Tsakos Energy Navigation Ltd (TEN) 2003 Q4 法說會逐字稿

Good day and welcome to the Tsakos Energy Navigation fourth quarter and year-end 2003 earnings conference call. [OPERATOR INSTRUCTIONS] At this time for opening remarks and introductions, I would like to turn the call over to Mr. Thomas Rozycki, please go ahead.

Good morning and thank you for joining us for Tsakos Energy Navigation's fourth quarter and year-end 2003 earnings conference call. By now, you should have received a copy of this morning's earnings press release. If not, please contact Perag Dave of GCI group at 212-537-8026 and he will fax or e-mail a copy of the release to you. As a reminder, this conference call is also being Web cast. To access the Web cast, please refer to the press release for the Web address, which will direct you to the registration page. At this time, I would like to read the Safe Harbor Statement.

This conference call contains certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. As to the caution that such forward-looking statements involve risks and uncertainties, which may affect Ten's business prospects and results of operations. Such risks are more fully discussed in filings with SEC. Now, I would like to turn the call over to Nikola Tsakos, President and CEO of Tsakos Energy Navigation.

Yes, good morning gentlemen and thank you for being on this call today. We are calling you from Athens, Greece and here with us is our Chairman, Mr. Stavropoulos, our Finance Director, Mr. Paul Durham, our COO Mr. Saroglou, our Deputy Chairman Mr. Michael Jollife, our Marine officer Dr. Labrinokus (ph) and myself and I will ask right now our Chairman to start with his comments.

Good morning or good evening everyone. Thank you Nikola. In a word, wow. What a year, on behalf of the entire board of director, I wish to congratulate you and your management team for a spectacular 2003. Year decade long efforts positioned the company to excel has certainly produced results. The strategy, the concentration on customer support, intention to operating details to ensure its safety and quality service as well as prudent cost containment have come together in the bottom line results. The patience to build a young and growing fleet has manifested and one of the most modern group of vessels in the world. The concentration on new build to promote dynamic organic growth has resulted in a fleet ideally positioned to deal with the challenges of energy transportation and to exploit the riches of today's market. The world economic backdrop suggests that favorable comparison should continue in the current quarter and the year ahead.

The boards' confidence will be re-affirmed yesterday when it declared the semi-annual dividend of 50 cents bringing the cash dividend relative to fiscal 2003 to $1. That compares with 70 cents dividends distributed relative to fiscal 2002. The board is encouraged by and enthusiastic about the additional new buildings program. The established base of financial strength and the prospects for future earnings growth provides the basis for further entry in shareholder value.

Again, Nikola, congratulations. On to core, please. I guess you and your team in the year 2004, thank you.

Thank you Chairman, we do not accept the congratulations until that surprises this 50, so, we have some way to go. It is a great pleasure and pride to have the opportunity to speak to all of our shareholders and to offer some insight into financial results that we released yesterday. I believe that the gold results saying that the fourth quarter of 2003 was a satisfactory one both for our company and our industry. Raised high among many different classes of vessels and the benefit of the strong market are reflected in our fourth quarter results. Once again, we posted strong revenues recording approximately 355% growth over the same period of 2002. Our continued fleet expansion coupled with our balance fleet profile was the foundation upon which this growth was achieved. In 2003, we continued our new bulding program by taking delivery of 6 more vessels, two after market double after market, four double, double Panamax bringing the total new building fleet to 29 vessels since 1997.

Last quarter, we stated our belief that the growth we had experienced in the third quarter was continuing to the fourth quarter and beyond. We were proven right in this assessment and as we move from the first quarter of 2004, the rate environment continues to be healthy, as we continue to enjoy this healthy period in the cycle, we are also keeping a watchful eye on the factors that could affect future growth such as the new regulations and the growing demand from China, India and the Pacific Rim agreement. The new IOML deflation for instance will position to continue earnings premium for young and modern fleet. The vast majority of our fleet now, more than 90% is over double- double design. And in an effort to an even more diversity and various premium potential to our fleet, eight of our schedule new buildings would be ice glass to we would be increasing needs expected the ice block ports in Russia, Canada, Alaska and elsewhere.

Currently, we have only four vessels of the single hull design in our fleet and it remains our intention to diverse these vessels in the near future. The continued strong surge in market and the timing of the expansion of our fleet has produced another quarter of strong profit. This results will affirm our ability to produce solid operating results and profits in volatile markets as well as to enjoy major benefits in cyclically strong periods. We continued to balance our employment profile in an effort to recognize strong operating results but also to minimize risk for the company and our shareholders. We will maintain a balance in our employment mix and we will seek to fix vessels from the medium to long-term customers. Currently, we have 21 vessels from period employment and seven vessels operating in the stock market. Then, of our six vessels are enjoying market related contexts. Our management agreements with Stock and shipping and trading keep us in low cost environment and we are always competitive. This relationship coupled with our employment profile has allowed them to be well positioned to manage the changes in the market dynamics over the last several quarters and stayed profitable since inception.

As we continued to build up our fleet, we will look internally to control expenses, both operationally and from G&A perspective, in order to derive more revenue to the bottom line. We will also continue to optimize and enhance our strategy to improve our operating results and six strategic opportunities for TEN 2004. Looking at our stock price, we got significant appreciation in our shares and volume over the last several months. We believe that there are several reasons for this, certainly the sector as a whole has enjoyed the good run in its evaluations. All of these are producing good results and I would like to congratulate each and everyone of them for doing a great job with a different strategies and putting out so vital industry on the raters grade.

However, TEN has enjoyed a strongest line in the sector so far in 2004 up over 60% in the beginning of the year. We believe that the markets has taken notice of value of our meet in our operating strategy and this has provided us with the more appropriated evaluation although we believe it still quiet low. I would like to thank our shareholders for their support and wish to assure this and one of you that we will continue working to grow our spirit and provide financial results that support even higher evaluations. That said it remains - a company in better is that we continue to demonstrate storage the investment community, management will continue to travel expensively to spread our message to analysts, investors and the media throughout the world opening new doors for investment and educating the market place about our company and the industry as a whole.

As you can see from our surprise there has been renewed interest from existing investors and positions established by new investors, at this time we have being encouraged and we have lost a new self side analyst and we will continue to deepen our relation with all analyst already covered our stock. In short we are positively marketing our selves to decision makers and investors all of whom can positively impact in and affect your investment intent.

At this time I'd first like to give you a top line review of the fourth quarter and year end numbers and then talk up a bit about our operating performance Paul Durham, our Finance Director will provide you with more specific details relating to the financial.

Today TEN announced net revenues for the fourth quarter of 2003 of 60.4 million compared with 39.2 for the fourth quarter of 2002. The company also reported the EPS of 83 cents for the fourth quarter, additionally TEN announced net revenues for the full year of $241.4 million compared with a 130 million for the full year of '02. The company also reported EPS of $3.44 per share for the full year totally. This represents best year so far in our company's history of continuos profitability and we are extremely proud of this accommodation.

Turning to operations during the fourth quarter we made several moves that further establish TEN as on the premier operators in the world. Due to our fleet's youth and high specification as well as the constant addition of new vessels we would again able to take advantage of this strong rates in the sport market, however as I mentioned earlier we have not changed our strategy of employing a significant portion of our vessels and the long term charters or contracts, currently 21 out of our 28 vessels are on term employment.

We have secured 65% of the current fleet net operating days for the remainder of 2004. These represent with the $135 million in revenue for this year. We are thinking out new opportunities for all of our vessels and have met with success is securing long term accretive charters for our fleet and driving value to the bottom line by taking advantage of the current sport market. This will continue to fund our growth and add to the shareholders value in the long term.

During the fourth quarter we have made several announcement for the short terms continuos to establish it self as a market leader. In October we have announced new accretive long-term charters for the Swiss market the Decathlon and Pentathlon with (inaudible). Later that month and subsequent to those agreements we sold in (inaudible) two vessels. The same price resulted in net profit of $15 million amortize over a five year period on top of $12 million of trading profit within that year. In December we announced the long term charter for the Suezmax Triathlon, a seven-year contract to three years option with Sunoco. These charter was especially rewarding because of its length at the time when many charters are looking for shorter term contracts. We believe that the mutually beneficial relationship that we have build with Sunoco over this years was a key factor in the length of this agreement. This clearly illustrates the trust and level of service that TEN provides that our customers have come to expect. Also in December, we announced that we had acquired the VLCC LaMadrina at a competitive price.

The Madrina has since been operating in the sport market earnings three (inaudible). In the first quarter of this year, we signed the contracts for the delivery of auction to 1(A) for Ice Glass product tankers and to 1 A Swiss market brings the total of our new building orders to 29 since 1997. As our new building program continues in 2004, we will of course and able to charter our vessels before they are delivered. Stavropoulos is at the end of discussions was made to royal concerns to secure employment for some of our future vessels. Financing for the remaining vessels in our new building program is well under way at the satisfactory rate. Our current holding cost is about 3%. TEN continues to monitor its fleet aggressively, is prudently always looking towards the future, we have worked diligently of position of the company for continued financial strength, which we believe has been reflected in our surprise in recent months. We look to extend the reach of our modern fleet by adding new vessels and take advantage of a strong sport market while balancing our stronger portfolio with long-term employment.

We are confident that the company's position is well to generate revenues necessary to expand over the coming years. As always, we greatly appreciate the support of our loyal shareholders as we strive to increase the volume of their investment. At this time, I would also like to take the opportunity to thank our off shore and on shore personnel from the great efforts and devotion without which we will not be able to achieve these results and right now, talking about the results, I would tell the floor to Paul Durham, our Finance Director to review in more details. Thank you very much and I'll be happy to answer any questions at the end of the call.

Thank you Nik and thank you all for joining us today. Before I begin, please note that the summary selected financial data is included in the press release for your reference. Rather than go through again the line items one by one, let me just present to you some of the salient features for the year from financial point of view. Firstly, you will notice that there was no impairment loss this year despite the recent IML announcement. We have no category one vessel, which are subject to very early phase out and the current high values of our vessels and their ability to secure very positive freight rate is not justifying impairment. Average daily running cost per vessel for the fleet increased by 8% from $5,500 a day to $5,950. Three quarters of the increase was due to the impact of the weaker dollar and the remainder to the higher insurance cost and to high repair and maintenance cost in quarter four. G&A expenditure increased from $560,000 to over $1.1 million. This is mainly a reflection of the fact that that fleet is doubled in size of 2 years and 2003 was the first full year that TEN on the NYSE, with additional expenditure on investor relations and related towards increased requirements for professional services, audit and legal filing cost and directed insurance. Daily cost per vessels still remains relatively low at $734 a day per vessel compared to $683 last year. Nine vessels underwent dry-docking during the year, two of them in quarter four. These were all the four Handymax vessels, two new Aframaxes, the (inaudible) and Maria Tsakos, the three Panamaxes - Victory, Liberty and Hesnes - the latter of which also underwent a major upgrade. Central dry docking cost in fact for the year are very heavy years as of dry docking, it amounts to $15 million of which 1.5 million was in quarter four.

As Nikola has mentioned during quarter four, we sold two Suezmaxes, the Decathlon and Pentathlon, for $55 million each. In the sale and lease back deal with the German KG organization. After pay back of 59 million of related loans this let us nearly $15 billion worth of free cash to utilize for further expansion. The actual net gain on sale was 15.8 million but portion that we can account for within 2003 is only 540,000. Annual amortization on the gain will be about 3.2 million each year. We acquired 6 new vessels during 2003 all before quarter four as in holding costs of about $225 million of which a $187 million would paid within 2003. Associated new loans for these vessels amounted to $160 million. These new vessels provided about $14.5 million to the bottom line or approximately a quarter of our total net income.

The new buildings now contracted for the six Suezmaxes and five product carriers to be delivered between 2004 and 2007 have a total contracted cost of nearly $450 million. Payments in 2004 will be $87 million, in 2005 a 128, in 2006 a130, and finally in 2007 the final 80 million. Total loans outstanding as of December 31 2003 amounted to $453 million compared to $386 million at the beginning of the year. The total debt to capital ratio at the period and was 59%. However, from a banks defined leverage point of view, taken into account the evaluation of the vessels our leverage was only 50%. Actual interest on loans in the year excluding other financial costs amounted to $12 million compared to 9 million in the previous year, due to the increase in the average debt of about $140 million between 2002 and 2003 but offset by interest rates falling by about 1%. Net interest charges on swap arrangement amounted to acquire 1 million interests after non-cash gains compared to 6 million negative charges last year. This concludes my comments on the financial results. Now I would turn the call back to Nikola.

Paul Thank you very much. Well done. As I said we will be very happy, we have our Chairman here, our Deputy Chairman Mr. Jollife, myself, our COO Paul Durham are directed to answer to any points or comments that the any of you would like to ask. Thank you.

[OPERATOR INSTRUCTIONS] Our first question from Gary Goldstein with Gilford Securities.

First of all I would like to reiterate the wow, just an outstanding quarter guys all of you and just an outstanding quarter. Paul had gone through little bit the bump in operating expenses and quantified the number. Can you give us the break down what it was between the added cost and the foreign currency?

If you remember that we have about 25% of our operating cost in terms of foreign currencies a non dollar, that's basically Euro. And that basically relates to the Greek officers on our ship. But that leaves about 25% of our overall increase in operating cost relating to other factors and that's relates to many increases in insurance cost were insurance cost have written by about industry wide by that 10% to 15% possibly more, so we held our interests rate increase to about 5%. We had some major repairs and fair acquisition being quarter four that gave a bit of a spike within quarter four that hopefully for the benefit of 2004 and that would account for approximately 10% of the overall increase

OK I appreciate that thank you and if you could just -- you guys talked about the Triathlon re-upping with the 7 plus 3 contract we have been listening to a lot of conference calls and talked about lot of companies and everybody is pretty much saying the same thing that they are having difficult is ensuring long term charters, and can you guys talk outside of the relation ship how come your - you been able to do so successfully and how you been able to do it?

Well I don't think we are the only ones who are doing this, we have a focuses to our client strategy. I think this is company's philosophy, we have a lot of repeat business we some times do not take a full advantage of the sport market in order to keep this relationships since --- you know this relationships pay I think this is a interesting business, its the business were we have a thick accredited minimum rate and then we are splitting the profit with the chartered or above that, so we are looking at the longer relationship as this is were a the back bone of our strategy in chartering is to have a repeat business with clients. If it is true that - there are not that many long-term businesses out there are as we see.

I appreciate that very much. I'll let some other people ask questions and get back in queue again congratulation guys.

Thank you

Our next question will come from Magnus Fyhr with Jefferies & Company

Thank you and Good afternoon, couple of questions starting on you know, your new building program has been very well timed during the last year and going forward. You also being taking advantage of you know higher asset values by doing some lease backs. Maybe Nik you can elaborate a little bit on going forward given the recent increase in assets by this where you see opportunities you have a probably less VLCCs in your fleets than most Suez and Aframaxes may be you can talk little bit about the different segments were you see most excitement? Thank you

Well Thank you very much I mean as our long lease one stock shipping which means there are companies very successfully focusing in one type of ship. It seems we have not invented what's the right type of ship yet then being a client driven we have been to participate in all sectors of the market form the handy size vessels were we have a plenty of them on order and existing ones mainly now ice glass vessels and up to the VLCCs as we said this is our - I would say - we are participating the least in that market. We still believe that the Aframax is the workhorse of our industry as a Durham, we see the Swiss max biting in that market, we have been built and then almost exclusively a fleet out of new buildings because we don't feel that it is some times correct to very high prices for second hand ships but that's our strategy other people have more second hand ships and been very successful and as you know with different strategy, we have been shift against our clients needs, we like to have a unified fleet the sister vessels that can assist us very much in operations, we are very operational mind, as you know, we have everything in-house, so, it is very, very important for us to be able to give a very good service to the client but I think we are looking right now at some ice glass ships as you know, we have been quite a few in the beginning of the year, we are seeing second hand that we are seeing new building prices together with second hand prices starting to become a little bit steep right now and we are proud we have already done our own building so far, behind us and without excluding against the specific business to look at other quality new business.

OK, you do have most of the cash committed to the new building program but from free cash flow, coming in and 2004, any chance of seeing an increase in the dividend year over the next couple of quarters?

Well, I mean we found that the Chairman is domain, so I don't generally speak about dividend in the board meeting but I think our board has decided to increase the dividend from 70 cents to a dollar, if we are like in the market continues, we might see, we are always staying between 25 and 50% of our net income into dividend, depending of course of the company's performance. 2003 was a year that was comfortable to increase the dividend and we hope that the remaining 10 months of 2004 will make us feel the same.

Thank you.

our next question will come from John Chapelle with JP Morgan.

Good afternoon guys, following up on the new building program and just expansion plans in general. The debt to GAAP of 59% right now, how comfortable would you be increasing that if you found out their assets that you know probably worth well for your fleet?

Well, as you know, you know better than us but sometimes, 50 to 59% or 60% is a comfortable level to be. Our strategy allows us to go as a total fleet sometimes to 70%, so we have space there and of course, if we identify products that will allows us to finance, if we see hire, we will continue this. So, yes, we have flexibility but we have a significant 11 ship new building programs with options coming up, we would like it towards the low ships back into 2002 and things were not as yesterday, so we have a significant appreciation as we speak today, in this prices, we have in some of our early all the Suezmaxes, we even have (inaudible) before taking delivery as about $50 million above what we have ordered. But of course you know, it is a cyclical market, and this might not exist. So, we are not banking everything on this appreciation but we believe we will have the significant ability to grow the company.

OK, thanks Nik. I have a follow up for Paul. You spoke about the high dried docking in 2003, can you just walk us through the schedule, may be over the next couple of years and the capital outlays?

We have a very light couple of years ahead of us. Within 2004, we only have four vessel I think, currently scheduled for the year. We have one of the vessels in fact giving in this week, it's a mirror, of dry docking in China, then we have the Olympia a little later on and later the Graignen and the Liberty and of course, we changed our plan to suggest the older ship, so the total outlay in dollar terms will be about $8 million this year and next year, we just have two vessels going in, which are the Panos G., if it is still around by then and the Victory. The advantage of having more than fleet I think this starts paying because we have as for the same. We will not have a significant drive looking expensive you know for biding and looking on wood and the incidence on it's a old looking at a much delighted year - this year has been a very hard year on the special survey funds, then and we were looking at a lighter year in the next couple of years

Very good. Thanks for that.

Thank you.

Any thing for there Mr. Chappelle.

That's it.

Thank you. Our next question will from with Derrick Sollen (ph) with Poten & Partners.

Good Afternoon. I'm just curious at how you see the future of the ice glass market. First you given in the fact that you have several ice glass products care and as you mentioned thost 1(A) Suezmaxes on order at the Korean yards.

Well I think, I mean you are the expert Mr. Poten I mean we are just a ship owners trying to make as lot as much, but our view here is that we are - you know we are taking a lot of information from great houses like yours and we are seeing that more and more oil as we have to be coming out from the ex-Soviet Union. I mean there are lot of reports taking about Saudi Arabia having rich plateau of production. All of this is right or wrong, we cannot arrive at this stage but we have seen an 8% increase in the oil canning out of Russia this year. Last year used to be - used to have a lots of ports to export a lot of space to export down from the black sea and a lot of space up from the Baltic all the way from Poland to the North, to Saint Petersburg, right now many of those sports are new states you have the Baltic state like Astonia, Latvia, Lithuania, they are different countries and you have a Ukraine down south so there is very little space for - port space for Russia to export other than really Novorossisk in the Black Sea and we know that we have had because of congestion and bad weather and environmental reasons a lot of delays in the mid market, I mean unbelievable delays we have had six of ours there were again shipping out there for 28 days waiting to bring the oil down - down south and of course you have most of their boats are blocked in the winter in the north.

So we are going to be seeing and these markets that is going to increase and that's why we decided to take the decision. We are actually building those other - this was much as prototype that we are building in Hyundai, which is a yard where we have a - we want to be in six and two yards, which will put Hyundai and Imabari in Japan. So those six hopeful will play significant roles

OK. Thank you very much.

Thank you.

Moving on, we will go to Samir Chauhan with Stern Agi (ph).

Good morning guys or I guess rather good evening. Just a couple of questions, I guess you guys mentioned the total cost in new bill program was about 450 million, how much of that is - do you guys already have financing committed

At the moment we are receiving lots and lots of wonderful bits from a full string of a excellent banks and we are sitting down as negotiating with the more as so we haven't any finalize any of the other terms as yet.

This year we only have two ships to be delivered which the first one being at the end of the June. So we'll have -- we are in the process of negotiating a sponsor with various banks, but we have been some of the long key story of the group, a very good relationship with the banks and that I think is also portrayed on our very low I think only in interest cost follows about 3.2% including -- and that includes a 55% of our loans being hedges followers. So, we have some hedges. So that I think its quite a comfortable level. We have a lot of interest for bank. We do not believe that we should be paying commitments in order to secure loans forward. We believe this is necessary, usually if you want to commit some finance in from today for the delivery of 206, or 207 or even 205, you will have to spend couple of 100,000 dollars at least in commitments. This is something we have not ever done in the company and there is quite a lot of interest for our. I would like to have chairman, if he wants to comment on that being the next bankruptcy's expert.

Well, I think you outlined it very well Nickola we have a very strong relationships with a number of leading shipping financing banks, I won't say that we are inundated with them but we are rich, with outstanding our offers from them. Our basic power steel is the finance of approximately 70% of our new buildings in the form of long-term debt and we have been given every reason to believe that it would be forthcoming on the timely basis.

Very good, thank you. Another question, do you guys see any additional opportunities for the sale lease factor that you recently did, with any of the other vessels you guys have?

Well, there are a lot of dangers for similar opportunities. I think this is something we have in the back of our minds, and we were talking we might do something in the future. And we have been happy with the transaction we did. We were able to secure the employment and also you know take advantage of them operationally. We have fixed them to minimum, maximum arrangements, so we are expecting to make good profit not only from the sale of our ships but for the five years, we are going to be operating them.

Right, it would help free cash as well for you guys. And lastly, I guess you touched on operating cost earlier, I mean what you guys see going forward I know you said, you know you seen it creep up a little bit but going forward, do you expect that to hold stable this year or may be increase a little bit more or if you could just touch on that briefly.

Well, as we said, we are going to have the much linear specialty rate program on the general operating the expenses, what we are seeing is the environment where the dollar hopefully will stop being so weak and that will add great to the a bottom line. And the insurance costs, we have already insured our PMI insurance, I think that is an average of over 5% increase and they were looking at similar increase to do 5% to 10% on the insurance which is in April before our Holland machineries. So we are not expecting such steep increase of our expenses, I mean looking I think in the industry, the whole, we have actually - we have only been affected because of those extraordinary issues in a small increase in our operating expenses. So I think we had about $5500 on the average of our fleet and of course, our fleet now contains VLCC's and towards Maxis, what is we have reached the 5.9, 5900 I guess dollars now. And most of it are supposed that it had attribute to the currency exchanges. But I think if you compare perhaps with other, it appears we are still quite comfortable in that.

Thanks guys. Great quarter.

Thank you.

Our next question will come from Natasha Boyden with Sidoti.

Hi, yes. Hi gentlemen, how are you?

Hi, hello.

I just want to follow up from the pervious question about the ice glass vessels. Can you give some idea of the background. What kind of competition is there in term of ice glass vessels. Are will you need to be built up in order to trade in this areas?

Well it's a very small niche market. I think the resale market has to be built up. I think for sure its not over built. The premiums received from those ships are in the winter months or sometimes extra ordinary. We have seen an after months, which is smaller than our Swiss market. That will be charted for six months of the $129,000 a day. We average I guess in the mid market is something like 40 and a very good market on a rough -- as we had in our ice glass we will use it for the 6 month 129-almost three times the rates for the winter months and then these operating normally in the market. So I think this market is going to be growing and we are only building those ships because we have clients who are already directed for this.

OK, if you would say the ahead of the curve. Is where in terms of getting the vessels in before I can see a curve.

Yes we want -- to wanting to blow on -- we are ahead of this in the ice glass yes.

OK. Thank you very much. Great quarter guys.

Hardin Bethea with the DePrince, Race & Zollo has our next question.

Hi, great quarter guys. I wonder if you are giving an idea of how many of your - what percentage of your operating days are pretty much already booked for the...

For 2004, we are about 65% mark, which represents about 135 million in terms of current decrease if we are in terms of a what is absolutely secured on the time chart is and the minimum we would like to be secure whether it has variable rates and for 2005, we are already we have secured about 52% of our operating days and that represents about 100 million of revenue.

What opposed to look at the first quarter and try to figure out based on what percentage of your fleet is sensitive to stock rate, how many operating days are there are once in the quarter for you is it actually fixed?

I think we really got about 50 or 60 days, which are still unaccounted for within quarter 1 at the moment. We are pretty well booked for the whole of the quarter now, I think some of the time remaining sports off is end around mid march and release will be fixed again. So in terms of operating days with it.

To give an example on the specific ship should (inaudible) enabled has the business here. Our VLCC LaMadrina, she was fixed from here delivering in January on a cross Atlantic voyage from West Africa to the loop earning up approximately a bit above the $100 thousand a day. She has been re-charted on a buck hole voyage, which means that the voyage that's usually many times real disease will take off -- will have to balance to go back to the Persian gulf to get the cargo. We were able to book a cargo for that ship all the way from Venezuela to that area to the far east, which minimizes our balance and that buck hole is about we are going to be earning about $65000 a day on a buck hole, which means that from March, we hopefully she would leave the loop in new parts of the world, we will start earning $65,000 to go were loading areas, so that is another 25 days, 65 for that specific vessel. So as Paul said, we have most of this quarter always spoken for.

So, if I understood you right Paul, 50 to 60 days across the entire fleet?

Is the 60 days across the 28, yes the 28.

: So, you pretty much, is fair to say that first quarter earnings are in the bag?

Yes, it is approximately 2,700 days available, over 2,600 are not accounted for.

OK, what kind of visibility do you have, may be Nik and George, you can comment on the different market and vessel sizes that you participate in and kind of give us the current look at where rates are?

Yes, I mean as I said, we have kept 7 vessels that are on the spot, and we have out of our 21 vessels currently, 10 of them are actually influenced, they have full utilization because this is our strategy, we don't let other owners, that is very successful, we might take the ship and wait for a couple of days or weeks sometimes in order to get the right rate, our strategy is keep the book balance running, earning money, I mean. So, we have settle those 21 remaining taking advantage of that market, since the beginning of the year, we had again, a very strong market, during the OPEC, we had the OPEC announcement a couple of weeks ago coupled with the IP week, which is the petroleum week in London, which gets most of the Shipping and Oil people run and not doing that much business. So, we had a small correction on the spot market. However, right now, the markets have rebounded significantly. The BLC market is as I said healthy, the Caribbean market, which is very important market for us since we have a lot of double-double ships calling with the very mentally sensitive area right now has almost had 70% increase in the last week, the Mediterranean market is due to a better weather and less delays mainly in the (inaudible) had a correction and that market had a 40% increase this week only as we speak today and the far east finally has stayed quite healthy. So, we are seeing a rebound from a still healthy lower market that we show in the last couple of weeks.

I guess some more to what you provided that you are in your press release, on a time charter equivalent by ship, can you kind of give me, where you see you know dollar amount raised currently versus where they were in the first quarter?

I am referring to the Sports market right now.

Sure.

Of course, you know we had the fourth quarter always I'd say for the Aframaxes was about $60,000 similar to the Caribbean, this market now in the mid 30s, rebounding from the mid 20s, that is strong. BLBC rates where in time chartered equivalent in around $100 and $110,000 in the fourth quarter and the beginning of the first quarter, they are down to 75 or$70,000, still very, very strong considering that the break-even oiling costs for all the entities is approximately $22,000 a day, so that's also quiet healthy. The storage market is, I would say in the mid 30's also. It has reached upto 80,000 or will get 140 as we speak and the market that has surprised all of us has been extreme products market that has performed very well. We are participating for our product tankers is not only in the $40,000 range.

OK. Great. Thank you very much.

Thank you.

Moving on to Jill Ovens from Alpine Mutual Funds.

Hi guys, I wanted to say hello and congratulations. I want to thank you for the performance. And a couple of things, first of all, I also want to acknowledge the dividend increase and I hope that is something that could be considered going forward and second of all, Nik, what I am really looking for because I haven't been following the group that closely. Is your perspective on kind of the next few months relative to where they have been a historical cycle. Because we are answering the shorter months where you would expect weak demand you know, oil prices are staying high, I am already hearing people talking about problems with summer driving. What a kind of -- you saying relative to your experience in a kind of what usually the weak months of the year, I mean are you saying this is going to continue to be strong, are your customers still telling the demand is still very strong.

Well, we are seeing lots of demand also coming out from far east places like China, in India. We expect that we are planning the fleet and now are employing our fleet expecting a weaker second and third quarter, that's a seasonal increase. But I think what is very important is that we have for the last three years, the lows of the seasonality alone was higher and I think that gives us comfort. We have this stepping up feeling that whereas 5 years ago, was for an Aframax around $11,000. We are in a position calling alone right now anything in the 20's. So that's double what it was, and that has gone up from the mid teens two years ago and better and better. So, we are seeing for good quality ships, they are not many perhaps out there and I hope that remains the case for the time being. And we they are stepping the setting up the arrangement. We are preparing for a softer market that we are.

OK, you say except for higher lows?

Yes. Defenitely higher lows.

And then I just wanted to tell you that 10-KBP put out a press release today that they were booking for opening up some new ports in Russia because they can't get their oil out from their combined operations. So I think the ice class moves would be really interesting.

We have followed that up and I think that will be very helpful because we are going to bringing a lot of ice class that is in our operations.

Well, I appreciate it and will see you in a couple of weeks.

Thank you very much, looking forward to see you.

And our next question will come Hari Subramanian with Acess Technologies.

Hello, Good evening, it has been a great performance. I just have a couple of questions. One of which on the earning guidance for 2004, I guess many of the questions have been covered there. But if you could, is it possible for you to give us some view into the percentage growth for the earnings?

Only in the very general term at the moments, it is our practice really to give any detailed kind of numbers though our analyst is out from the sales that are coming up with projections. In general term, we feel fairly comfortable with these projections. They are indicating that 2004 will be a strong year especially of course we thought what they are now in quarter 1 with some softening in quarter 2 and quarter 3. So in general terms, we go along with those kind of assessments, we also believe it will be a super year, quarter 1, especially being a tremendous quarter with already will be the quarter that will project 2004 possibly higher than 2003, fairly, we have it. We believe its going to be a good year.

OK thank you and the second question is, recently there was a press release or news item I think from one of the US government agencies talking about increased threats in maritime terrorism. What do you see as your exposure to this type of risks?

So we are obviously all of this - what industry what we are in, export now for terrorism and the maritime industry especially is compared to other industries is exposed, possibly not so much as far as tankers are concerned although we did have the incidence a year or so ago when the terrorist attacks the Limberg, the French tanker which we hold. There are new regulations which requires to have on each vessel, a security officer of course which will provide some assistance, but obviously will not stop the dedicated terrorists and there are strong regulations in sports other ten more facilities. So, yes we recognize the risks, there is limited things we can do. We hope that all the state authorities new governments for the world of course will provide the kind of protection that all of us require.

OK Thank you.

Our next question comes from Jeremy Hunt, a private investor.

Thanks, my question was pretty well covered by the preceding answer, I was interested in the general outlook for revenues and profits for the current year?

Well I hope we got good news for you. I hope we have good news this time next year for you. Yeah, I think we feel very confident to 2004 as we did early on in the discission and we now have 95% of our operating days in quarter 1 fully covered and the kind of rates we are seeing in this quarter are quiet preferred to, obviously 2004 is going to be a great year, I know but it is a 2005, we feel very confident as well.

May I ask you another question? Hello.

Please go ahead.

What are you dividend payment dates normally during the calender year?

This is our Chairman.

We defer and pay our dividends twice annually. Our pattern has being to make the cash payments in October and April of each year.

October and April.

That's correct.

Thank you.

Any thing further Mr. Hunt Thank you. That concludes the Q&A session, I will turn the conference over to you gentlemen, for any additional or closing remarks.

Well, thank you very much for all this interesting questions and thank you every one for their support in keeping our company in limelight as we see from our enlarged volume in the last couple of months. We as management will continue to do what we know best is run ships and try to bring good results and again I would like to congratulate all the shipping companies out there. Because we are not that many on the New York Stock Exchange and elsewhere that I bring good results and our helping such an important industry, like I was finally been a little bit appreciated not full yet by the investment public. Thank you very much Mr. chairman, if you would like to.

I think you covered it pretty well. There's a comedian who is about my age, his name is Rodney Dangerfield and his by line used to be "I don't get no respect." Thank goodness, our industry is beginning to get a little respect. Thank you.