Tsakos Energy Navigation Ltd (TEN) 2009 Q2 法說會逐字稿

Good morning. My name is Arnika and I will be your conference operator today. At this time I would like to welcome everyone to the Tsakos Energy Navigation Q2 earnings conference call. (Operator Instructions). Ms. Kowalcyk, you may begin your conference.

Good morning and thank you for joining us for Tsakos Energy Navigation's second-quarter 2009 earnings conference call. By now you should have received a copy of the earnings press release. If you have not, please contact Sarah Freeman of CJP Communications at 212-279-3115, extension 244. She will e-mail you a copy of the release.

Again this quarter TEN is providing a supplemental slide presentation with fleet employment and financial data, which can be accessed from the front page of TEN's website at www.TENN.GR. Please note that this is an informational presentation only and will not directly reflect the flow of management's comments on today's call.

As a reminder, this conference call is also being webcast. To access the webcast please refer to the press release for the web address directing you to the registration page.

At this time I would like to read the Safe Harbor statement. This conference call and the accompanying slide presentation could contain certain forward-looking statements within the meanings 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 like to turn the call over now to Mr. Nikolas Tsakos, President and CEO of Tsakos Energy Navigation.

Good morning, good afternoon to all of you attending our call today. We are here again to proudly announce our 63rd quarter of continuous profitability, even in today's challenging environment. So far in 2009 TEN has weathered the storm, as we say in the seafaring language, and has come out with positive results.

Our revenues show for the six months were $195 million, and with a net income a bit in excess of $43 million. This represents $1.06 for the first six months of our operation. I think what we are both internally focusing here is that the reduction that we have been able to receive in our operating expenses in the second quarter were -- we have showed the market -- the spot market was becoming seasonally very poor. And together with some strengthening of the dollar, but with our on-hands management we were able to reduce our expenses in order to cope with the challenging environment.

The second and third quarters are traditionally and seasonally weaker quarters. However, on the second and third quarter we are facing quite a very poor spot market with the spot levels that we have not seen for a very long time.

However, the encouraging part of this whole situation is that the major oil companies and the end-users are looking there to attractive long-term, anywhere between 3 to 8 years, quality vessels like ourselves. And we have partly taken advantage of this market environment for long-term fixers, following our strategy of targeting ships with a minimum and a profit-sharing rate above that, in a sense becoming partners with our clients.

There is a big appetite, which is encouraging. Something we did not see in the first quarter of this year. And I think what is very important for us is to know that today we've nine vessels on the spot market. And we could actually fix all those nine vessels on long-term employment with first (inaudible). We have taken the decision to (inaudible) to do this, and keep some of our ships on the spot market, hopefully for a better 2010.

I think this has been the environment that we are seeing. We have seen also values of assets -- very few sales and service transactions on the banker site. We have some values of vessels dropping from the historically highs of 2008. We as a Company, we have been perhaps really conservative. We have not [made] and delivered an order since 2004.

And I think we're starting to see that perhaps this is not the complete bottom, but it is again getting interesting to look at some newbuilding orders. And I think this has been the strength of which there has been the future in this like back in 1997 with the (inaudible) crisis. But when we started our first phase of newbuildings with about 20 vessels, our 2001 the aftermarket 9/11 and the recession that followed gave us our second newbuilding phase with the (inaudible) that we are taking on today, because of our [long] options that we have in those ships. And perhaps this could be the third stage of growth for the Company.

I think I will not take more of your time. I will ask our COO, Mr. Saroglou, to give us a more detailed operation. And, of course, I would want to introduce who is here today. It is our Chairman, Mr. Stavropoulos, who will give us his comments. Mr. Saroglou, who will get into the nitty-gritty of what the Company has performed in the last -- in the six months and what happened after that. Our CFO, Paul Durham, will give us the analysis of the figures. And we have here for questions -- to be asking those are our Deputy Chairman and the remaining team of TEN. So I will first ask our Chairman to give us his wise thoughts on how things are doing. Thank you.

Thank you very much and a good day to all. I don't know how wise my thoughts are. They basically are an echo of what Nicolas has shared with you. But let's look at the overall background that (inaudible).

We are here one year after the Lehman financial collapse and the ensuing economic meltdown. In the interim unemployment has soared with no signs of early relief. Last month's numbers, which just came out, as you know were even worse than expected.

Policymakers have driven interest rates to record lows. However, real estate prices continue to fall and market liquidity remains minimal. Retail sales remain weak and inventories continue to shrink. Those grassroots could be poison ivy.

Rising commodity prices, particularly crude oil, may be counterproductive. Overall sustained economic recovery may not develop until the second half of 2010.

Oil consumption led by Asian recovery may be flat in 2010. That would be good news after two years of contraction. Meanwhile, the tanker fleet will continue to expand despite scrapping, which could be exacerbated by reversal in tonnage now in forced storage.

There are few, if any, indicators that we will see near-term relief from extremely depressed charter markets. TEN is navigating its fourth depressed charter market since its inception in 1993. Such periods are never welcome nor pleasant. However, it is in such periods that the stress test corporate strategies. TEN's second quarter and first-half earnings suffered dramatic declines from like periods of 2008. However, they remain solidly in the black. In fact, they have (inaudible) the policies of emphasis on term employment and keeping the ball spinning, as Nikolas has indicated.

We are very proud of management's performance in these challenging times, marked by sustained profitability, strong cash balances, and a young and growing fleet. On this foundation we are confident the next upward cycle will prove very rewarding for TEN.

Niko, you, your management group and the entire Tsakos team have again earned our applause. Thank you very much.

(inaudible) George.

Thank you and thank you, Mr. Chairman, it is my pleasure to speak to all of you today and provide you with the details of another good and profitable quarter, the Company's 63rd consecutive profitable quarter since inception in 1993.

(inaudible) operated a fleet of 46 tankers during the second quarter. We continue to operate in a challenging environment for shipping due to the global economic crisis, although we see evidence of light at the end of the recession tunnel.

There is usually a time delay of 6 to 9 months between the recovery of the real economy and the recovery of freight and asset values in shipping. Fixing the global economy is not over yet. However, most people believe that we have seen the bottom, and we now go see through the much needed period of stabilization, which precedes any period of growth.

For 2010 both the International Monetary Fund and the international [tenancy] agency forecast growth again for the global economy and the global oil demand, ending the negative oil demand trend of 2008 and 2009. Looking at the highlight of the second quarter, we operated a fleet of 46 tankers at 97.8% capacity. That is 44 tankers at 97.4% in the prior year second quarter.

Thanks to the hands-on management and the close monitoring of the expense side of the business, we expect a 14% reduction in the average per ship vessel operating expense from $9,898 per vessel per day down to $8,514. Lower crew costs, stronger dollar against the euro that reduced repair and maintenance expense where the main contributors. We continue to preserve a strong cash position with over $300 million during the softer third quarter and a softer year.

Because of the (inaudible) vessels have a schedule of 2009, with initially only one vessel, and the softer market during the second quarter and the typical slow third quarter, we accelerated the special survey inventory of both tankers, which scheduled (inaudible) fell in 2010, creating a more balanced special service schedule for 2009 and 2010, when in 2010 rates are expected to be higher.

We continue to operate the corporate fleet to a combination of spot prices, CoAs, pools and (inaudible) charters with fixed rates and (inaudible) charters with profit sharing and (inaudible) arrangements. Please turn to slide 6 on the online presentation to see the current employment details.

We have nine tankers trading in the spot market, two tankers in CoA, three vessals in pooling arrangements, and 33 tankers in (inaudible) charters with fixed-rate, profit-sharing arraignments (inaudible).

We paid on April 30, 2009 a dividend of $0.35 per share for a total dividend payment for fiscal 2008 of $1.75 per share, which represents a 1.5% increase over the dividend paid for fiscal 2007 of $1.75. Continued our share repurchase program with automatic10b51 plan which was initiated in the beginning of 2008.

Recently we announced that the 2007-built suezmax tanker, Arctic, was placed on a three-year time charter to a major South American oil company with a fixed minimum daily rate and a 50/50 profit share to a maximum pre-agreed level.

In late July, the 2006-built aframax product tanker, Promitheas, entered an up to six months time charter at a fixed rate to a major international oil trading company

On July 17, TEN took delivery of the Ise Princess, the fifth DNA-design aframax tanker in a series of eight from Sumitomo Heavy Industries in Japan. Upon delivery, the vessel entered an up to four month redelivery time charter to the Mid-Atlantic basin.

In late July 2009, TEN signed contracts for the construction of two suezmax tankers at the Sungdong shipyard in South Korea for delivery in the third quarter of 2011 for a price at 30% below the prices of 2008.

In deadweight terms, TEN operated during the quarter, and still operates today, 4.9 million deadweight tons with an average age of 6.6 years. That is 9.5 years for the average fleet of the world tanker fleet.

Please turn to slide three and four in the online presentation for the look of the (inaudible) fleet details. (inaudible) we see lately more transaction, but still this number is too small and can hardly make the overall market (inaudible). The (inaudible) community continues to be (inaudible) with the (inaudible) and fleet finance capacity continues to be restricted and available to few, big and bigger clients that banks select.

(inaudible) values are down, but not enough for those market participants with capacity to grow in today's environment to make ends meet. Sellers of potentially distressed assets, CPS or private owners (inaudible) are not stressed enough yet.

As we said, we took delivery in July and rechartered the Ise Princess, which is the fifth (inaudible) DNA tanker in a series of eight. A [series] of quarters we initiated back in 2004. We announced today two more suezmax building tankers for delivery during the third quarter of 2011. We believe that newbuilding prices are close to the bottom. An improved global macro picture from 2010 in combination with higher commodity prices are expected to put a floor in newbuilding tanker prices.

Following this order, our newbuilding order book stands at five tankers. The three DNA-Aframax tankers will be delivered in September of 2009, in January of 2010, and the last one in May of 2010.

Slide eight gives you details of our newbuilding program including the (inaudible). Please note that we have already committed final arrangements for the 2009 deliveries, and [medical] problems we have currently, which we are evaluating for the 2010 years.

We have built one-quarter of the fleet with competitive price orders and options before the newbuilding market (inaudible). As I mentioned (inaudible) our strategy to charter our vessels on bank charter with the profit sharing arrangement is paying dividends. We have been looking at the benefits of this in the past, but also more relevantly 2009, and we have seen the direct benefits of this to be the bottom line of the Company.

On slide seven you can see the (inaudible) of June 30, 2009 we have fixed 66% of the remaining available 2009 fleet operating days, and 44 of 2010 available fleet operating days.

With currently 33 vessels with fixed time charters -- time charter with profit sharing, CoAs with (inaudible) and vessels in pooling arrangements, out of an operating fleet of 47 tankers, and assuming only the minimum rate, TEN has secured 509 months of forward employment, or 1.3 years per vessel, and $360 million in minimum gross revenues until the end of their respective charters.

The Company's charters are reliable, first-class, (inaudible). For a list of their names, please turn to page number five on the online presentation.

The global economy is stabilizing and this is helped by unprecedented macroeconomic and financial (inaudible) support. The world is coming out of a recession unprecedented in the post World War II era. The recession, however, is not over yet and the recovery will not have the same pace for each economy around the world.

In (inaudible) for both 2009 and 2010. 2009 the global economy will contract by 1.4%, while in 2010 you'll see expansion of 2.5%, which is 0.6% higher than the estimate of IMS in April of 2009.

Emerging and developing economies in Asia and primarily China and India will lead the way. On the same page, the International Energy Agency expects global oil demand in 2003 to rebound by 1.7% or 1.4 million barrels, weighted 5.2 million barrels, led again by emerging and developing economies of the world.

Improvement in the global economic confidence is expected in gains in stock markets around the world, as well as in commodity prices. Oil trading again over $70, and this is good both -- this will be both good and bad at the same time.

But in the sense of an expensive oil price environment it could threaten the global economic recovery, and/or make this recovery very sluggish. And definitely create more imbalances between developed and developing economies that might not be easy for them to absorb (inaudible).

But within the sense that all these levels -- at these levels the world will start investing again in exploration and production projects that guarantee additional future oil production capacity.

Another positive for the tanker market is that the fleet levels (inaudible) countries are producing more oil. OPEC's (inaudible) compliance levels at around 31% from 83% in March, and hence demand for tankers will increase.

Vessel conversion projects like (inaudible) FSOs at this point price levels are coming back to life. And that is another (inaudible) viable for the supply of tankers, in addition to the 2010 results decline.

Despite a softer spot market as we go through the seasonally weak third quarter, we'll continue to see big charters, all the majors, and government companies who have an appetite to fix expenses forward. In TEN we recently announced a three-year time charter for our suezmax tanker, Arctic, and shorter-term time charters aframaxes, Asahi Princess qne (inaudible).

We have a good time charter portfolio, which we have the intention to increase charters going forward. If we wanted, we could charter today all our vessels going forward.

On the corporate front the Company continues its impressive growth and continues to profitable for the 63rd consecutive quarter.

On the dividend distribution we have increased the dividend distribution. And you can see the dividend is (inaudible) on slide 11. And this -- we have done this at a period of time when (inaudible) and other public companies in different business sectors elect to cancel or flat their dividend distribution. The Company has raised its dividend distribution every year since the cash dividend payout was introduced in 2002. Since inception we have paid back approximately $285 million in the form of dividends, and repurchased stock worth approximately $82.5 million since 2005.

In the meantime all of us in TEN will continue focusing on the day-to-day operation of the fleet and keeping vessels employed at full utilization. In managing cost basis, conserving cost, and navigating the Company safely through this challenging times.

We are confident in the Company's current financial powers, strategy, personnel and its sensibility to grow in difficult times, as the Company's track record indicates, since 1993. Without further ado, I would like to turn the call over to Paul Durham for a review of the financials.

Thank you, George, and thank you all for joining us today. A summary of selected financial data is included in the press release. And now I will add a few words on the more significant issues relating to our results and financial statement.

TEN achieved net income rate of (inaudible) million in Q2 2009, compared to $69.2 million in Q2 in 2008. There were no vessel sales in either quarter twos. For the six month period net income was $43.2 million compared to last year's half year result, $434.3 million, which included a capital gain of (inaudible) million.

Total revenue for the quarter was $114 million compared to $171 million in Q2 2008. The decrease then mainly due to the significant weakening of the crew transportation last (inaudible) quarter compared to the [regular' quarter of 2008.

The market for product carriers has been softer over the past year. The power vessels were mostly on time charter. And at least achieved their minimum hire, which was considerably ahead of market rate. The average daily PTE per vessel for Q2 2009 is approximately $22,900, compared to $39,500 in the previous year's quarter. For the six months, $25,200 was achieved compared to $35,400 last year.

Total operating expenses amounted to $34.9 million, down from $37 million in last year's quarter two. Despite the increase in the fleet by two new vessels and the purchase of two chartered-in suezmaxes, the daily average operating costs per vessel fell 14%, partly as a result of our technical managers' efforts to reduce costs wherever possible without jeopardizing operational and safety standards.

Also, drydock work was less than in Q2 2008, and therefore there were less associated repair costs. The dollar was 13% stronger against the euro than in quarter two, 2008. Does giving some further relief to crew costs. There were, however, increases in P&I insurance costs since last year, much relating to prior year back pool.

Depreciation in the second quarter was $23.3 million, up from $21 million in Q2 2008, due to the new vessels and the purchase of the chartered-in vessels.

G&A expenses were $900,000 in the second quarter of 2009, compared to $1.1 million, as we sought to to reduce expenditure on advertising and various office expenses.

Special management fees were some $2 million to $3.3 million, in line with the extra vessel and due to the 3% fee increase starting in January.

Amortization of stock plans was less than $200,000 compared to $1.7 million in Q2 2008, due to the vesting of half the grants at the previous year-end, and the lower share price. Taking all these overhead items together, overhead costs per ship per day fell 29% to $1031 in Q2 2009 to $100,460 in Q2 2008.

Total finance costs for the quarter amounted to $6 million compared to $10.9 million in quarter two 2008. Broken down, direct loan interest was $10.3 million compared to $14.6 million, despite average outstanding debt increasing by $84 million. Typical loan interest rates fell nearly 1.5%,

Interest actually paid on swaps, however, was $3 million compared to zero last year. This was offset a positive change in long hedging swap valuations up $4 million compared to $2.2 million last year.

There was another positive movement in the bunker hedges we initiated this year, amounting to $3 million, bringing the total gain for the half-year to $3.9 million. While we believe that we shall say further gains on these instruments over their life, it is possible that some of these valuation gains may be reversed if oil prices were to fall in the future.

Our outstanding loans fell by a net [$16] million in Q2 to $1.476 billion. The net debt to capital ratio was 55.4%, and the leverage based on estimated vessel value was approximately 51%.

We took delivery of the Aframax Ise Princess in July, paying $49 million, of which $39 million was from new debt. That leaves three Aframaxes under construction, and also now the two suezmaxes, on which we have just paid the initial installment totaling (inaudible) million.

As you will see on the slide, total commitment to date on newbuildings are $275 million, of which $55 million will be paid in the remainder of 2009, mostly next month on the delivery of the aframax Asahi Princess. Up to $40 million of which will be covered by newly arranged debts.

$134 million will be paid in 2010, mostly on the delivery of the final two Aframaxes, and $86 million in 2011 as final installment for the delivery of the two suezmaxes. We expect that debt suitably arranged will finance a large part of these final payments.

That concludes my remarks. I will now hand the call back to Nikolas.

I think we would be happy to answer any of your questions, or first we would like to open the floor.

(Operator Instructions). Jon Chappell, JPMorgan.

So on the newbuilds that you announced this morning, I am just curious, did the yard come to you with any -- are those slots that they were marketing brand-new slots, or where were those potentially slots that were used for someone else to order, who maybe canceled their slot, and that is why you got it at such better pricing point than maybe what the last market rates have been?

I think the second -- (inaudible) the second. There have been some -- as you now, deferments, cancellations, etc. etc. Our strategy has always been to -- we might not get the cheapest newbuildings ever all the time, but we try to be on the down curve, and that is why we paid out to the market for five years. And it compares with many of our peers who I think are down in the market in the last five years.

So have other shipyards come to you with potential slots as well?

We are seeing more and more of for this -- I would call them deferments from -- yes.

I thought from George's remarks that it looks like you believe the newbuild prices may have been bottoming at this point. Any commentary on secondhand prices? I know that most of TEN's historical fleet growth has been through orders that you have placed yourselves so you can have them to your own specifications. But if there is distressed assets in the secondhand market, are you seeing them yet? And do you think that asset prices are near bothering bottoming in that market?

I think regarding to our speciality, which is the newbuilding, as I said, we never expect to see always the bottom, but a (inaudible) drop in 10 months for vessels that are very welcome by charters, and vessels that already charters are giving us 10 to 4 years charter for those ships at very attractive rates. It is something that (inaudible) going to put all the companies starting one other. But it is something that is interesting for us.

As far as secondhand sales, this is something we have not really focused, as you know out of 47 ships there are only three ships which have not been built by us. And that was quite sometime ago when we bought those ships. But we are -- they're not real deals to be done to give some market values.

That's fair. A couple of questions for Paul, just on the modeling side. George also made mention to smoothing out the dry docking scheduled from '09 and '10. Do you have the vessels, or at least the number off hire days expected for the back half of this year and then even for 2010?

For the rest of this year we have included (inaudible) is in now, or it's doing there. Promitheas has finished recently in quarter three. Ajax is complete. Afrodite is going in. (multiple speakers). End of the month is going in.

And for quarter four we have lined up (multiple speakers). We have the Artemis, I beg your pardon in quarter three. And for quarter four, Apollo, Didimon and Delphi. (inaudible) have the technical people, they are nodding their heads. They all agree with that.

Very roughly on a broad basis we should assume 20 days in yard, and then depending where the vessel is, there might be another -- more days of voyage related days lost.

And then finally. Go ahead.

I said, Jon, we will get you another measure we are taking in this soft environment of the spot market. And we had -- as you remember, when we talked to you six months ago, we had one vessel scheduled for dry docking instead of the rate this year, which (inaudible) and 10 vessels for 2010.

And what we decided to do is take preemptive action, and we are going to be doing six vessels this year, and bringing forward some of the (inaudible). We want to do 10. In order to avoid having a ship lose income, and hopefully they are a much better market environment (inaudible) which is next year. So it is balancing, and next year will be a much easier year for (inaudible) here, with only four or five ships for surveys.

We have moved things around very quickly in order to take advantage of the weak spot market.

And those vessels for next year are the Silia T in quarter two. The [Hesnes] in quarter two. The Victory in quarter two. It is going to be a rough quarter, quarter two next year. Eurochampion, quarter two. Euronike in quarter three. And Ariadne in quarter three.

Great, very helpful. I will turn it over now. Thanks guys.

Natasha Boyden, Cantor Fitzgerald.

Wanted to see -- I am trying to get your thoughts about how you could go about balancing share purchases at this point versus deleveraging in this environment? Would you -- are you comfortable with your level of leverage or do you see ramping up your share repurchase program, or would you prefer to preserve capital here?

I think George mentioned that we have purchased our shares with an average close to $17 so far this year. And we have an automatic system that absolutely buys shares when they drop under that level, which we find it very, very (inaudible).

However, cash growth and preservation is very important, because of the opportunities that we hope, and we are seeing at that we look here. So I think if we have to choose, I think it would be cash preservation, rather than share buyback as we speak now.

Great. Just more of a kind of couple of macro questions. What are you seeing right now in terms of floating storage out there? And what are your expectations about how long that phenomenon might last?

Well, I think if you look, we are still seeing the price -- the (inaudible) last time I said was 71. And we are seeing the contango going forward on the -- (inaudible) of about an additional $8 for August next year. Which seems at least to be perhaps less, but there is a contango. And there are about 110 (inaudible) vessels on floating storage. On the good side, about 50 on the (inaudible). And since the last time we spoke, we made the presentation, we have seen almost eight VLCCs now being on (inaudible) storage, which is I think the largest we have ever seen since (inaudible) gas, oil and (inaudible) storage.

I think this is -- there is -- it has not changed. It has perhaps increased a little bit, but we still have a significant amount of ships in storage, plus we have vessels going for FPSOs and other projects.

Great. And then just a last question in terms of modeling. Paul, maybe you could address this. Interest expense for the quarter, obviously significantly lower than it was in the first. Can you tell us what you expect it to be going forward?

Yes. Let's take quarter three. If you assume we have about $1.5 billion debt, we expect the interest rates on that debt to be about 2.5%, purely on the debt.

You've got to add to that, however, the interest that we pay on our swaps, Because if you remember, they are the whole point about swaps is to keep our overall debt at a kind of fixed rate of interest.

We are going to be quite thick in quarter three. We will get about a hit of about $6 million to pay in quarter three. So let's assume we are going to pay $9 million or $10 million on the debt and $6 million on the swaps, we are looking for a guaranteed $15 million or $16 million interest on -- in quarter three.

The wildcard of course is the spot valuations. We don't know which way they're going to go. We have had a good run with positive movements. At today's level it looks fairly neutral. We might not just get a positive swing, but we've still got another maybe two months to go, so who knows what will happen.

On the bunker hedging, which we treat as a finance cost, because of its more speculative nature, again we are expecting some sort of movement. But again, it relates to how oil prices go. There has been some speculation that oil prices might take a dip before they start taking off again, we just hope that dip isn't around the end of quarter three.

So as far as swaps are concerned, it is very difficult to say at these early stages of the quarter.

But then (inaudible) I got to (inaudible). Technically I think our decision here with the board has been to -- when the [bottom] on the board was $43 to cover some of the actual banking costs. And then I think higher we did another 10%. So we will have to (inaudible) speculation is treated accounting as speculation, but perhaps it is very obvious that part of our day-to-day business. And we have actually taken actual positions of tankers being delivered to us, (inaudible). And retaining banks perhaps a bit too conservatively we have done a straight (inaudible).

So some part of the Company is being -- trying to keep things very tightly and very simple to understand, so there is no speculation in what we have done there. It is just part of day-to-day business. I don't know, Chairman, if you want to mention anything on that.

No, I think it is totally consistent with having a financial policy that is geared to predictability.

Daniel Burke, Clarkson Johnson Rice.

Maybe a question for you. You have talked very positively about the increase for long-term charters. Could you differentiate, are you seeing any difference in the appetite for long-term charters looking at the crude side of the fleet versus your Handi and Panamax clean tankers?

I think as we speak today the interest is more -- it is a very good question, because we didn't touch on that -- it is more on suezmaxes and aframaxes and partly on the [VMPP]. But I would say today we see appetite on the flip side for suezmaxes and Aframaxes, which is a bigger appetite.

There is skepticism, I would say, not on the clean side about products and miles. About (inaudible) and the miles. But the way our fleet is balanced, we tend to focus a bit more on the longer side as we speak. And that his why we mentioned. Yes, there is a more of a weight on the larger ships.

Thanks. Paul, maybe for you, I don't know if you have this available, but do you have the actual profit-sharing amount that was booked in Q2 on -- I think it was the Vs, as well as a couple of the Panamaxes?

Well, let's put it another way. Is that the average for quarter two that we achieved for the two VS if you take the profit share and just to spread it within quarter two, I think about $39,000 each. That was their earning capacity.

On the two Panamaxes their earnings were for quarter two $26,000 each. And that is -- in both cases, the VLs and the Panamax' because of the way the profit shares in spread within quarter two.

Okay, great. I can work through the numbers from there. Thanks very much. Thank you.

Stephen Williams, Simmons.

Just one more question on the newbuild orders. Can I take anything from the timing of those deliveries? Then do you see the second half of 2011 as a more attractive time to expand the fleet, or did you just see an opportunity to buy these offsets at attractive prices and they just happened to be delivered at that date?

We all believe that 2010 will be a better year than 2009. How much better we do not know, because we have the exciting question mark, what will happen if 16% or 17% of the fleet will do a [double ships]. Hopefully by the end of 2011, beginning of 2012, the dust will have settled and we will -- most of the single ships, or all of them, will be out of the market. And of course at the same time the appetite of (inaudible) as we are approaching to is for that period.

Is there any concern that given that you are seeing the opportunity toward attractively priced assets for delivery in 2011, do you have any concern that there is going to be another rush of ordering for delivery in that kind of period?

I think the number of vessels that were scheduled to be delivered in 2011, 2012, our understanding is that for sure the order book will not increase. I think through companies like ours that are well-funded and always look at opportunities, it might take (inaudible) has we come down.

So we don't expect to see more new business than the very largest number of new buildings that we have seen placed in '08. So this is actually -- we will see less newbuildings. And some of them, there are companies that can finance vessels like we can, are going to take advantage. But as you understand fixed finance really for companies that are not of our peer group is becoming harder and harder and more expensive.

That's helpful. Thank you.

Gregory Lewis, Credit Suisse.

Good afternoon. I just wanted to touch on the last caller's question regarding the single hull vessels. Given the fact that some single hull vessels have already received waivers to trade beyond 2010, at this point how much of the single hull fleet do you actually expect to be removed from the fleet over the next 18 months? Thank you for your time.

I think if we look at the fleet of -- that represents about 17% of the fleet, the ideal scenario would have been all of those 17% can be removed by January 1, 2011. However, I think the realistic scenario is if we see I would say 5% to 10% I think it would be very positive for the market, and another similar amount for the next couple of years.

At this time there are no further questions. This does conclude the Q&A session for today.

Well, again, Mr. Chairman, would you like to --?

Well, we certainly want to thank you for your interest in our Company, and your (inaudible). And we will continue to expect our good management to perform outstandingly.

Gentlemen, thank you very much. This year the management have decided not to take holidays. Because last year we went on holidays and then the market collapsed in September. So this year we will stay here, so if any of you pass (inaudible) give us a call. And have a great summer. Thank you very much.

This concludes today's conference call. You may now disconnect.