Tsakos Energy Navigation Ltd (TEN) 2011 Q1 法說會逐字稿

Thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation conference call on the first-quarter 2011 financial results.

We have with us this Mr. John Stavropoulos, Chairman; Mr. Nikolas Tsakos, President and CEO; Mr. Paul Durham, Chief Financial Officer; and Mr. George Saroglou, Chief Operating Officer at the company.

At this time, all participants are in a listen only mode. (Operator Instructions).

I must advise you that this conference is being recorded today, Wednesday, May 11, 2011. And at this point, I would like to turn the call over to Mr. Nicolas Bornozis, Investor Relations Advisor to Tsakos Energy Navigation. Please go ahead, sir.

Thank you very much. Good morning to all of our participants. This is Nicolas Bornozis of Capital Link, investor relations advisor to Tsakos Energy Navigation. The company released its financial results for the first quarter of 2011. 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 Tenn@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 at the front page at www.tenn.gr. A 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 as an archive after the conference call.

Now the slides of the webcast presentation 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.

And ladies and gentlemen, at this point I would like to turn the call over to Mr. John Stavropoulos, the Chairman of Tsakos Energy Navigation. Mr. Stavropoulos, please go ahead.

Thank you very much, Nico. Good day to everyone.

My reflections today are about TEN's (technical difficulty) back to the future. The dramatic steps by management since we last visited with you have positioned the company to produce exceptional results once the tanker industry digests its excess capacity. Meantime as reflected in the recent results, the combination of a sound employment strategy and operational proficiency that provided solid cash flow and banking on the bottom black ink on the bottom line.

Looking back and looking ahead, the cash flow and net contributions from the two new suezmaxes and two shuttle tankers are in beginning later this year and in 2012 and many years thereafter provide significant visibility to future results. These revenue sources combined with the present fleet at normalized charter rates should produce returns similar to those the previous mid decade.

I believe the strong financial status combined with management's skills will position TEN to once again produce exceptional rewards for its shareholders. TEN has done it before and I am confident we will repeat that in the future. I wish to thank Nikolas Tsakos and the entire Tsakos team for having positioned us in this area.

I would now like to turn over the presentation to George Saroglou. George may we have your report?

George Saroglou Thank you, Mr. Chairman.

It's my pleasure to speak with all of you today to provide the details of the operation of another quarter. For those of you who are connected to the Internet on our website, there is an online slide presentation whose format we will follow during the call. Please go to page number 3 of the online presentation.

We are now well into the third year following the outbreak of the global financial crisis of 2008. We operate in an environment where freight rates continued to be unimpressive with the exception currently of product tankers and especially the end market (inaudible) sector where rates are around the $20,000 levels last seen in the good old days of 2008.

Thus, in the LNG sector, the LNG sector is in fact the best-performing sector in the energy complex as we speak with rates quadrupling since their bottom back in December of 2010. As our Chairman mentioned earlier, in '10, our back to the future strategy continues to guarantee the profitability and growth of the company every year since our inception back in 1993. So we are talking about 18 years in operation and counting.

Back to the future because we have been in bad markets before in 1997, 1999, and in the period in between 2001 and 2002. And we have been able to take advantage of the opportunity we have been presented with in growing the company, in creating value for our share owners and in preserving the firm's profitability.

Our corporate strategy focuses around the following elements -- a young, modern diversified fleet providing its clients with quality service. We nourish client relationships that have been built and developed over a long period of time by both TEN and the Tsakos Group. We have an employment strategy that emphasizes generating sustainable cash flow and provides a strong balance sheet, profitable operations and the ability to finance growth and maintain dividends.

We have a prudent fleet renewal strategy to not only maintain a young and growing fleet, but also to provide a rich source of capital gains, which generated profits of over $280 million in the transaction that we have concluded since 2002. We maintain a very high fleet operating rate, currently at almost 99% for the first quarter of 2011.

Over the five-year period, since 2007, the annual fleet utilization rate has been at least 97% if not better. We maintain a very high retention rate of markets [insinuating] contributing to operating efficiencies. We are deploying sister vessels, and this contributes to group familiarity, operating skills, and savings. The contributions of Tsakos Columbia Ship Management to purchasing proficiency should be noted, as well as our high and improving safety record.

Looking at the physical market, [web alone] demand continues to grow in 2011 with the growth primarily coming from developing Asia. China's demand is forecasted by the International Energy Agency to grow by 6.3% in 2011, reaching almost $10 million per day. In reality, however, Chinese demand in the period December 2010 to the end of February 2011 has been growing on average closer to 15%. most probably this is a number that cannot be sustained, especially in the high oil price environment we currently operate.

US demand for 2011 forecasted at $19.3 million per day is marginally above the 2010 numbers and almost 250,000 barrels below the 2008 levels. So the demand numbers look good. And considering the lower supply levels because of the lost Libyan barrels, which could take months to reinstate once the conflict ends and the adjusted demand projection for Japan following the devastating earthquake, the scenario where they always (inaudible) out of the low end of the five-year historical average by the fourth quarter of 2011, gains traction.

Going forward, the market fundamentals seems to improve during the latter part of 2011, giving the large number of new builds still to come during the year, which come primarily in the [DLTC] and the suezmax categories since the product tanker order book looks to be under control, a better chance at finding full employment.

The highlights for the freight market during the first quarter were the spike in the ice class trade in the Baltics, which benefited primarily our LR2 vessels, a spike in demand at the beginning of the Libyan crisis, which benefited our sport trading aframaxes and had a short-lived spillover effect into suezmaxes in both [net] and West Africa and the improvement in the sentiment and the rate for product tankers, and of course, the boom that we have experienced in LNGs.

The global economy also continues to grow with global GDP forecasted at 4.5% for both 2011 and 2012 with advanced economies expected to grow at 2.5% and the developing world at 6.5%. High commodity and food prices, [various] crop inflation in the developing world, high unemployment in the advanced economies and the European sovereign debt issues continue to be the main reason that could stall global growth.

As we speak and following the sale and delivery of [4.22 new buyers] at the end of March, TEN has a pro forma fleet of 51 tankers; we have 47 in operation and four suezmax tankers under construction.

Two conventional suezmaxes that are charted already for '11 and 12 years, respectively, to one of the companies for its clients; these two vessels are due to enter the fleet in their respective time charters [exit year] in mid-May and mid-July 2011.

We also have two DP2 shuttle suezmax tankers for delivery in the fourth quarter 2012, and the first quarter of 2013.

The fleet is 100% double hull versus 92% for the world tanker fleet and has an average age of seven years versus 8.6 years for the world tanker fleet.

During the quarter, the first quarter, we operated a fleet of 47.9 vessels versus 46.6 in the prior-year quarter.

The sale of Opal Queen in March produced a capital gain of $5.8 million and release $17.2 million in their [cap results]. We continued to evaluate offers for vessels in our fleet, and we expect to be fair to report further profitable transactions in the near future.

Fleet utilization for the quarter was 98.9%, almost 99%, in comparison with a 99.2% in the same quarter of last year. the metrics that we considered to be [mindful] for 2010 since the New York stock listing in 2002 (technical difficulty) related net income in excess of $1 billion. Since 2003 we have grown the fleet, sold the older tankers, maintained the modernity in the young profile of the fleet, and at the same time, managed to raise the capital gains to an approximate [$280] million. Since the initial listing in 2002, we paid $333 million in the form of cash dividends to our share owners.

TEN also had the chance to enter a new sector with existing growth prospects, the shuttle tankers, by signing a 15-year time charter deal with a national South American (inaudible) for two DP2 suezmax shuttle tankers. This is the company's biggest deal ever, which is expected to generate at least $520 million of revenue over the life of the contract.

The [key] building contracts with a leading [cordion CVS] to build these vessels was signed in March. We focus on repeat business with the company's client. We extended the World harmony and Chantal to two more years in direct continuation of the current time charters that expired in April and June, respectively.

We combined the recent renewed and/or extended charters, the two 15-year DP2 time charters, 11 and 20 years from (inaudible) time charters. And if we also add to this a two-year extension of Harmony and Chantal, this will all guarantee the company minimum revenues of at least $740 million over the life of these contracts. And we are confident that there is going to be more good news in the months to come.

On the LNG, the market's prospects improved before the Japanese strategy tragedy. Everybody expects the LNG together with food and period [loyal] to substitute a big part of Japan's would existing nuclear power, electricity generating capacity that is damaged, and not only aging reactors and aging infrastructure could be shut down due to environmental and safety reasons.

LNG freight rates are trending higher. We have witnessed the market's improvement in TEN as well. The vessels charters exercised their option at an increased rate for six months period starting from July, and management is already in discussion for the vessel's next employment after the six-month optional period at a rate that will be more than 2 times the vessels' all-in breakeven cost.

Moving on to slide number 3, these are some -- the financial highlights. Paul Durham will give you more details about the financial results of the company.

[Full year's] revenue for the first quarter of $99.2 million. Net income $9.3 million. The average time charter equivalent per vessel per day, almost $18,000, and the OpEx per vessel at $7,482. We registered an 11% reduction in the daily average OpEx of the fleet between the first quarter of 2011 and the first quarter of 2010, which follows on the 10% lower that we can [done] in comparison with the first quarter of 2009.

So the buying power and the synergies of the newly established Tsakos Columbia Ship Management seem to be working; of course seem to be helping manage the cost side of our business.

On slide number 5, we can see again a snapshot of the more modern and vessel sized fleet that we have built, which is split between crude and product tanker. We have 24 crude carriers ranging from VLCCs all the way down to aframax size; 26 product tankers going from Vergina II, the aframax size down to the handysize, and one LNG vessel.

Except for two VLCCs and our oldest aframax Vergina II, the fleet was built in South Korean and Japanese shipyards to high specification standards. 21 of the 51 vessels have [highest class established], and this is one of the largest such fleets in the market.

Let's go to slide number 6. As we said, we continue to have this balanced employment strategy with a mix of spot charters, contract of affreightments, pools, and period charted with fixed rates and period charted with profit sharing arrangements. Currently, we have 11 tankers trading in the spot market, two tankers under contract of affreightments, six vessels in pooling arrangements, and 29 tankers in period charters with fixed rates and profit sharing arrangements.

The company time charter policy has a bias to retain charters with profit sharing and this has been the main reason for the company's continued profitability over the last 18 years. The recently announced 11- and 12-year time charters for our suezmaxes, Spyros K and Dimitris P, provide further visibility to future cash flow generation and profitability.

The next slide number 7, with the dollar value to the current fleet employment was high. As of today, we have fixed 65% of our remaining available days in 2011, and 39% of the 2012 available fleet operating days.

If we assume only the minimum rate for the 29 tankers in the 48 vessel fleet, including Spyros K which we're going to take delivery within the next week, we currently operate -- we have secured 504 months of forward employment or, 1.5 years per vessel, and $235 million in minimum gross revenues.

Slide 8 illustrates the fact that the sale and purchase tankers is an integral part of our operations as we have demonstrated with a series of transactions over the year. Since 2002, we have closed over 100 transactions realizing actual value. In the meantime, we have been able to generate $280 million in capital gains. That's approximately $35 million, the average capital gains per year since our 2002 listing.

The company will reinvested these capital gains in the renewal of the fleets by ordering the majority of its newbuilding tankers before newbuilding prices started to rise. This way we managed to grow the size of the fleet and, of course, maintained its (inaudible).

On the dividend, let's go to slide number 9. Our dividend distribution, this is our dividend distribution since the listed of our company on the Euro Stock Exchange. We have paid in total $8.78 in cash dividends.

On June 4 of last year, the directors announced an enhancement in the [quarterly] dividend policy going from semiannual to quarterly. The first quarterly dividend of $0.15 was paid on July 15, 2010; the second on October 26; the third was paid on February 1, 2011; and the fourth quarterly dividend of $0.15 was paid on April 28, 2011.

That concludes the operational part of our presentation. Paul will walk you through the financial highlights of the first quarter and the year, and then I think Niklas Tsakos is going to give you another synopsis of the state of the market.

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'll add a few more words about quarter one.

TEN achieved net income of $9.3 million in quarter, one including capital gains of $5.8 million compared to net income of $19.5 million in quarter one 2010 with capital gains of $14.2 million. Total revenue was $99 million compared to nearly $105 million in quarter one 2010, the decrease being to the tougher freight market which was alleviated, as George has mentioned, by some modest recovery in product carrier, profit share, ice class extra profit share and brief aframax spikes in The Mediterranean.

The average daily TCE rate achieved per vessel was almost $18,000 compared to the previous first quarter at $20,700.

Apart from the more difficult freight market, a significant increase in bunker costs impacted further the 12 vessels on spot with contract of affreightment during quarter one.

However, despite an extra vessel, operating costs decreased to $31.6 million from $34.5 million in quarter one 2010 because of the decrease in average daily costs per vessel, which fell by 11% to $7,482 from $8,414 in the previous quarter one, which, we emphasize again, was itself 10% down from quarter one 2009.

The decrease was due in part to lower repair activity and recovery of prior-year expenditure through insurance claims. But there were also savings in crew expenses due to actions taken by the technical managers over the past 18 months related to crew composition. Savings were also achieved for purchases of lubricant and also in paints despite our decision to expense from the beginning of the year all paint purchases and no longer account for paint stock. This required a one-off write-off of $360,000.

Depreciation increased by $2.7 billion as a result of the addition of six new vessels in 2010. The five vessels sold in 2010 have been accounted for as held for sale at the end of 2009 and incurred no depreciation in quarter one 2010.

Management fees increased by approximately $500,000 mainly as a result of the fee increase last July, on appointment of TCM and technical managers. That increase has been considerably surpassed by savings achieved by TCM mainly due to augment its purchasing power.

G&A costs increased by $140,000, partly because of an overdue increase in directors fees, plus the welcome addition to the board of a person with huge international banking experience.

Total finance costs were now $6.4 million compared to $14 million in quarter one 2010. Despite the increase in average outstanding debt between quarters, total loan and swap interests net of capitalized interest remain the same at about $13 million.

The decrease was partly due to favorable movements of $3.5 million on valuations of our three non-hedging interest-rate swaps, reversing in part prior year and negative movements.

Also included under finance costs are positive movements of the bunker swap amounting to $2.6 million, which together with $1.2 million cash received on bunker swaps helped reduce the impact of high bunker costs to our bottom line.

By quarter end, total debt fell to $1.52 billion. Having paid $28 million in scheduled repayments and a $16 million prepayment on the sale of Opal Queen, our net debt to capital was 55.2%.

For the suezmax to be delivered this weekend, Spyros K, we paid $11 million in quarter one and will pay the final installment of nearly $15 million this week.

For the second suezmax, Dimitris P, we shall pay $11 million in quarter two with a final installment of $15 million on delivery in July.

For the two shuttle suezmaxes, in quarter two we have paid $18 million in total with a similar amount payable in quarter three.

In 2012, we expect to pay $102 million, and in 2013, $46 million.

We have a arranged loans of approximately $48 million each for the two 2011 deliveries, again, at competitive terms. We have not entered into formal discussions for the financing of the shuttle tankers, but banks have already shown interest given the long-term lucrative charters.

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

Thank you, Paul, and thank you, Chairman, for your good words. I hope that next time the results will be tenfold instead of where they are today, but at least we are in the black and just listening to George and Paul I think, we thought 2010 was a very busy year, but I think the beginning of 2011 has been a very productive period for the company.

On the spot market, we had some very interesting spikes that we have not seen for quite a while. We show that regardless of the balance and the large oversupply of tonnage that might exist in the tanker sector, perhaps not as much as the dry cargo sector, but still, there are moments [that demand] that the spot market get very tight, and we saw age for the six weeks between March and the middle of April on the LR2 aframaxes in the Baltics in the ice trading, where we got a level set to in excess of $100,000 a day, and we had three vessels actually participating directly in these markets on the profiteering arrangements selling $20,000 and selling [$50,000 to $50,000] above that.

And then of course our products and handysize vessles were also participating in one way or the other in the profits of the ice class trades.

And also the uncertainty in North Africa, starting from Tunisia, Egypt and Libya created a panic for about three weeks with the aframax rates were very strong in the Mediterranean.

I think as we speak today, the product market as a result of the very unfortunate events in Japan, but also because of the very low inventories mainly in the United States and Europe, are making a comeback that we have not seen since the fateful of September of 2008 when the market -- when the balloons burst. So we're seeing some of the roots flow through $30,000 or -- and many of them above $30,000 a day as that has been a very welcome development.

On the -- and as George said, the LNG market is a direct result of what it is about new [clear] safety has quadrupled, and our company is looking forward to gradually take advantage of this in a significant way. And that would be -- could be a very big infusion of earnings for us in the near future.

But I think that the first quarter also, we, after long negotiations, we signed -- we chose a yard which is going to build -- it's a first Korean yard that will build our two shuttle tankers, the largest that the company has done so far. It's worth $530 million. And we were able to reduce the price from our initial calculations by 20%, so this makes the return on equities of -- that did an award in excess of 15% that we were calculating initially.

So I think this also has a very good reputation of the type of [steam] and the type of building made in -- with first-class yards that was severe competition starting from in excess of $110 million down to the price that we agreed at least 20% for these two vessels.

Another fact that kept us busy and we're very proud of is the immediate charter of our two suezmaxes, which -- the one is being delivered to us on Monday, and will go straight to the new charter for 11 years with a profit sharing that covers our breakeven and allows us a significant profit, 50-50 profits there, above that.

And, the fifth vessel later in July is going to also enjoy the same employment. I think we are very happy because it's a first-class signature, and it's a long relationship, dating back in the mid-90's so that we're prolonging for another 11 and 12 years.

So, we have chartered in the last month for our vessels for 53 years. It sounds -- I hope we're all around to enjoy them at that stage.

Also, I think [these new] charters talk about the reputation of the company on our vessels. On the S&P side, of course, the Opal Queen was our oldest of the generation of [Arimabari], very like aframaxes but we thought that at this time again with a significant profit like most of the sister vessels; extensions of charters as George talked about; and of course, a significant reduction of our operating expenses that keeps us profitable in these very, very difficult times, I think all you have to do is just look what our peer group is announcing with the results and you will understand the differential of on-hands operation like ours in comparison to some of our peer group.

And on top of that, of course, listening and following our Chairman's advice, we are continuing our significant dividend payments and looking forward for opportunities that might arise in the future. TEN has proven to be able to position ourselves as a -- to take advantage of recessionary markets. We're expecting a couple of quarters of difficulties. We were pleasantly surprised in the first quarter, but I think that this -- we have a very strong balance sheet which is going to be coming on stronger for additional sales of ships that we're going to be able to go through our next phase of growth.

And with that, I would like to open the floor to any questions that our shareholders might have. Thank you very much.

(Operator Instructions). Gregory Lewis, Credit Suisse.

Thank you and good afternoon. You know, you mentioned the two suezmaxes that you placed on long-term charters. Could you talk a little bit about your thought process behind doing those two transactions? Are those sort of maybe to replace some of the longer-term VLCCs that you have on time charter? Is that how you are thinking about it, or is it more just more decision that's sort of lock in the cash flow on one of those vessels?

As George said, I think, we are very proud of our utilization; I think very few companies can enjoy utilization; our lowest utilization was somewhere in the 97% or so, way above the industry average. So I think we are interested to try and make money day in, day out. So that's one way of us doing it.

And at the same time as you correctly said, we just had after a very long period of time, two of our VLs opening up in the spot market, so this again is a replacement of those employments, with new employments, without losing the upside.

Because I mean we are in a market which is marginal today for suezmax (inaudible). We can capture our -- I mean looking at suezmaxes today, depending on [36] or -- we're based on 36 and [35], the other it's $9000 a day. So as we had our six on the spot, that would make that -- in our arrangement, we would make them more than double that -- significantly more than double that at a minimum. And when the markets hopefully within the next 11 and 12 years goes back to the good old days of the $60,000, $70,000, $80,000 a day, we will share 50% of the upside above our minimum. So it's a combination, as you said.

Okay, and then just thinking about the two VLCCs at this point, I mean when we look at the fleet as a whole, they're sort of the only two vessels -- those are really the only vessels that are a little bit older than say the whole fleet. Could we potentially see the sale of either of those vessels -- either of those VLCCs that have rolled off charter? Is that something that management is thinking about?

I think that -- as you see, our range to cover a fleet fully after 2000, 21st-century, fleet very soon. Our older aframaxes are breaking, most probably, would be sold within the next couple of quarters. It is our oldest ship.

And then our three VLs, two of them being a bit older are the next candidates. And this is a segment of the market where when the time is right, we will be looking to a newer fleet.

So I think on the VLCCs, in a sense it's a market who had not -- played the spot for quite some time, so in a sense that's happening also that's happening are glad to have the ships -- two ships and make these -- enable the VLCCs.

And at the same time, there are significant projects we are already participating and actually turning those ships because they are the last of very large European Danish [steel] ships, so they're like mammals, and they're very heavy vessels and they're very -- they were built for a life of 30, 35 years. So they are ideal candidates, and we've been approached by a lot of interest in participating in as FSOs, not really as FPSO but as FSOs, which is a less complicated fraction than an FPSO. And, this is for something we will be within this year, taking part in business like that for those ships.

Okay, great. Just shifting over to the LNG vessel, I believe there was an option on that vessel, in other words, and in thinking about that, if we think about where market rates are and we maybe think where the option to the exercise is, I have to imagine that the option is going to be exercised, but has there been conversations with the charter to potentially blend and extend that contract to may be give you a little bit more upfront?

I think I mean as you know, to get something more upfront, TEN is not a classics trading company, so we do not want to complicate. But in the option is double the current rate, and the discussions for another extension that might go up to another four or five years with the same charter or similar level charter, is a Double Dutch; I cannot say much more. But we are enthusiastically looking at having the LNG providing a significant contribution to our bottom line.

Okay, but it is safe to say that that option has been exercised?

This option has been exercised as we adopted it, but of course at a much higher level than the existing one.

Okay, perfect. Okay, everyone. Thank you very much for the time.

Rob MacKenzie, FBR.

A question for you on your chartering strategy, and I wanted to dig down a little bit into the subsegment. In your slide deck, you have overall fixture (inaudible) at a minimum 65% chartered this year, 39% next year. By my math, when I try and (inaudible) it looks like you're somewhere just north of 70% charter for crude and 58% or so for product. Is that about right for next year?

Yes, yes. I think -- your math is quite good. Yes.

Is that -- (inaudible). And if so how are you thinking about 2012, to go longer in terms of contracted product or crude, or both? Or what?

I think that you will see us go -- we have stayed [side] on fixing many of the products long term because of an atrocious market that has been going on for as I said since September 2008. Interest is coming much more right now at levels that are positive to the bottom line.

And, I think you will see the products going close to 70%. They are enjoying a very good spot market right now with rates in the [$20,000's] and the $30,000's], which is more than double where they were two months ago. But I think this has also brought a lot of seculars out to look for employment for (inaudible) for products. And I think following that strategy of above 70% coverage, we will increase this.

Okay. So, including in 2012? Or you want to hold out through (inaudible) for a rising rate potentially?

We are always looking for (inaudible) charterers, and as long as the minimum rate covers and gives us a couple of cents to the bottom line, we are happy to share the upside with the big charterers.

Got it. Thank you very much for that. That does it for me for now. Thank you.

Michael Pak, Clarkson Capital.

Good afternoon, gentlemen. Just a couple of quick questions here. Can you talk a little bit more about what you are seeing in the product market, product tanker market, particularly the end [mark] class weight, recovering the way it has been?

And, second question, with your -- with the funding requirement on the shuttle tankers, when -- can you give us a sense of when you feel you can get that financing in place? Thanks very much.

We believe that the product tankers right now that they have been -- there has been a significant effect. Also physical and psychological that I think you are getting I think some rain also in the South of the Mississippi, and I think you're getting also some floods in the Mississippi where some of these refineries are getting disturbance.

And I think together with the accidents in Japan, I think this is -- has created a further demand. Don't forget this market has been low for almost in excess of 2.5 years. So naturally, and naturally low, way too low operating -- or gross operating expenses at least for those ships.

So now, we believe growth and but of course, I don't expect it to stay at $30,000 a day. It would be lovely if it did, but I think we will see it dropping down, but significantly higher from where it was. Our I will ask Paul to talk about the funding -- the funding on the DPs.

Yes, well we can -- if we wanted to, we could close it tomorrow. The banks are very interested in this deal we've got, but of course, [whatever] it's actually paying commitment fees for the next three years. We're just as confident that we will be able to close the financing within months of the actual delivery of the vessels. As we are doing now with these suezmaxes, yes. We're just closing the deals now on the financing.

The company has an excellent reputation with banks. They know we are one of their blue-chip best customers. We still have, fortunately, a small queue outside our door each time that we announce a newbuilding.

Increasing amount of (inaudible).

Does that answer your question, Michael?

Yes, it does. That's very helpful. Thanks for your time, guys. Thank you.

Now from FBR, you have a follow-up question from Rob MacKenzie.

The follow-up is on the impact of Japan on the product tanker market; obviously that was a big benefit in March. But since then I think we've seen some of the crude carriers as they were starting to start back up again in Japan. How do you see that impacting the results for next quarter? Do you expect to get that benefit reversed pretty quickly here?

Well I think that -- don't forget our company. It's almost perfectly (inaudible) to begin diversified between products and crew. So as the refineries start up, we will finally have our VLs going to Japan and delivering crude, which will then -- will be turned into product. So I think we might see some small correction on the product. But in the same time, the -- there's a big amount of VLCCs just floating around because they could not close the refineries line is in Japan, so that will help.

And at the same time, I think the effects of a reduction is that nuclear power are going to be much longer term positive I think for our industry.

Okay, thank you. And is the 17 VLCC March number, does that sound like the right number?

Yes. And we're between 15 and 20. That's right.

Okay, thanks. I'll hand it back.

(Operator Instructions). As there are no further questions, we now pass the floor back to management for closing remarks.

Okay. We would like our Chairman, Mr. Stavropoulos to give you some thoughts, and I will close the call. Thank you.

I don't know how wise they are. They are a little personal and a little painful.

Our heart has gone out to Japan, and relative to Bob's question, we hope that they have a speedy recovery. That's something that we would all pray for and wish for.

Tomorrow, I leave for another place that is in the state of devastation; it's called Mississippi. And if you don't know the statistics, there are 11 refineries between Baton Rouge and New Orleans. And the prospects are that at least two or three of those will be closed for an extended period of time, and most of them will lose some significant production.

We've already had some closures or reductions in Memphis, and in Illinois and other places. Unfortunately, this is going to be a very positive event for private tankers. My hometown is a mixed verdict, and that's under threat of a flood, and I pray for my relatives and my friends there. That's my personal note today. Thank you.

Wow, we hope all the best, Chairman. And I hope the plants will not have anything to do with your hometown.

Excuse me, gentlemen. I'm so sorry to interrupt. Do you have time for one more question?

Of course.

I do appreciate it. Very kind. And that comes from Chris Kelly with Janus Capital.

Hi, guys. Sorry about that. I actually just e-mailed Harris and asked if we can talk afterwards, but I will go ahead and ask it really quick if that's okay.

No, problem, Chris.

Nik, just wanted to get your thoughts on -- as you look at your stock, obviously, there's a big disconnect between the asset value of the company and where the stock trades. What -- how do you think about the best way to go about closing that gap and getting Tsakos fully recognized by the market for the value that you guys offer?

That's a very good question and I think we are trying. One of the ways we are trying to do this other than be on the road and see shareholders like yourselves and others, again, we're organizing. We have, as you know, a US representative as an advisor to the board, Mr. Daniel Speckhard, the ex-US ambassador to Greece, who is representing the company in the United States and allows us to be able to be much closer to the shareholders on the US side of the Atlantic in the United States. And he will be participating on I think on a couple of events in this week and the following week. And so that's one of the ways to just try and explain to people.

And I think a more real way is what we are doing with the sales of ships. And I think that the sale of the Opal Queen at approximately $34 million would equate to a share price of $21 for our stock today. So I think by selling the vessels, by taking -- noting a significant capital gain, I think educate -- very well educated and analytical people like the analysts of course and our shareholders will understand that if a ship is valued at $16 million or $17 million according to a share price, that it sold at $34, there is a huge disconnect.

And we are continuing as our newbuilding program of course. And we are doing the sales of the process, the majority of the process, from our new -- from our very active sales and purchase program. We dividend out as a reward to our shareholders which the management and insiders and the majority, of course, shareholders.

So I think this is one of the ways we are trying to achieve that, because we feel, of course, very frustrated with this very big difference between the net asset value and the share price.

Again, we have been able -- comparing our company to the majority of our first-class peers out there. Perhaps it would be the only profitable (inaudible) the company this quarter, but it seems it does not really reflect yet at least to our share price. Chairman, do you have any thoughts on that?

The only thing I would add to that, Niko, is that some people are skeptical about the relationship of share prices to NAV. So I would encourage that group to look at cash flow projections, particularly with the four vessels that we've been discussing today, the two new suezmaxes and the two shuttle tankers. Factor those into your numbers and then put a typical market valuation on it, and then come back to us and tell us if you think our NAV can be verified.

Okay. Thank you, guys.

Thank you, gentlemen. I appreciate you taking the question. Once again I will pass back to you for closing remarks.

Well, I thank you very much for being with us today, and we're looking for another exciting period. All the best to all our shareholders and I will talk to you next time we have -- the team is going to have a roadshow starting next week. As I said, we will get our time with Daniel Speckhard. And then, we have -- our team will be on -- in the marine (inaudible) event on -- in May -- on June 21. So you can see us there. That will be next time and I think we'll be talking to you late in July for our next quarter's results. And in the meantime I think you will be receiving a dividend also -- a dividend in July.

Well we plan to have a declaration in July. We can't commit until the board has actually made the declaration (multiple speakers) that's our expectation.

Okay. All the best. Thank you.

Thank you, gentlemen. And with many thanks to all our speakers today, that does conclude our conference. Thank you for participating. You may now all disconnect.