Tsakos Energy Navigation Ltd (TEN) 2010 Q4 法說會逐字稿

Thank you for standing by, ladies and gentlemen, and welcome to the Tsakos Energy Navigation Limited conference call on the fourth-quarter and full-year 2010 financial results. At this time all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session (Operator Instructions).

I must advise you that this conference is being recorded today, Monday, March 14, 2011. We now pass the floor to Mr. Nicolas Bornozis, President of Capital Link, Investor Relations Advisor for Tsakos Energy Navigation Limited. Please go ahead sir.

Thank you very much and good morning to all of our participants. This is Nicolas Bornozis of Capital Link, Investor Relations Advisor to Tsakos Energy Navigation Limited.

The Company released financial results for the fourth quarter and full year period ended December 31, 2010. The press release has been distributed publicly and you should have received a copy of it by now. Should you not have a copy please call us at 212-661-7566 or e-mail us at TEN@CapitalLink.com, and we will be happy to send it to you.

Today in addition to the conference call there is also a live audio and slides webcast which can be accessed through the Company's website on the front page at www.tenn.gr. The conference call will follow the presentation slides, so we urge you to access the presentation and webcast.

Please note that the slides and webcast will also be available [on an] archive after the conference call. The slides of the webcast are user controlled, so by clicking on the proper button you can move to the next or to the previous slide on your own.

At this time, I would like to draw your attention to the Safe Harbor statement. This conference call and slide presentation of the webcast contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private 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 disclosed in TEN's filings with the Securities and Exchange Commission.

Ladies and gentlemen we have with us today Mr. John Stavropoulos, Chairman of Tsakos Energy Navigation; Mr. Nikolas Tsakos, President and CEO; Mr. Paul Durham, Chief Financial Officer; and Mr. George Saroglou, Chief Operating Officer. At this point I would like to turn the call over to Mr. John Stavropoulos, the Chairman of Tsakos Energy Navigation.

Mr. John Stavropoulos, please go ahead sir.

Thank you very much and good day to everyone. Some of you are on daylight savings time while others are not. We're in the latter category.

On a very sad note, our heartfelt sympathy and prayers are with our friends in Japan. Their loss of family and friends in one of the worst natural disasters known to mankind is heart wrenching. The vivid pictures on TV are unbelievable.

We have a very special attachment to Japan through many personal friends as well as business relationships. Of particular note the Japanese have built 20 superior quality vessels for TEN.

Closer to home, I must take the opportunity to publicly commend Nikolas and his management team for navigating TEN through very rough seas in 2010. The record of 18 consecutive years of profitability speaks volumes. I need say no more.

Nikolas, I would like to turn it over to you.

Thank you very much and good morning to all of you. We're very happy to have you on our 18th consecutive profitable year.

As the Chairman said, 2010 was a very difficult year. It seems 2011 is going to also be a very difficult year for colleagues and friends in Japan. And I think our thoughts are all with them for what they're going through in this very difficult moment.

All of us as a Company, we have actually spent a lot of time and built relationships with clients and shipyards in that part of the world and we feel very close to them.

2010 was of course was a very difficult year, both on the personal and business front. And thanks to a lot of help from our friends, we were able to get by and we want to thank them for their support in all fronts.

In the rough seas, in the bleak environment of 2010, our Company successfully concluded its 18th profitable year, accumulated income of $1 billion and paid out $333 million, including today's dividend and dividends in the last eight years.

Meanwhile we have worked very hard during this difficult year on housekeeping issues that will enable us to take advantage of the opportunities that will come in the future. Always after the storm, there is the calm and we are (inaudible) preparing for this calm.

I think very important things that we did in housekeeping (inaudible) not only was the Tsakos Columbia joint venture which was established in July, another pioneering concept with immediate financial benefits. Our low operating OpEx, and that is what Paul Durham is going to talk about, is the proof of it. We always enjoy very competitive operating expenses but [they were used] I think by 17% (inaudible) on the last quarter and 12% in the last six months.

At the same time in 2010 we [won] the largest contracts in the history of our Company so far by signing two very lucrative 15-year contracts to Petrobras for a very new, exciting (inaudible) business the (inaudible) tankers.

We extended our profitable business and strategic alliances around the world and that has kept our utilization in excess of 97% in a very poor freight market. I think this is very commendable, also operationally (inaudible) business. This has enabled us to continue our [un-stopped] dividend policy with almost $9 in dividend [saved] (inaudible) we have paid as much dividend as what our share price is here today in the last eight years, which comes out to $333 million in dollar terms.

In this difficult year, again we have kept active as we've been doing for the last 18 years. In the [sales and purchase] markets grew (inaudible) transactions and (inaudible) [for] $280 million of capital gains in 28 countries.

It seems, however, that the one place where we have [failed so far] is to convince the equity markets about the value of our (inaudible) and the real value of our Company. Thank God we have convinced the shipping market about the value of our Company and our ships.

The actual sale profits from our recent sales activity -- I mean the actual value that shipping buyers have paid for our vessels or the market value of our ships, or what has gone in the bank, has been US$230 million. This is the equivalent of the [paper] value of the ships according to the non-shipping buyers of about $130 million. I would say a huge difference [where] the $100 million [here or there].

We believe that with our continuous (inaudible) sales and purchase transactions [with continuous record] that we have, our highly efficient operations we will be able at some stage, hopefully sooner rather than later for the benefit of all of us, [at also] the largest shareholders to bridge (inaudible) this gap and convince the Street of the real value of a Company which has been profitable since inception.

We're talking about operations. I will let Mr. Saroglou, the COO, go down in more detail performance of what happened in the last 12 months and the future (inaudible) [developments]. George?

Thank you, Nikolas. It is my pleasure to speak with all of you today and provide you with the details of our operations for another quarter and another solid year. For those of you who are connected to the Internet and our website, there is an online slide presentation [for some of you to] follow during this call. Please go to slide number three on the online presentation.

18 years of continuous profitable operations and growth. The annual profitability record continues. Every year since we've had the Company's inception back in 1993 and regardless of the state of the economy or the state of the shipping market, we've remained profitable thanks to the Company's (inaudible) [employment] strategy.

Telling a little bit about the market, in the fourth quarter of 2010 spot tanker rates were not as strong as anticipated, although we had a strong finish in December especially for those (inaudible) involved in the (inaudible) rates. The spot market is gradually moving higher after -- moved higher after the Chinese New Year holidays, thanks to the cold spell in Europe and the US and the geopolitical unrest in the Arab world.

The recent tragic earthquake and tsunami in Japan will take some time before we see the real effects on the time to the market. It is certain, however, that gradually Japan will replace a large chunk of its damaged nuclear powered capacity (inaudible) with electricity generated by burning oil. This is going to be good for fuel oil imports, diesel, also natural gas, coal and of course crude oil.

The global economy continues to grow with global GDP up 5% in 2010. [We see constantly] the number is being revised and for 2011 the latest numbers that we have is 4.4% global GDP growth. [The latest story about the spike] in the growth and the growth prospects between advanced economies and those economies that are currently in the development stage. The [engine] growth continues to be developing Asia, with China and India leading the way. But we cannot ignore the fact that mature economies with few exceptions and despite the recent [debt crisis] in Europe are back on the path [toward] recovery.

Oil demand also grew in 2010 at 3.4% year-over-year -- 87.7 million barrels per day. This is 2.7 million barrels up from the 2009 levels, breaking the previous demand record of 86.5 million that we had back in 2007. The prospects for 2011 is at 89.1 million barrels up 1.4 million barrels from the 2010 demand levels.

This is a good number for tanker demands, especially after considering the International Energy Agency's upward demand revision for both 2010 and 2011 are based on stronger data from developed economies, the (inaudible) countries that witnessed an oil demand collapse in 2009.

We still have, however, downside risk from fears that world economic recovery could stall from inflationary worries (inaudible) countries [especially] China. Oil prices are up perhaps too high when considering the fundamentals and having a [Euro zone] which continues to shake under the burden of sovereign debt.

What happens around the world today, whether it is unrest and regime upheavals in the Arab world, or the natural disaster in Japan, could however have a positive longer-term impact for our industry. The rebuilding of Japan would require an increase in the country's importing crude oil, oil products and LNG.

According to the International Energy Agency, if the country were to replace its missing nuclear capacity for generating electricity with oil alone, it would have to import a further 375,000 barrels per day on top of expected purchases that this year are expected to hover above 4.250 million barrels per day. Over the longer-term period, this crisis will [not] probably make a lot of people rethink about the use of nuclear power in generating energy and could make LNG the fuel of choice especially in Japan, who is a very heavy user of LNG.

As we speak, (inaudible) has a pro forma fleet of 52 tankers -- 48 in operation and four Suezmax tankers under construction. [But have used] two of them to enter the fleet in the second and third quarter of 2011. And we have two remaining vessels, (inaudible) tankers that were expected to be taking delivery in late 2012.

The fleet [affords] a double hull -- 100% double hull versus 91% for the world tanker fleet and has an average age of 6.8 years, vessels; 8.5 for the world tanker fleet. During the fourth quarter we operated a fleet of 46.1 vessels versus 46.6 in the prior-year quarter.

In 2010 we [sold] (inaudible) [five] vessels registering a capital gain of $19.7 million. This transaction has [released] (inaudible). We continue to evaluate offers for vessels in our fleet and we expect to report more transactions in the near future.

Fleet utilization for the quarter, thanks to our employment strategy, was 97.5% in comparison to 98.8% in last year. For the year, fleet utilization was at 97.6% versus 97.7%. Some effects that we consider to be (technical difficulty) [for 2010] (inaudible) since the (inaudible) listing in 2002, the accumulated net income exceeds $1 billion.

Since 2003 we have grown the fleet, sold the older tankers, maintained the modernity and the young age of the fleet, and at the same time managed to register over close to $280 million (inaudible) in capital gains from the sale and purchase transactions.

Since the initial listing and 2002, we paid $333 million in the form of cash dividends, including the dividend announcement of this morning. We also raised last year it's total of $105 million of equity, which solidified the Company's cash reserves. [The profit] of this equity offering will be used primarily to expand our fleet.

As Mr. Tsakos said, TEN entered a new sector with exciting growth prospects, the (inaudible) tankers, by signing a 15-year [paying charter] deal with a national South American (inaudible) for two DP2 Suezmax tankers. This is the Company's biggest deal ever, from which we expect to generate at least $520 million of revenue over the life of this (inaudible).

To focus (inaudible) very much on the Company's clients and we have extended the vessels that were due to be renewed, like for example the (inaudible) to two more years, and the (inaudible) continuation of the current tank charters that expired in April and June respectively, and feel very confident that we will continue rechartering vessels for deployment [is due] during the year.

Let's move into slide number 4, some financial highlights. [While] we give you more details later on, if we look at (inaudible) the 12 months (inaudible) revenues of $408 million, net income of $19.8 million. The average TCE per vessel almost $20,000 and the OpEx per vessel a 12% reduction from the 2009 level at $7,647.

For the quarter, Voyage revenues of $95 million; net income a loss of $2.6 million which includes the impairment for one vessel of $3.1 million; time charter per vessel $18,287; and OpEx $7,284, a 17% reduction from the Q4 levels thanks to the effects and the synergies and the additional [bank] power we have from the newly established Tsakos Columbia Shipmanagement Schoeller.

Let's move to slide number five. This is the fleet as it stands right now. We have a modern and very versatile fleet, with the fleet [equaling] between crude and [product] tankers. We have 25 fruit carriers from VLCCs down to Aframax size, and 26 product tankers from Aframax size down to Handysize.

Except for the two VLCCs and (inaudible) the majority of the fleet is built in South Korean and Japanese shipyards to very high specification standards. And 21 of the 50 vessels have -- [32] vessels have ice-class (inaudible) which makes them one of the ice-class (inaudible) fleets in the world today.

Let's move to slide number six. We continue the balance employment strategy of the (inaudible) fleet to a mix of four charters, compact (inaudible), pools and (inaudible) charters with fixed rates, and period charges with profit sharing arrangements. We currently have 10 tankers trading in the spot market, two tankers in contract with (inaudible), six vessels in pooling arrangements and (inaudible) tankers and period charters with fixed rates and profit sharing arrangements.

The Company (inaudible) policy with (inaudible) time charter profit sharing has been the main reason for the Company's continuous profitability over the last 18 years.

The next slide, slide number seven, (inaudible) dollar value to the current fleet employment for hire. As of today we have 66% of the remaining available dates for 2011 and 37% for the 2012 available fleet operating dates.

Assuming only the minimum rates for the (inaudible) tankers in the 48-vessel operating fleet, 10 have secured 418 months of forward employment of 1.2 years per vessel, and $190 million in minimum gross revenues. Let's move to slide number eight.

This slide illustrates the fact that our sale and purchase activity is an integral part of our operations, as we have demonstrated with a series of transactions over the years. Since 2002, we have generated capital gains from approximately $280 million, which includes the sale of Opal Queen, a transaction that is going to be recorded in the second quarter 2011.

The Company reinvested these capital gains in the renewal of the fleet by ordering the majority of [the Cuban B] tankers before prices started to rise. This way we have managed to grow the size of the fleet and we have maintained our fleet [modelics]. Approximately 26% of our net income that we have generated, this $1 billion figure we have indicated and have generated since the initial listing, has come from capital gains.

Moving onto the dividend policy, which is slide number nine. This slide shows our dividend distribution since we listed the company with the New York Stock Exchange. We have paid in total $8.70 in [capped dividends].

On June 4, the BOD announced -- June 4, 2010, the Board of Directors announced an enhancement in the Company's dividend policy going from semiannual to quarterly. The first quarterly dividend of $0.15 was paid on July 16; the second on October 26; the third on February 3, 2011. Today, we announced another distribution of $0.15 to be paid on April 28 to shareholders of record of April [21].

This concludes the operational part of the presentation. Paul will walk you through the financial highlights of the fourth quarter and the year. Paul?

Thank you, George. I thank you all for joining us today. A summary of collected financial data is included in the press release, and now I will add a few words about Q4 of 2010.

We had a challenging year in 2010. Our original optimistic expectations for the latter part of 2010 evaporated from this year on. The [December cycle] we desperately needed was all too brief. Nevertheless, we achieved a final profit of nearly $23 million for the year, excluding the impairment charge of $3.1 million relating to the Aframax [DP2].

(inaudible) occurred, as it became clear in quarter four that given increasing vessel age discrimination, there may be more difficulty than previously anticipated in extending the vessels' current lucrative time charter after expiring.

And gross revenues in 2010 were $408 million compared to $445 million in 2009. Again, there was (inaudible) upon the reduction of operating expenses for $19 million. Capital gains again played a significant role in our annual result totaling a net of $19.7 million on the sale of five vessels, compared to $5.1 million gain in 2009.

Operating income for the year was $80.7 million compared to $72.4 million for 2009.

For quarter four, that (inaudible) of higher rates together with further cost reductions and some turnaround on the stock valuation movement, that had been negative for much of the year, actually gave it a profit of nearly half $1 million, again, if we exclude the impairment charge.

In quarter four, gross revenue was $95 million compared to $98 million in quarter four 2009. While revenue after deducting voyage expenses and commissions was almost exactly the same as in quarter four of 2009 of $[74] million.

The average time charter equivalent rate was approximately $18,300 for quarter four 2010 compared to $18,100 in the fourth quarter of 2009. For the year 2010, the average TCE was approximately $19,800 compared to $22,300 for 2009.

Total operating expenses in quarter four were $31 million compared to $37.4 million in the previous quarter four. And daily average operating expenses per vessel fell to $7,284 from $8,743, almost a 17% decrease. This was due to better pricing on stores, sales and lubricants and action taken since 2009 to reduce crude costs.

A stronger dollar also helped, especially on crew costs. P&I insurance costs were also down.

These factors also affected the average daily [expenses] for vessels for all of 2010, which fell by 12%. G&A expenditure in Q4 was about the same as in Q4 2009. And amortization of stock grants was also a credit in the quarter as the reduced share price resulted in a [spot] per vessel of [part] amortization.

The management fees in quarter four 2010 where nearly $0.5 million higher, a fairly modest increase considering the $1 million taken off operating expenses due to the new technical management.

Also, our board approved a $425,000 management incentive award, the first in two years. Although we were not able to achieve our target internal equity given difficult times, we were able, without technical and commercial management, to keep our fleet fully employed, significantly cut operating and administrative costs.

[Sales] in the range to [sell] four vessels at significant profits and dispose of two other older vessels; take delivery of two brand-new vessels and the quiet four new tankers with employment; enter into very lucrative 15-year time charters expected to start in 2012; obtain new financing at very competitive terms and reduce our overall net leverage to 56%; achieve another year of clean assessment under Sarbanes -Oxley with no significant or material deficiencies; comply fully with all loan covenants; build up cash reserves to be in a position to take advantage of potential opportunities; pay a dividend of $0.60 per share; and despite the tough market, still manage to conclude our 18th consecutive year of profitability.

Certain finance costs for 2010 amounted to nearly $63 million compared to $46 million for 2009. Total average loans outstanding for 2010 and total interest on loans and swaps was marginally lower than 2009.

Most of the difference in 2009 relates to non-cash valuation movements and interest rate and [bunker] swaps. In 2009, these have been mainly positive movements, keeping 2009 finance costs exceptionally low. Only in quarter four of 2010 was there a positive movement of $3.7 million on our loan hedging interest rate swap (technical difficulty).

In 2010, we drew down $235 million in new loans, mainly relating to the delivery of two newbuilding Aframaxes and acquisition of four Panamaxes. Loan repayments, including pre-payments of loans related to sold vessels, amounted to $175 million, bringing outstanding loans at the year-end to $1.56 billion.

We have two Suezmaxes under construction for delivery this year. We have paid nearly $22 million so far this year and we will pay another $40 million in 2011. We are nearing completion of discussions relating to the financing for these vessels again (technical difficulty).

We have not yet arranged financing for the two new [shuttle] Suezmaxes, although there is already considerable interest from banks in this respect. We expect to make initial construction [installed] very shortly of about $20 million in total.

And this concludes my comments, and now I will hand the call back to Nikolas.

Thank you, Paul. I apologize for the brief interruption this is Nicolas Bornozis of Capital Link, and I would like to mention before we go ahead with the Q&A that Nikolas Tsakos will receive this Thursday an honorary PhD from the City University Cass Business School in London in recognition of his pioneering work in shipping and the capital markets. (applause).

I would like to remind congratulations. Nikolas, you're in Athens, I'm in New York, but I'm applauding from where I am. And I'm glad to remind our audience that Nikolas has been behind the creation of the Maritime Industry Fund, MIF, in 1993, which was initially listed in London and eventually evolved into today, [PEMA].

So our sincere congratulations to Nikolas for his unique contribution not only to shipping itself but also to raising of the industry's profile in the global capital markets. And with this brief interruption, I will turn back the floor to the operator for the Q&A. Operator, please go ahead.

Yes, just to Nicolas, thank you very much for your good words and your applause. And you see we will do anything to get the share price up. So if we need a doctor to get it up we will get a doctor. Thank you very much anyway. So yes, we're pleased if you have any questions we'll be here to answer.

Operator, please go ahead.

(Operator Instructions). Natasha Boyden, Cantor Fitzgerald.

Good morning, gentlemen, and Nikolas, congratulations on your award.

You've mentioned both in the press release and in the presentation that you made (technical difficulty) as far as progress so far in terms of cost savings in terms of (technical difficulty) OpEx. Do you expect that there is definitely more [programs] to be had here with the relationship you have with Columbia or is the current level a good rate running forward? And what can we really expect in terms of percentages going forward?

As I said, this is again a very interesting relationship where you have a very large ship owner and a very large second commander; they're teaming up or taking advantage of [retailer's] expertise. It's only six months before we have -- you know, that we have been working together, so we expect that when we have a full year's [effort] which will be in July, we will be able to achieve even further economies of scale. You will need to have a full year before all the contracts that we negotiate with suppliers and shipyards around the world are going to be taking an effect. So we hope to see an increase -- I'd rather say a decrease in our OpEx further.

Okay, great. And then just turning over to the (technical difficulty).

As I said we're always participating the -- I think almost on buying or selling (inaudible), is something we have been doing since we have (inaudible) a very important part I think for our bottom line. The way George said, I think 28% of all of our net income at least or even more comes from the sales and purchase transactions.

I would say if we're looking forward this year, we might have three or four sales. And of course we will have a new business program that Paul discussed where before sales (inaudible). But we're always keeping our eyes open at opportunities that might arise. We have a lot of interest in the recent (inaudible) that we had in China and [are often] there have been approached by Chinese -- another Chinese state, other companies and corporations in renewing our [DLTC] [deep]. And I think even our (inaudible), it was really good there. (inaudible) -- I think we are looking (inaudible) from that time.

Oh, great. And just a couple of industry questions if you don't mind. With the shutdown of (inaudible) oil exports and an increase in output from Saudi Arabia, what kind of changes are you seeing in terms of (inaudible) trade patterns in the (inaudible) market? And having said that -- what you are seeing, what changed do you think we could also anticipate (inaudible)?

That's a very good point. As I think 2011 January was a very -- had a very quiet start in most of the trades. And then (inaudible) when we had a very positive effect for our ice-class did; we were one of the largest ice-class operators and we are taking advantage of it right now.

The ice-class (inaudible) in many cases has a premium of $60,000 to $70,000 a day above the [nine] classes, so we're enjoying that premium, and hopefully, [ it took] -- calculated into a nice profit at the end of this quarter.

And then we had the -- in February, the very (inaudible) of the (inaudible) market [dual cap] because of the events in northern Africa. And we had the very, a couple of weeks, a very booming market. Right now, we're making close to 1.5 million to 2 million barrels of oil coming out from Libya, which has been really (inaudible) in longer ton miles by -- from Suezmaxes and Aframaxes and the in the Black Sea, and that is where you will see a strengthening more exports from [Russia].

We are seeing the cross-continent (inaudible) market, much -- almost doubling because of that. And we have seen Russia finding a lot of oil to replace the 2 million barrels up in the ice-bound areas. And we are seeing vessels actually being ice blocked waiting to get cargos there.

So I think it has been replaced. You have again a weaker market in the Mediterranean, but it has been replaced by longer ton miles in the other markets that I mentioned.

Okay, great. And then just lastly, you know, with bunker prices where they are and rates, although they have rebounded over the last couple of weeks, still being on the relatively low side, what are you seeing in the market in terms of [slow steaming]? Is that something that you are doing, or is that just something that you are seeing here and there?

Well, I think -- I mean that's a really good technical point, and I think the slow steaming is here to stay for more than one reasons right now.

And I think one important reason is the value of the bunkers, so we are (inaudible) by the majority of our charters in all segments of the shipping industry to (inaudible) in some segments [coming] to ridiculously slow treatment, and we have nothing against that, as long as we can make the end use (inaudible) that.

And of course it has a lot to do -- the silver lining in this -- is of course it helps the environment. It reduces significantly the already small footprint of shipping in that part. So I think we are in a period -- a prolonged period of slow steaming in all segments of our industry. And of course this helps the depressed rates.

Great. Thank you very much.

Rob MacKenzie, FBR Capital Markets.

Good afternoon. I want to come back to the issue of Japan a little bit, you know the tragedy (technical difficulty) fossil fuel inventory. Next, what do you see in terms of inquiries for -- do you expect further inquiries for product tankers to deliver (technical difficulty) products in addition to delivering more clearly if any to other markets and to refine those products to send to Japan?

Yes, well out chairman -- that's a very appropriate, important question. The question now is who has the excess refinery capacity, and that will dictate where the product tankers will take a load from. But there is no question that Japan will out of necessity have to increase its products import.

Do you have any kind of feel for how material that might end up being over the next several quarters?

That's a little difficult to answer. I think George gave you a number of --

$[375,000]. (multiple speakers)

But I would not expect that that total amount would be in the form of oil products. But of necessity, a significant amount will (technical difficulty). Maybe as much as two-thirds of that number, at least in the shorter-term will be required of product tankers.

And let's not forget that in the last earthquake of 2007, they lost something like 8 GB of capacity at the time and they have gradually restored to (technical difficulty) approximately 5. So we might not see the same amount of electricity generated by nuclear power. And that has to be factored in. We cannot factor in today, but this is -- I think a very serious [cost advantage].

Sure. Okay, thanks. And the next line of questioning is around rejuvenating fleets. Obviously you haven't been very active in that. And one of the rationales for the equity offering is obviously to have the liquidity to buy vessels after the prices fell and after where we thought there were some tracking opportunities. Do you think we're getting close to that point in time where you may be able to deploy a meaningful portion of your cash to (technical difficulty) the fleet?

I think for sure we are a long way from the top. Let's say we are discussing, as I mentioned with the last Chinese (inaudible) companies on building VLCCs with 15-year employments a very lucrative (technical difficulty) with our other clients. And that we will be starting (technical difficulty) 2.5 years ago or more, the price of those assets would be in the $150 million range. When a lot of our (inaudible) group has to take delivery at these prices of vessels as we stood today. And this is what [were ordered] in 2008. At these prices, I think we avoid that (inaudible). And so we are seeing vessels valued at closer to $90 million. So I think for sure we are away from the top. We will never reach or we will never always buy at the bottom and [sit] at the top, but I think we're much closer to the bottom than the top. And that's why we're getting ready for our collective acquisitions, where the capital expenditure is a fraction of what it is being at the top.

Right, great. Along those lines, does that mean that even with the -- with what I'm looking for the discrimination against older vessels, does it mean if we're close to the bottom, does it make sense to hold on to some of those and perhaps sell them at a later date when discrimination might be a little bit lower in a stronger market?

We (inaudible) actually if you look at (inaudible), the only vessel that we have in the last century are our three VLCCs, and those vessels are very well built Danish -- surprisingly -- European vessels. And those vessels where we have already been approached by partnering or providing them for FPSOs or FSO projects. And so those six we might be selling or selling part of it or joint venturing with growth in mind.

And both are taking care of our own (inaudible), the 1991 built Regina, (inaudible) actually (inaudible). So I think this will be [firstly] one of the candidates for sale.

And then in order to keep our chairman smiling, if the [VNOG] market continues to go from strength to strength to strength, mainly also because of this Japanese unfortunate incident, we already -- our LNG will be getting more value than it already has today and that we become perhaps another candidate of significant capital and profitable gains. So that answers some of Natasha's previous question to where we're going.

Great, thank you, gentlemen. I will turn it back.

Gregory Lewis, Credit Suisse.

Yes, thank you and good afternoon. I'm glad you actually brought up the LNG vessel. That's really what I wanted to talk about. If you look at where LNG rates are, apparently for (technical difficulty), I think it's somewhere in the mid-$20,000 range. I believe right now LNG day rates are somewhere along the lines of about $50,000 a day. So in other words, (technical difficulty) looking to (technical difficulty) this asset forward, it almost looks like maybe you're talking about selling the vessel. Is that sort of correct in thinking?

Well, going forward, we took, as we said to you, a defensive position last year which is (inaudible) from the recent (inaudible) at the end of -- in July. And then we already have offers for -- and then as the rate doubles, it really (inaudible) except where we take an option. But we already have offers today for (technical difficulty) in the 70,000 (inaudible) for a period of five years or R&D break even costs on top of that. So that will be a significant contribution to 35% to the bottom line if we keep the (inaudible) transactions.

However, (technical difficulty)might not be the most exciting thing to do, so we are already having interest also on buying the [six] at a significant profit. So we're actually juggling both. It's a good problem to have. It's much better than a year ago.

I agree. And then just looking at your fleet, you do have those three Aframax [LR of quiet] vessels. And I realize that TNT has been willing to move these vessels between -- from the product to the crude market. Could you sort of give us a little color on where these vessels are? I mean you mentioned that [high class] rates in the Baltic are north of $80,000 a day. Could you sort of talk about -- do you have any exposure right now up in the Baltic?

We have a significant exposure in the Baltic. All 3-6 and actually on into a minimum and profit sharing employment. And I will say today, in today's market, they are earning close to $60,000 a day. I mean Paul is going to give you -- the market [the day after that] is $110,000. So, so far, $60,000 is a conservative figure including our profit-sharing, but I think Paul I'm sure is going to give you the nitty gritty. And we're keeping our fingers crossed for the ice not to melt until June.

But yes, we have significant (inaudible). And all our ice-class vessels improves, we're not only going to get the premium [of course] the ice-class but they get almost 100% of [wide] class earning capacity when they push ice.

Okay, great. Thank you very much for the time.

Fotis Giannakoulis, Morgan Stanley.

Good morning and congratulations on a good quarter. It was well above expectations and actually the market is recognizing that. I want to follow up on the ice-class situation. I seems that the rates, they have sky rocketed the last few days. Can you let us know where the rates are right now and how many vessels do you have [sourced]?

Sure. Fotis, thank you. Right now, we are in the Baltic; the Aframax rates are about $125,000 a day. And we have three vessels on time charters for major operators, ice operators, where we share 5050 anything above $20,000, which is a little bit above our breakeven. So we are earning $50,000 on top of our minimum rate, so that is a significant premium.

Then we have four ice-class vessels in [Poose], and four ice-class vessels to a major end user but also are selling. So altogether [if you have the] vessels that are earning ice-class premium.

Thank you very much. Just on Japan, I guess it seems that the number of ports right now are closed. Have you seen any [directions] of [auric] flows at this point? And do you think that we're going to see crude moving to other areas? How do you see the product tankers will benefit? A regular import out of Korea or from further distances?

Well, I think this is a good point because things are happening as we speak. What we expect to see is a softening on the LEG east (inaudible) because right now with the (inaudible) of (inaudible) refineries operating we will see less goods going to Japan. And I think we are seeing (inaudible) as we speak.

And we expect to see imports coming from all over the world because Korea is an important market. I think the most beneficial (inaudible) might be -- of an increased (inaudible) are going to be the Indian refineries that are opening up. And they are just new refineries, and I think they will (inaudible). I think it is going to be good for [BNR tips] on the product side, anything from a Panamax to Aframax will take advantage of this unfortunate event.

Thank you.

Thank you very much, and congratulations, again.

(Operator Instructions). There are no further questions at this time. I would now like to hand back for any closing comments.

We very much appreciate you joining us today for (inaudible). We hope it has been [lucid]. Also, we hope that you are joining with those in prayers for our friends in Japan. Thank you.

We would like to note that our (inaudible) from Mr. George Saroglou and Mr. Stavropoulos are going to be in New York starting the next week, on the 21st. And they will be very happy to sit down with you and explain to you in more details, what are the Company's, the strategy. While at the same time because we have, like I said, we have a very large gap to bridge, and that is our challenge for 2011. And that is to bring our real evaluation, the real value of our ships close to the (inaudible) valuation, and I think it's something that we would be happy to achieve. So, thank you very much for your time.

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.