of new ships coming in, but that fleet has developed nicely. So I think that's the result of the flexibility and healthy fleet sizes. It's the reason why this market is performing, and we are very pleased with this. And obviously, we have 18 Suezmaxs and all of them are modern. So we're well positioned, so it's good.

Okay. And then I think you touched on it briefly on weather, but in terms of weather delays that you're seeing with the Suezmax trade, is -- any way you can quantify that?

For example, Bosporus, so Black Sea, those are seeing 5 to 7 days now and it looks to be increasing. There is not that many delays or much delay in [Bastro] which if you go back 2 years was a huge driver. But generally, the port delays are due to simply Northern Hemisphere heading into winter here, there is more. But there's not -- I can't sort of pinpoint that there's any severe changes there. But it is pretty normal, but the fleet is running on long voyages from where we are -- where the whole market is. Every additional barrel here in Atlantic seems to be heading to Asia, which is great for shipping, right? So overall, looking good.

Okay. And then just one more from me. I think when you guys instituted the ATM, I think, the market was significantly lower, rates were significantly lower. Now that it looks like we've seen -- what we're seeing this real recovery in the market, how should we be thinking about the ATM over the next couple of quarters?

All we can say is, it's a tool in the box and we've not used it. So that's the only comment on that. And we'll see how things develop here. But it's a good tool to have.

We will now take our next question from Mr. Lukas Daul from ABG.

A question on the OpEx. You've been sort of delivering very well on that front. Looking into 2019 and the drydockings that you are maybe planning going forward, how should we think about that?

I don't think we're going to see it, Lukas. The OpEx, I think, we always run a cost efficient operation, and there's no -- obviously, there will be some -- quite a few drydockings, so there will be some increases there, but nothing significant. So we'll keep focused on running a tight and safe ship.

Okay. And just to confirm, what you sort of said previously, you are going to install 2 of the scrubbers on the SFO vessels?

Yes.

Okay. Which vintage is that, can you say that?

2004, the FRONT ENERGY and the FRONT FORCE. So when we started looking at scrubbers and economics, we thought these were going to be right at the back of the line of candidates, but it didn't take long to see that the '04 or the high consumption is actually where you're likely to see the quickest payback. So we're going to do the upgrade on those two for sure.

We will now take our next question from Mr. Greg Wasikowski from Wells Fargo.

Apologies, if anything has been covered earlier. We had some connection issues during your prepared remarks. But just starting with the scrubbers, real quick. For your second round, can you remind us how many of those were done through your fixed price options? And then how many do you have remaining?

We have done -- this, let's see -- all the ones we declared now are the fixed price, and I believe we have 4 -- sorry, it's actually 6 or 8 left.

Okay. And then going off of what I think Fotis brought it up, for your order Vs, when you're thinking about that strategy over the next couple of years on what to do with those, does the prospect for floating storage driven by IMO 2020 factor into that decision? And just what are your thoughts around the potential for floating storage there?

I think at the moment, we are worldwide, we're at the minimum. On the international fleet, we're at the minimum when it comes to floating storage. It's the blending, it's the storage that will always be there, that's there now. The only change we've had associated rainy fleet, that's partly gone back on the storage due to the obvious local storage requirements. On what's going to happen with 2020, I think, it's very easy to put forward an argument that there will be more storage, but time will tell. I'm obviously hoping that we are going to see a scenario that we did in the Q1 of '15, where suddenly the old ships were worth a lot and lots went on storage. We had like 10% in worldwide fleet. But obviously, you need an old market that goes into very steep contango. Obviously, there's others that could be blending and various things coming in as well. But all I can say is, I don't have the answer, but I can say that the storage on ships will not decline from where we are now. It will increase and, hopefully 2020 will be a trigger for the various reasons there, but only time will tell.

(Operator Instructions) We will now take our next question from Mr. Randy Giveans from Jefferies.

One more quick follow-up question. So with the spot rate improvement, have you seen a market improvement in the time charter rates, 1-year, maybe 3-year? And if so, any thoughts on securing some of those now that they're pretty far well above your cash flow kind of breakeven levels?

That's a good question, Randy because -- and it's very relevant. You look at the last 18 months, there's virtually been no market. There has been -- you can do a 1-year deal, maybe 18 months, but no one should be willing to take 3-year deals. And we've seen now a spark here, more spark, more activity and real interest, especially if you can deliver ship with a scrubber. So it's something we monitor. I think the VLCC is in a 3-year deal, it's heading quickly ahead to the high 30s. The Suezmaxs are 3 years; it's well, again, with a scrubber, about 27.5, I'd say, and there could well be some upside on those rates and the afras are probably on the 22, 22.5, 23 for 3 years and also on the move. So we've gone here from not having a market. And if you had to sort of force this out to getting a deal, you'd be locking in probably $3,000 to $5,000 below your daily costs, so at least $1 million loss per year, whilst now you on our very low breakevens, we can lock in some decent returns forward. So we monitor. We don't have a sort of a percentage target or anything like that. But going back to end of 2017, we had 28% of our fleet on time charter. 2017 was a year where we, I'd say, we only lost. Given the bad market, we actually ended up losing $4.4 million over the year and that was very much down to the charters we've taken with the LR2 charters giving us about $40 million -- or saving us $40 million in loss. So we will look at it going forward. We don't have any sort of immediate plans of doing anything, but it's something we always monitor, and I'm very glad to say finally there's a market.

Yes. Absolutely. And just to be clear, you only have 1 vessel right on any kind of time charter, right, that's LR2?

Correct. We've got 1 ship out, LR2, the 17 3 and it's expiring in about 3 months' time.

(Operator Instructions) There are no further questions at this time. Mr. Macleod, I would like to hand the call back to you for any additional or closing remarks.

Okay. Thank you very much. And thank you, everyone, for calling in, and apologies for the problems we had with the Q&A session on our last call, so -- but very glad we could make it up with plenty of questions here today. So have a good weekend, and thank you very much again.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.