Tsakos Energy Navigation Ltd (TEN) 2004 Q4 法說會逐字稿

[OPERATOR INSTRUCTIONS]

Good day, and thank you for joining us for today’s Tsakos Energy 4th quarter and year end 2004 earnings call. By now you should have received a copy of the earning press release. If you have not, please contact [inaudible] at the GCI Group at 212-537-8026 and he will fax or email a copy of the release to you.

As a reminder, this conference call is also being web-cast. To access the webcast, please refer to the press release for the web address, which would 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 Privacy Securities Litigation Reform Act of 1995. Investors are cautioned 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 TEN’s filings with the Securities and Exchange Commission. Thank you.

I would now like to turn the call over to Mr. Nikolas Tsakos, President and CEO of Tsakos Energy Navigation.

Yes, thank you. Good morning from Athens, Greece. Thank you for being on the line with us and thank you for having cold weather in the States. It keeps oil prices and tanker rates high, so thank you for that. With us today is our chairman, Mr. Stavropoulos, our Deputy Chairman, Mr. Jolliffe, our Finance Director, Mr. Paul Durham, our COO, Mr. Saroglou, our Marine Director, Mr. Paul Lambrinakos and most of the TEN team, on the line from Athens, Greece. I think we’ll have our chairman to start his introduction, and then I will be available to give you an insight of the developments of the last quarter and year, and our Finance Director will deal with the [inaudible]of the figures, and then we will take your exciting questions. Mr. Chairman, the floor is yours.

Thank you very much, Nikolas. Good morning, everyone. It is always a pleasure to visit with TEN’s owners, and the Security analysts who cover our activities. I’m sure you all agree that congratulations are in order of a superb job of the management team under the guidance of our CEO, Nikolas Tsakos. The 2004 performance added considerably to the shareholders value. As a result of this strong earnings performance, and the excellent financial health reflected in the balance sheet, the Board of Directors proudly increased the dividends for the final semi-annual payment related to 2004 operations. This will be payable in April of this year, its $0.95. When you combine this with the initial semi-annual payment in October, the total is a $1.65, which compares very favorably with the $1.00 for 2003 and $0.70 for 2002.

The other important action by the Board will be approval to seek delisting in Oslow. We’re very appreciative of the opportunity we’ve had to our shares to be traded in Oslow since and conception of the Company in late 1993. However, since the listing on the NY Stock Exchange in March of 2002, trading of our shares in Oslow has been minimal. A significant added in expense in management time to retain the Oslo listing is not longer justified. Going forward, management attention will focus entirely on the needs of the NY Stock Exchange listing.

Looking ahead briefly, the prospects for our industry in general and TEN in particular are in deed very bright. The demand for oil and product is likely to grow by 2% or more in 2005. The distances from producers to consumers continues to expand. The projected increase in tanker capacity this year is some 6%, should help ease the extremely tight supply and demand conditions of late 2004, but maintain an environment for [wellness] can and will prosper.

We look forward to our third consecutive year of high returns on capital buttressed by the addition of five new buildings particularly the two new ice class Suezmaxes. Our people again thank you for a great year and the opportunity to share my pleasure of our fellow shareholders.

Thank you Mr. Chairman for your good words. Again it is a very pleasure – I’m surprised that I have opportunity to speak to you today and offer my comments on the results that we received yesterday in the industry in general.

I believe that without saying that the fourth quarter in a whole was a very productive one for both for the company and the industry. We reached a new high across the board and the benefits of the strong market, I think that reflected in our fourth quarter results and our year-end results. Once again we posted strong earnings, another record year with approximately 130% growth of over the same period in 2004. Our continued fleet expansion coupled with our balance sheet profile were the foundations for which the growth was achieved.

Last quarter was on the was based on the week of the growth we had experienced in the third quarter will continue in the fourth and then based upon our belief that the demand side of the equation remains quite strong. So finding that this is the case, and as we move from the first quarter of 2005 the rate environment continues to be strong and of course very strong when compared to the historical values although it seems a bit lower than the values that we seen – the big values that we have seen in 2004.

As we continue to enjoy this healthy feeling we are finding we are also keeping a watchful eye on the factors that will affect the future growth for our business such as new regulations, demand from China, India the Pacific Rim as well as inflationary pressures many have been caused by the increasing price of oil. April 5th, as you know is the deadline for the [IMO] regulation and this date is approaching and continues one position to continue working premiums for our fleet which is very young and very efficient. The vast majority fleet is now 95% of the double double design. Currently we are down to two single single vessels and this is our intention is for this year to diverse those major vessels.

In an effort to maintain TEN’s the most diversified energy cargo around present to our first energy offers this year of last year. Ten of our scheduled new-building from ice class to meet an increasing need expected for the ice blocked ports of Russia Canada and Alaska. The continued strong [indiscernible] market and the excellent timing of the expansion of our fleet are combined and produce another quarter of strong profits. (Indiscernible ) We have more there more ability to go to operation and profits in certain markets has well as enjoying major benefits (indiscernible ) that we are operating currently. We continue to balance our employment profile in an effort to recognize stronger operating results but also to minimize risk for the company and our shareholders. We will maintain a balance in our deployment mix and we will seek to fix selective vessels on leading to long term service.

Currently we have 24 vessels on continued deployment with [wider] rates and 3 vessels operating the spot market. Our fleet management capabilities and on our rate out the arrangements we have with [Tsakos] ship operating allow us to keep costs low and remain competitive covering enhanced management of our fleet. These relationships coupled with our deployment profile have allowed TEN to be well positioned and to be able to manage the changes in market dynamics over the last several quarters. As we continue to be capital fleets we will look internally to control expenses both operationally and from a G&A standpoint and in order to bring more revenue to the bottom line. That is why I among other things we will have – decided to delist from the Oslo stock exchange in order to reduce costs in our global communications. We will also continue to optimize and enhance our strategies to improve our operation and performance strategically alternatives for TEN’s during next year to apply to those years.

At this time I first like to give you a talkative view over the fourth quarter and year-end numbers and then talk a bit about operation and performance. Paul Durham our Financial Director will get into more detail about the numbers. Yesterday we announced record revenues for the full year of 2004 of $305 million, compared to $230 million for the full-year of 2003. We predict earnings per share at $7.53, for the full-year versus $3.00 for the 2003. In addition we announced net revenues for the fourth quarter of $90 million, compared with $60.5 million for the fourth quarter of 2003. We can present $2.69 for the first quarter of 2004, versus $0.83 for 2003. So far, this has been the best and our company continues profitable track record since inception and this has been our best year. We are proud to delivery quality results to the various shipping sites. Operations during the fourth quarter we made several moves that further accomplished them as one of the premier operators in the energy sector in the world. Due to our fleets youth and high specification as well as the cost and addition of new vessels, we were again able to talk advantage over strong rates in the spot markets. However, as I mention earlier we have not and will not change our strategy over doing a significant portion of our vessels under the long term charters or contracts. Currently 44 of our 47 vessels are on permanent deployment that produces (indiscernible ) of our vessels that means no down time for deployment reasons. However, twelve of those vessels are of profit sharing that market has made arrangements that has allow us to enjoy the benefits of the spot market. We have secured nearly 75% of the current fleets of (indiscernible ) for the remaining of this year, 2005 and almost 60% for 2006. These represent almost a $150 million in revenues over the next four quarters. We are aggressively seeking out new opportunities for all our vessels and have met with success long-term accretive charters for our fleets and driving volume to the bottom line by taking advantage of the current spot market and as (indiscernible ) which we fixed out to (indiscernible) on our one year (indiscernible ) out on the year with a minimum base rate (indiscernible ) . This type of business will continue to find our growth and to our shareholders bottom line.

During 2004 we have ordered 10 new ice class vessels in the Suezmax and Handysize [indiscernible]. And we are happy to announce that the stronger they are worth 50% or more than the contract price that we have signed. Global our first LNG vessel is a clear sign of our diversification policy. TEN will be operating in the whole energy transportation spectrum in order to satisfy our lines and clients. From the Handysize ice class vessels for the smaller north Pacific ports to the larger [indiscernible] ice class [indiscernible] even into the class market. In addition, in last twelve months we have sold four of our vessels for significant capital gains including our two original supertankers which were the base of forming the company back in 1993, the Liberty and the Panos G. We have replaced those two vessels with two special design Aframaxes due in June ’05 and July ’06. This brings the total number of new to the beginning of our program in 1997 during the energy crisis to 33with a value in excess of $1.5 billion. The timely order of those vessels before the current period of new building and [indiscernible] allows TEN to grow steadily through the low starting costs.

Our new building program continues with deliveries one of which we have already taken last month. 5 deliveries this year of 14 altogether. We have already entered into discussions already with major oil concerns to secure accretive deployment of some of our future vessels.

By announcing from the remaining vessels these are in our new building program is already underway at a very competitive rate. TEN continues to market its fleet aggressively yet dutily always looking toward the future. Who have worked diligently to position the company for continued financial strength in order to move swiftly when opportunities arise. In addition we will move to extend each of models by adding universally at the right time and at the right price and this way we will reap the benefits of a strong spot market while we will balance our [indiscernible] portfolio along with long-term employment.

We are confident that the company's position will generate the revenues necessary to expand over the coming years and in the 1st quarter of '05 we will have seen continued strength in rates though we are not at the record levels which we have seen during '04. At this value we are looking very comfortable in that 2005 we will positive the year for the company as well as for the industry when we compare it to the historical rates in shipping we are realizing that this is unlikely to sustain the record high rate that we saw in 2004 however we might be again pleasantly surprised. As always we greatly appreciate the support of our loyal shareholders and we strive to increase the value in your investments in TEN. I would also like to take this opportunity to thank all my colleagues around the table and employees that serve our systems in making this a very successful year for the company, the board of directors and most of all the hundreds and thousands of crew that we have on our ships that make sure as to whatever we tell that you is a reality and the ship arrives safely and so does the cargo. Paul, I would ask you if you could begin [indiscernible] details and then and we will be available for questions.

Thank you Nikolas and thank you all for joining us today. Before I begin please note that the summaries direct financial data these included in the press release for your reference and I would like to now talk about the more significant items occurring during the quarter and the year.

We were well positioned to take advantage of the excellent market conditions existing in 2004 thanks to the 12 new deliveries these past three years, the absence of significant dry dockings this year and the balance tracking strategy which we employed. Overall days available for trading were almost exactly the same as the previous years quarter. However this year and for the 4th quarter we had a 98% productivity compared to 93% last year due to the reduction dry dockings. Although each [indiscernible] of our operations days were under period employment in ports of call the percentage of operating days with variable rates were nearly 60% something of a similar pattern through the year. So as Nikolas has indicated we have achieved considerable security in terms of employment of our vessels but continued to insure our ability to take advantage of [indiscernible] markets. As an example the [indiscernible] is in its second year of a seven year time charter. But due to profit sharing this vessel earned an average of $65,000 daily in quarter 4. And the Aframax on evergreen employment under contracts with [indiscernible] were earning daily time charter equivalent rates of up to $68,000.

Overall average daily TT per vessel for the quarter was $35, 400, and for the 12 months $28,700. Operating expenses in the year were impacted by the weak dollar, which especially affected our crew costs. Average daily operating costs increased by less that 6% in the year from $5,946 in 2003 to $6,286 in 2004. Nearly half this increase is due to the dollar fall. Much of the remainder of the increase is due to insurance costs, partly because rates have increased for us by about 12.5% which is a modest increase compared to the general market but mainly because the insurable value of our vessels has increased by 25-30%. Other increases relate to the cost of lubricants due to oil price increases to the cost of maintaining the older vessels and to the impact of the addition of the VLTC [Andromena]

Daily G&A expenses per vessel exclude the first time incentive award moved higher by approximately 15% over the previous year due to extra investor relations visits to the USA and because of the implementation of the Sarbanes-Oxley compliance now mostly successfully completed. Total finance costs for the year amount to $10.1 million, an 18% decrease from 2003, mainly due to a fall in average loans from $473 million in the previous year to $436 million in 2004 and slightly lower average interest rates.

Swap interest and evaluation charges increased by over $1 million but this was more than offset by the $2 million of extra capitalized interest arising from the large number of constructions in progress.

We have 9 interest rate swaps in place providing interest rate protection for 70% of our outstanding loans and these are now beginning to provide positive results as base interest rates move up. We intend to provide further coverage in the near future both on existing loans and new loans.

During 2004 we sold 3 vessels for $86 million in total contributing over $21 million to net income and releasing cash totaling $39 million. [indiscernible] was to partially finance the building contracts for the two super designed Aframax's ordered in the past 6-months, one of which we will take this June

Of the owned vessels only the Premiera underwent a dry-docking during the year although preliminary expenditure has been incurred during the 4th quarter on the [indiscernible] and Victory [indiscernible] for their dry dockings in early 2005. There were 9 vessels dry docked in 2003 at the cost of $15 million. Total expenditure has been less than $4 million in 2004, of which $1 million in quarter 4. The only other dry dockings expected in 2005 related to the Athens 2004 and the [Crosta] at the end of the year.

Total loan repayments in quarter 4 amounts to $11 million, plus a prepayment of $21 million from the sale of the [indiscernible] bringing the total loans outstanding at the end of the year to $365 million.

Our net debt to capitol ratio fell to 32% compared to 54% at the beginning of the year, or taking into account the value of our vessels as provided by independent brokerage our bank defined leverage fell to 27% compared to 50% at the beginning of the year.

The assessed value of our fleet today is almost $1 billion the value of our construction contracts another $1 billion, some $330 million in excess of contract prices. Using these values, we estimate our current net asset value to be approximately $60. That's about 50% in excess of our current share price. In January 2005 we took delivery of [indiscernible] a new product carrier, which started service from day one earning over $30,000 a day. The final delivery payment on the new vessel was $18.1 million and we received a related loan of $26.3 million and we have arranged a sale of one our older vessels, the Panos G a single [skip] Aframax , the delivery of which next month will provide a $5 million capitol gain and release another $6 million in cash after debt free payment and will have a positive impact on our average daily running costs.

Following the delivery of the [indiscernible] we have 14 vessels under construction at a total contract price of $741 million of which a further $205 million will be paid during 2005, $17 million of that during quarter 1. And this concludes my comments and now I would like to hand the call back to Nikolas.

[OPERATOR INSTRUCTIONS] Your first question comes from Jon Chappell of JP Morgan.

Good afternoon. You certainly did a good job getting your debt to cap ratio down in '04 so my question is regarding fleet expansion now that you the leverage to do more expansion than you already have planned, is LNG becoming a more increased focus for you guys as you look at new builds in the 2007-2008 or 2009 timeframe?

We have been lucky and we have been able to order 33 ships, all of which we ordered starting with the energy crisis when new building prices in the far East were very low, a fraction of what they are, so 33 new building vessel program has been at a very low cost, and I think we have averaged about a bit under $14 million from Aframax because we ordered [indiscernible], and close to $50 million or under on Suezmax, whereas Suezmax today is in excess of $80 million and Aframax is up $60 or $65 million, so we have a good starting base. The sector we still believe that makes sense to base it are specialized vessels, and that is what we ordered, because many of other colleagues are, perhaps at the same time, at lower cost to ice class ships. And of course, as you write, you say LNG’s. We believe it is going to be a very exciting business in the future. It will not happen from one day to the other. Many people will bleed, till I think this business becomes a mainstream business, but somewhere we believe the still that you can buy relatively inexpensively, if you can call $ 200 million inexpensive. With that, we can combine with the other, building markets have moved. However, if we have clients, and we do all the time, requiring a special ship like the Aframax we ordered back in August, we will still go out and look for those ships.

Have you gotten the contract yet for the one LNG that you do have on order?

We are being flirted by many suitors, I would say. We have a lot of offers for 20 year contracts, for 10 year contracts. Our view, right now, is that a 10 or 20 year contract is quite unexciting returns wise, and having a conservative structure was very low and tax position, it is something that we might take the time to do a more exciting 5 year contract to allow this market to mature, to allow more shipping interest to open, to allow more gas to be floating around, and then we will go for something longer term after the 5 years. But there is a lot of interest on a daily basis we are discussing towards that we could have done if we wanted to.

That’s fine, and the point that you brought up before about the contracts that you already placed for your group carriers, or product carriers, and the contracts are 50% higher than when you placed them, are you being approached by people to possibly sell those ships as well? Is that something you would consider?

We’ve been as a family business for many, many years, and we know that a capital gain is sitting as long as you have a good strategy, and you are not going out of business and you are not taking a share of ill-sellable clients, it is something that you always do in shipping. A capital gain and an operational gain in the way we look at business from the largest shipping nation in the world both have demand. So we are the only, perhaps, shipping company, publicly traded shipping company, we’re not trying to sell four of our ships to developing new ships in 04. We had the resell of one of our highly sized ships, we have 10 of them on order. We sold that ship to an Australian Navy for a capital gain. The Australian Navy is going to spend $60 million to make this vessel a bunkering station for the Navy, so it was not that we were keeping the ships in the competition’s hand. We also decided to sell our oldest vessel, the oldest new vessel. Our first rebuild, the Tulaze, which we purchased around $42.5 million back in 1997, and we sold for close to $47 million, after she made a significant profit, with exactly the same money from the ship. With the money from the ship we want to take a newly designed Aframax for the year of 07. So yes. And also, I think we sold also two of our older ships, the Liberty and the Panos G, so we are not shy. We believe that this is part of the business, I know that we were disappointed like you that you almost have the earnings of those ships there, and that to lower our estimates sometimes when we sell ships, but we are in this business for the long-term, and we want to make sure that the business will be profitable in the long-term.

Your next question comes from [Harvey DelStover] of [Doman, Rose & Company].

Thank you very much. For the first time, I guess we are starting to see the spreads in rates between single and double hulled ships widen. I don’t know if this is the time when you expected to start seeing this, but the question is, is there any change in you strategy relative to owning these vessels and when you might divest to the last single hulls? And also, in light of the 2010 year, the phase-out of these vessels, how do you see that phasing out? Is there any reason to expect them to start being phased out substantially before that or is it your firm’s expectation that it will all happen relative to the last minute?

Thank you. We have two single single ships left, the Tamira and the Bermina. They are two very good ships earning very good money today. But you are very correct as to the beginning of the year. We are at 8 through the 5th. We are seeing bigger differences between the single ships and the double ships. We are going to be selling those ships. Those ships have a use in the hull were we have been saving them. The ships that I mentioned, the Tamira, at two years old, the final ship we will be selling at close to $10 million next month, so further trading, yes we will be selling both of those ships within this year.

Okay. The other question I wanted to ask was relative to use of cash flow and dividends. You talked about NEV of Tsakos now being substantially higher than the current stock price. You have seen some of your competitors institute a high dividend type of policy, which has resulted in substantial premium evaluations in the marketplace. Obviously, your strategy is a little bit different because you have a significant amount of new builds coming, so it is more of a growth strategy. But have you guys entertained a higher dividend payout strategy, I guess, I’m sure, being a large owner, you’d be concerned about the share price and the relative discount that it suffers in the market place.

Yes, thank you very much. Yes, we are the largest share holders. The management is growing, always purchasing shares. We believe in the company, and we believe it might be, because of everything I’m allowed to say. It seems it might be undervalued, however we have learned to look at this from the meeting of long-term goals for the company, and we have increased significantly with dividends in the last two years, from $0.70 in 2002 to more than doubled in 2004. We are going to be doing this steadily, but growth is well important for us, because we are seeing a lot of changes in our industry, we are seeing a lot of new designs of ships required. We are seeing the energy business being very important. So I think we have a need of 5% as we speak today which I think is not bad, but we will always look at that. I don’t think that we will be using dividends as a way to bring the share price up, endangering the company’s future, and we also have a share buy-back program. Right now we believe that the best investment we can do is buying back our shares, and I think the Board has approved increased this buy back. We couldn’t do much before our annual results because of the inside results, but I think you will be seeing the company buying back stock. Chairman do you have some comments on that?

I have very little to add, Nikolas, I think you described it. In 2002, when ENP was listed on the New York Stock Exchange, one of the guidelines that was provided to investors was the dividend program, which stated that we expected to pay out between 25 and 50% of ordinary income in the form of dividend and we have found that that is a very useful procedure for us to follow. It gives us enough to reward our investors with cash dividends and enough to finance our organic growth. So, at least until the foreseeable future, that is the policy we will continue to pursue.

Our next question comes from Natasha Boydon of Canter Fitzgerald.

Hi, I just wanted to followup, follow on from Jonathan’s question. He talked about entering the LNG sector, and obviously you have the vessel coming on, given that dry bulk appears to be, you know, growing quite rapidly and being a pretty hot sector right now, have you had any thoughts in that direction.

Ah, yes, that is a very exciting. I am trying to convince our Chairman here that carrying coal is a type of energy. I have not been successful so far. I think, you know, we as you know, we and I mean the management, we want to have Tsakos Energy Navigation as concentrating on the energy side of the business in order to avoid any conflicts with other parts of our business. And I think we want all our investments into energy to be to TEN, and we would want to mix it up with other types of business because that would create conflicts. So, I think without, never say never is the saying, but I think we will maintain our focus on what we believe we are doing the best in, which is being an energy company. The group, and when the family is participating in dry freight and the container freight in a significant way, but I think that would create conflicts and we want TEN to focus on only what we can. However, saying that, if in the future there are possibilities and our shareholders are enthusiastic about this and (indiscernible) we will just have to begin, but I think currently we are focusing on the energy business.

OK, great. And then just a question on the expenditure side. I think I missed what Paul said. You said the total amount you were going to spending in ’05, you said $17 million in the first quarter and what was the total for ’05?

$205 million.

$205. Ok. And then just on maintenance cap ex for ’05 with dry docking, gentlemen, do you have a figure for that?

Yeah, sure. It is about, for this year it is very little, of course, because we only have 5 vessles, so it would be about between $8 to $10 million.

$8 to $10 million, and then in ’06 how many, do you have any more going on or a higher number.

In ’06 we are looking at a slightly higher number, hopefully pushing around at least $10 million also.

Our next question comes from John Kartsonis of Smith Barney.

Yes, how are you doing and congratulations on a nice year. You talked about the specialized binders, the ice class and the two Aframax’ you have on order. Can you elaborate a little bit on what are the advantages, especially on the two Aframax’ and where do you expect to see any, you know, additional profit either on higher day rates or lower operating costs from these vessels.

Yes, thank you very much. Well, with our Aframax, we cannot give all the secrets, but anyway I will, I will elaborate on the second (indiscernible). You know, these are ships that are especially designed to be able to carry, to be wide enough and shallow enough to carry very large quantities of oil in the Caribbean, much more than a Panamax would do, so it can fit in the ports where the Panamax’s do, because as you know the Caribbean market is a market for the Panamox vessels, and this is a vessel that can (indiscernible) the 100,000 tons and actually almost (indiscernible) everything reports that the Panamox can pull, so we believe that this will give us significant .. instead of carrying 60,000 tons, instead of carrying 60,000 tons we can carry up to 100,000 tons in that.

I see. And also on the (indiscernible), can you give us your range of the fixed rate, you know, what is it approximately and you said it is a 50/50 profit sharing.

Well, the (indiscernible) for the (indiscernible) again I think with an interesting, I mean we have a very long relationship with [petroblast] as a client and this is specifically required, and it surprisingly we only have a protection on our bottoms, on the bottom side of our rate, so we get close to $18,500 a day if the market collapses, which is way above the $14,000 of our break even. So, it will be accretive and then based on the monthly, based on a monthly brokers awards, we will be getting whatever the market is. The first month however (indiscernible) $36,000 a day.

Our next question comes from John Race of Du Prince, Race and Zolla.

Yes gentleman, this is both John Race and Greg Ramsby and we want to just start off by saying congratulations on a great quarter, a great year, and more specifically, we applaud your strategy in fixing your chartering, which in our opinion has greatly reduced the unpredictability in your revenue and earnings stream, which in my opinion, along with your NAV, has gone greatly unrecognized. So, first of all I just want to start by saying that. And, I just want to also, I want to, I wanted to make sure I got that right, your NAV is $60.00 based on your new builds?

That’s right.

OK, let me just ask you, if global oil demand exceeds 84 million barrels a day, what, what, which is what I think people are focusing on today, what will that mean for the, you know, the tanker supply and demand dynamics in your opinion?

Well, I think we will see most probably another 204, which is you know significant, a significantly strong year. I mean, we are seeing how tightly the market is balanced right now and when the market changes from one, from week to week, depending on the availability of tonnage. We had quite a slow start in places like the Mediterranean for the Aframax’ but we (indiscernible) to convict in January; however, we are seeing now this market almost doubling overnight, which means that, you know, it is in a very short period of (indiscernible), but you have supply and demand so well balanced. If we reach 84 or we exceed 84 barrels per day I think there we are going to have a significant, you know, a significant increase in the market. I mean by a little family every million dollars increased production you need six million deadwood tons of ships to service that.

So therein is the entire new supply for this year, if oil goes up a million barrels of demand this year, China has already forecast they go up 500,000, then you are looking at all of the excess supply, or that was once deemed excess supply, being soaked in immediately.

This is how we feel, yes.

OK, can you comment again on your stock buyback. Did you, I am confused, did you increase it, or was that the one you recently announced, or did you just increase it at this most recent meeting? I was confused on that.

Well quickly if I can comment on that. We had published the fact that the Board of Directors authorized an increased amount to be added to the previous authorized amount at an earlier date. We did not further increase it at the most recent Board meeting.

OK, and would you be buying stock at these levels?

We think it is very attractive.

Just, just one other question. You know, there has been a lot of, or it seems to be there is a lot more takeover activity, M&A activity in your space. If, if Tsakos was approached would you take that to the Board Nikolas, or would you share that with shareholders?

Well of course, I would be more, it is our obligation you know to get that to the Board and, as I said, we all want to enhance our terms where our major shareholders in this we have a very strong view of what the company should be valued and as I said, if there is something that does not change in the (indiscernible) not only themselves, but I think the whole sector is under valued. The whole industry are between six and seven times which I think is ridiculous which companies just like ourselves that we made profitable since inception. We have not had a down year in a very typical market. Some of our performance might have higher peaks but we also have down views. It’s a market of quality. So I believe that through the whole sector is penalized by accepting this ridiculously low fee issues. We might – if we cannot convince you shareholders in the immediate future we should allow shipping companies to give us a little more respect I think the management our company will be a sitting duck sooner than everybody else. So I think this is the apsolute (ph) we are ready to enhance our value. We will work hard. Shipping is a complicated business your out floating around states around the world 24 hours a day. We need to get a little bit more respect. I believe that all the companies out there are first class companies. We have proven this with our results, with our performance, with our Sarbanes Oxley act, and I don’t think we should be penalized the five or six times earnings. I think something has to happen where we can try to convince you that we should double digit with one (indisernable) by back the company from you.

So, do you have any sort of poison pill in place to prevent an unwanted takeover at these levels?

The biggest poison pill is we are significant holders of the company. Poison pill (indisernable) the original by laws that the company has of course has protection but not the protection to get people out. I’m interested in that. The protection to get the (indiscernible) where it should be.

[OPERATOR INSTRUCTIONS]

Again we would like to thank everybody for your support it’s been an exciting 2004. The management of the company wouldn’t be in the United States starting on the 14th of March trying to get our message across and thank you very much and hoping we will see you soon, and again congratulations all colleagues in of ours in the spirit of their doing a great job in keeping the shipping name closer too – in focus. Thank you very much.