Tsakos Energy Navigation Ltd (TEN) 2012 Q2 法說會逐字稿

Good afternoon and thank you for standing by, ladies and gentlemen, and welcome to Tsakos Energy Navigation conference call on the second-quarter and six-months 2012 financial results. We have with us Mr. John Stavropoulos, Chairman; Mr. Nikolas Tsakos, President and CEO; Mr. Paul Durham, Chief Financial Officer; and Mr. George Saroglou, Chief Operating Officer of the Company. (Operator Instructions).

I must advise you this conference is being recorded today, Friday, August 3, 2012. I now pass the floor over to Mr. Nicolas Bornozis, President of Capital Link investor relations, advisor of Tsakos Energy Navigation. 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.

The Company released its financial results for the second quarter and six months of 2012. 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 e-mail it to you.

Please note that parallel to today's conference call, there's also a live audio and slide webcast which can be accessed through the Company's website at their 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 as an archive after the conference call. 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 read the Safe Harbor statement. This conference call and slide presentation of the webcast contains 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, at this point I would like to turn the call over to Mr. Nikolas Tsakos, President and Chief Executive Officer of Tsakos Energy Navigation. Mr. Tsakos, please go ahead, sir.

Yes, good morning. Thank you for attending our half-year and second-quarter call.

We have been discussing since the last quarter that we could foresee that the measures we have taken in the Company on the chartering and operations side are turning the curve towards a better performance. We are glad to announce a better performance; however, a loss is never gratifying, so we're looking forward to going back to our continuous profitability streak as we speak.

We believe that we're taking the internal measures, the cost controls, the correct allocation of vessels in the right parts of the world where demand is stronger. We're taking measures to enhance the Company's growth, looking at new, much more profitable segments like the offshore through our shuttle tankers and the LNG, which has been a very large contributor to our bottom line, to the betterment of our bottom line.

And we believe that in next year the oversupply of tonnage will start drying up. A lot of ships are being taken out of commission for scrapping. So we hope that we will be closer to profitability as we speak.

What is making us also optimistic is that we see a lot of our clients out there looking, as we have reported also today, at additional interest for long-term employments with profit share. And since the company is doing more and more with minimum in profit shares, arrangements that have, I think, contributed to us sustaining a difficult period and having the open upside in case the market turns, as we hope.

So we will be discussing more of this as we go. I would like to ask our Chairman to give his wise words, and then Mr. Saroglou will talk to us about the operations for the last quarter. Thank you.

Thank you very much, Niko. This is John Stavropoulos. I'm going to repeat much of what Niko said, but I'm going to repeat it because I think it's extremely important to us as shareholders.

What you've just given us is a most encouraging report, and I'm looking forward to the other comments from George and Paul. I want to applaud you, Niko, and your management group, along with the entire Tsakos group.

Your efforts during the overall economic storm and the deep depression in shipping has kept TEN on course. Your strategies and implementation have preserved underlying shareholder value. The keys to this success have been highly developed and enhanced long-term client relationships, reflected in extending term charters. These don't come easily; they take a lot of hard work and perseverance.

Extremely effective cost containment at operations and corporate levels with uncompromised standards of safety and customer service. I hear one of our Associates almost on a daily basis walk down the hallways and say, Not a single drop. This is the kind of dedication that we have in the management group of the Tsakos Group, as they want to deliver a safe and quality service to our clients and to the world that we serve.

I think even more importantly from a financial point of view is the renewed emphasis that you've put on expansion and growth areas, such as you mentioned LNG and other offshore support activities, like these shuttle tankers. These all contribute to the development of earnings, cash flow, visibility, and thereby protecting financial strength and the dividend capability. As a shareholder, I want to say, Well done and thank you.

Thank you, Chairman. George?

Thank you, Nik; thank you, Mr. Chairman. It's my pleasure to speak with all of you today again and provide you with the details of the operations of another quarter.

For those of you who are connected to the Internet and our website, there is an online slide presentation which formats we will follow during the call. Please go to page number three of the online presentation.

This is the snapshot of the fleet as it stands right now. We have 23 crude carriers, including two vessels that we are building, two shuttle tankers we are going to take delivery in the first quarter and second quarter of 2013. We have 26 product tankers. We are one of the largest product tanker operators and owners in the world. And we have three LNG. This is a pro forma fleet -- three LNG carriers, one in the water, one on order, and one option to be declared later this year.

If we look at the highlights on page number four, since 1993, as you see, we have built a sizable fleet and company. If we look at the macro picture, the vessel supply is still the main reason why we haven't seen a sustainable improvement in tanker freight rates in 2012, although so far the year has been much better than many have expected after the weak fourth quarter of 2011.

Demand for oil continues to be an all-time high levels during this year, in 2012, around the 90 million barrels per day and despite the headwinds the global economy is facing. As a result of the [sovereign] stress in the Eurozone and lower-than-expected growth in a number of emerging countries, the latest forecasts for global oil demand for 2013 by the International Energy Agency is positive, supporting a 1 million barrels per day increase from 2012 levels to almost 91 million barrels per day.

With geopolitical tensions in oil-rich regions continuing, more expensive bank lending available to blue-chip companies only, and a tanker order book that is gradually coming closer towards supply/demand equilibrium levels, it might not be long you for we finally see the market downturn come to an end.

We're now in the third quarter of the year, which is typically the lowest month for energy transportation, but looking ahead to the forecast for oil demand in the fourth quarter of 2012, we see the International Energy Agency forecasting at least 1 million barrels per day higher demand than the fourth quarter of 2011, and this should bode very well for tanker demand and freight rates.

In this environment, our Company, TEN, continued to focus on having a balanced and flexible chartering policy in maintaining a high fleet utilization and operating efficiencies, cost containment, and selective growth. The Company continues to invest in LNG sector and the energy transportation with favorable fundamentals and growth prospects.

TEN is also looking for opportunities in the shuttle tanker, the offshore market, and other energy sector with good growth prospects as most new oil discoveries in the world are offshore discoveries, and of course is looking for opportunities in conventional tankers.

We continue to see strong demand for our vessels from our clients. Since the beginning of 2012, we have chartered or rechartered seven vessels, including our LNG Neo Energy to a four-year time charter. We have chartered our Aframax Proteas to a one-year time charter with profit sharing. We have chartered three MR-1s, Aris, Ajax, and Didimon to fixed time charters for five, three, and two years, respectively, and we recently announced the extension for two more years of Nippon Princess, a modern Aframax, and one more year for our Panamax Maya.

And as we speak, we negotiated more renewals for vessels in the fleet that have charters that are due for renewal later in the year.

From the beginning of 2011 until today, we have been able to charter and recharter 30 vessels out of the 51 vessels the Company owns on a pro forma basis, on-time charters with [period] employment lasting from one to 15 years. A combination of fixed-rate charters and charters with profit sharing will generate over $1.1 billion in minimum revenues from the above [features].

This time charter strategy has helped the Company navigate safely through the [crutch] of previous and the current market downturn and has given TEN the ability to maintain a strong balance sheet, sustainable dividend distributions, and enough liquidity for future growth.

If we look again at slide number four, we have a pro forma fleet of 52 tankers, which includes 48 in operation, the two DP2 Suezmax shuttle tankers under construction with expected delivery in the first and second quarter of 2013, one LNG under construction for delivery during the first quarter of 2015, and another option for another LNG for delivery during the fourth quarter of 2015.

The fleet is 100% double hull, very modern, six years old. If you exclude the two VLCCs that are currently held for sale, then we have 21 tankers with highest-class capabilities and 36 out of the 51-vessel fleet have secured employment that ranges from one to 15 years. Thanks to our time charter philosophy, we continue to operate the fleet at a very high utilization rate with the current figures for the second quarter of 2012 being over 98%.

If we move to slide number five, Paul will present and give details on the financial results for the quarter, but a quick takeaway is the improvement that we see in all the metrics from the previous quarter, the first quarter of 2012, and the second quarter of 2011.

Most notably, we have registered an operating income of $10.1 million and we've seen also the average daily time charter equivalent rate per vessel for the quarter at $17,714 per day, and the main reason behind this improvement over the previous quarters is our LNG Neo Energy, which earns nearly four times as much as the rate it was earning in the second quarter of 2011.

We have announced today a dividend distribution, which is payable on September 14, and during the first half of the year we had also a share offering.

If we go to slide number six, again here you see a breakdown of the fleet. It's very modern, very versatile, and the fleet has been ordered and billed before new building prices started to rise to record levels.

The majority of the fleet, with the exception of those two VLCCs that are held for sale, La Madrina and La Prudencia, were built in South Korean and Japanese shipyards to very high specifications, and again I need to point out the highest-class capability of the fleet, 21 out of the 51, which is one of the largest fleets in the world of [25] class capabilities.

We have a very balanced employment strategy and we try to employ the fleet with a mix of spot charters, pools, period charters with fixed rates, and period charters with profit-sharing arrangements. We currently have 14 tankers trading in the spot market, and this number includes the two VLCCs that are held for sale; four vessels in pooling arrangements; and 32 tankers in period charters with fixed rates and profit-sharing arrangements.

The 32 tankers includes the two DP2 shuttle tankers which will begin producing when delivered to TEN during the first and second quarter of 2013.

The Company's time charter policy with preference over time charters with profit sharing has been the main reason for the Company's ability to successfully navigate through market cycles and grow in the last 19 years. The 28 new charters that we concluded from the beginning of 2011 until now, with an average chartered life of a little over three years, provides further visibility and stability to future cash flow generation, profitability, and dividend distribution.

Slide number eight puts a dollar value to the current fleet employment profile. As of today, we have fixed 68% of the available 2012 fleet operating days and 54% of the 2013 available fleet operating days. And if we assume only the minimum rates for the 32 tankers that we currently own, TEN has secured 1,226 months of forward deployment, or 3.1 years per vessel, and a little over $1.1 billion in minimum gross revenues.

Overall, we're optimistic for the long-term prospects of the tanker market and we continue to position the Company to benefit from a sustainable recovery in freight rates when the upturn will come, and we know it will come, thanks to the profit-sharing elements that most of our time charters have in place.

The next slide talks about our -- presents our sale and purchase track record since 2003. Vessel values right now have come to a bottom. We are not seeing too many vessels taking -- too many sales taking place, but we are assured that we have vessels in the fleet that when asset prices will begin to improve, as the freight market will begin also to improve, that will be sold and will be replaced in order to maintain fleet modernity, which is a very important part of our philosophy.

Moving to slide number 10, this shows the history of our cash dividend distribution. We announced today another $0.15 per share to be paid September 14, 2012. In total since 2002, we have paid $9.53 in cash dividends, or a little over $371 million, and this compares with a listing price in our IPO of 2002 of $7.50. So investors who are [intent] today since the New York Stock Exchange listings have their investment fully repaid from the dividends the Company has paid and currently have exposure in conventional tankers, LNG, and offshore tankers at no cost.

And before handing out the baton to Paul to give us a little bit the story from the financial -- to give us more details on the financials, I would like for one more time to highlight that we have built -- we have managed during this 19 years to build a very modern fleet with very high visibility as far as the time charter strategy is concerned.

Currently, we have minimum revenues of $1.1 billion, thanks to the longstanding customer relations we have. We have very high liquidity, strong banking relationships, and a strong balance sheet, and I think with the help of our directors and shareholders, during these years we have built a very rock-solid operation that can take advantage of current market weaknesses, and hopefully through this growth we can expand further shareholder value.

And without further ado, I'll pass it on to Paul.

George, thank you. Thank you, George.

Well, the last quarter was again an improvement over the preceding quarter, thanks to a reduction in banker costs, reduce operating expenses, and the start of LNG carrier Neo Energy's lucrative charter.

Revenue after voyage expenses in Quarter 2 were $73 million, against $70 million in Quarter 1 and $68 million in Quarter 2 2011. Quarter 2 average daily [TT] per vessel was, rounded, $17,700, compared to $17,130 in Quarter 1 and $16,400 in Quarter 2 2011.

Operating income was $10 million against $1 million in Quarter 1. For the half year, operating income was $11.1 million against $8.7 million last year, excluding last year's capital gains.

All the vessels generated positive EBITDA, apart from the non-operating VLCC La Prudencia and the product carrier Aegeas, which underwent prolonged special survey and other repairs.

Total EBITDA amounted to $35 million. That's $9 million more than Quarter 1, of which $6 million was generated by Neo Energy. For the six months, $62 million EBITDA was achieved.

The $5.7 million net loss in Quarter 2 was a $12 million improvement over the previous Quarter 2 and $3 million better than Quarter 1.

VLCC La Madrina operated at breakeven in Quarter 2, but at least covered costs and generated EBITDA. La Prudencia underwent repairs to render her more salable as an operational vessel, and therefore incurred costs, which are potentially recoverable in the event of a sale.

Total operating expenses in Quarter 2 were $32 million, some $3.4 million less than in Quarter 1 due to fewer dry dockings, cost reductions achieved by the technical managers, and lower crew costs due to a weaker euro.

Daily average OpEx per vessel, therefore, was $7,505, a 4% reduction from Quarter 2, 2011, and an almost 10% reduction from the higher OpEx of Quarter 1, which was much due to Neo Energy's dry dock in March.

Finance costs for Quarter 2 were $16.1 million, a 5% fall from the previous Quarter 2, but a $6 million increase over Quarter 1. The large interest swap valuation gains of Quarter 1 were not repeated in Quarter 2. There was also a non-cash $1.9 million negative movement on bunker swap valuations in Quarter 2, but this was offset by lower bunker costs.

The interest rate swap relating to Neo Energy expired yesterday, the last payment being accounted for in Quarter 3. From Quarter 4, the vessel will operate with net income further enhanced by $13,000 a day.

In Quarter 2, we repaid $40 million in loans. There were no new loans in Quarter 2, so total outstanding loans at the end of June amounted to $1.47 billion and net debt to capital fell to 56.6%.

We have two shuttle tankers under construction. On the first, we had $75 million remaining to be paid, of which $14 million was paid in July using an equivalent amount of pre-delivery debt. We'll pay another $14 million in 2012 from pre-delivery finance and the final $47 million in Quarter 1, 2013.

For the second shuttle, we shall also pay nearly $28 million this year out of newly-arranged pre-delivery financing and the remaining $47 million on delivery in Quarter 2 next year.

We have also paid the first installment of $21 million in July for our new LNG carrier from the proceeds of the recent offering. Another $21 million will be paid in 2013, $53 million in 2014, and $115 million in Quarter 1, 2015, on delivery.

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

Thank you, Paul. As we said earlier, this has been a quarter where a lot of things started falling in place again with preparations we have made in the last year.

The third quarter, as George said, is traditionally a slow quarter, but we expect not to have the similar results as we have, and also in the meantime continue to enhance our coverage of profit-sharing arrangements with the major oil companies that allows us to continue [adhere] the dividend distribution.

And by the fourth quarter, where we expect -- in the first quarter of next year we expect market conditions on the spot to be even better, we hope that we can return back to profitability. We're really just 5% away in this category of ships in achieving such a task.

So with this, we would like to open the floor and listen to any questions. Thank you very much.

(Operator Instructions). Urs Dur, Clarkson Capital.

You've been developing very well on the LNG space. I was wondering if you had any further update there as to what opportunities look like right now? Are there any open slots?

And then, a second level to that question, which is, if you listen to some of possibly your critics, they may say that you're relatively new to LNG and that you may face a more difficult time getting attractive charters. And I tend to disagree with that, but do you face any problems being a relatively new entrant to LNG? What's your commentary to that?

I have to say that from the recent influx of LNG, we made our first newbuilding order in 2004, so that's eight years ago, and we took delivery of the ship a couple of years later.

So it's always nice to be considered young, but unfortunately in LNG space, we're not as young. We've been around operationally now for at least five years, so I would say we are not the new kid on the block and I think this is what our charters appreciate.

I think [new order] people which have entered the market in the last couple of years, rather than ourselves. So I think we are considered a seasoned energy transporter and I think our clients, who are in most of the cases the same clients that we charter our conventional vessels to, just look at our LNG as a continuation of our Company's -- in the continuation of our normal business in the LNG.

Currently, we are looking, for your first question, at opportunities in chartering our ships. We are negotiating -- this is a significant influx of business. There are -- some of the companies that went out and ordered ships and are facing some financial pressures are opening up some slots, as you know, through being one of the largest brokerage houses that Europe is in.

And we are looking at this prompter deliveries for 2014. However, we are looking at the way the various business is trained at developing. I think 2015 and onwards is when we expect for most of the -- for the booming of the market to happen, although, as you know today, one-year employment is in excess of close to $150,000 a day. That's it.

It's reasonable to say that you're very actively looking at LNG assets right now and that it's not unreasonable to think that you might have positive announcements about accretive transactions over the next 12 months in LNG.

In LNG and in offshore, yes. I think we can say if you include offshore, I think this is a statement and I think we have not -- we have presented that one of our goals in financing our future is a creation of LNG offshore specific vehicle in which TEN will be the major shareholder, and I think that vehicle will get its own life when the time is appropriate.

I think we are perhaps two to three quarters away from that, mainly because the deliveries of our offshore vessels are in the first quarter of next year and the second quarter of the next year. But I think, yes, and I think then that vehicle will be [where] TEN will, again, be the major shareholder, a very active player in this market as TEN is in the conventional tankers.

Great. And then, just switching over to clean, quickly we've seen some softness in rates, but (multiple speakers) I would say, but the term rates are still in contango, so that's relatively encouraging.

I was wondering if you had commentary on that market, when do you think it might turn. I know that you have a number of Panamaxes which have been, say, underperforming compared -- not yours, but just the market itself compared to the MR space. Wondering if you could talk about the dichotomy of those spaces and how you think it develops over the next two years, given the very mellow order book.

Well, I think, yes. As you said, not our Panamaxes because all of our Panamaxes are chartered long term, and we just renewed one of them at the minimum -- at a very significant minimum rate with a profit-share element to a major end user.

Yes, not yours, just more talking about (multiple speakers) market and how you view it.

That was clear. And we expect -- as George said, we are -- if you divide that fleet in two, we're one of the largest public carrier owners. We are not, as you know, an operator. We do not charter in ships. We do not have any obligations to pay our charter higher on the ships. We have -- we own ourselves and we operate them, and this is a very simple policy that we have kept for a period of time.

So we expect the products to be one of the growth parts of our business, also in the income side, and we are looking in today's values at opportunities in modernizing the fleet in this segment.

And the eco-spec sides or the eco-spec specification?

The majority of our ships -- that's a very good point. The majority of our ships are very modern vessels, so they have an economical element themselves.

As you've seen, all the major companies are taking on modern ships, were spending minor on our existing ships, and we have been very successful in reducing our consumptions close to 10% to 15% on our existing ships, be that they have been -- you cannot do something like that on a 20-year-old ship or even a 15-year-old ship, but on a 5-year ship that we own, with a small investment you can achieve something like that.

So yes, when the eco design proves itself, those will be the ships that we will be looking at. But I think it needs a little bit more time to prove itself.

Great. Just a point of -- quick question, Paul. You mentioned 56.6% net debt to cap, is that correct?

Yes.

And in 1Q, just forgive me, just quickly, I think it was around 60%, correct? So it's a little improvement.

60%, just short of 60%, yes.

Yes, excellent. All right, great. I just wanted to make sure I had that number correct. Thank you for your time, guys.

Thank you.

Gregory Lewis, Credit Suisse.

My first question is regarding the slide eight where you sort of lay out your 68% and it was 54% in 2012 and 2013. And I think we've gone over this before, but just if you could refresh me. When we think about vessels that are in pools, what's the sort of perceived rate you think about those vessels that you include in the secure revenues?

Yes, I think now we're down to almost three vessels. There were three vessels this quarter, one we have taken out, so it's four full vessels and one of them has left the pool, so we have reduced not for any specific reason.

I mean, we are big pool believers, and they have served us well. As you know, it's not -- we cannot hide it. It's all over the news that the pool, of which we have been for a very long period of time, seems to be going through some of its own realignment, let's say. So we're using some of that time until they realign themselves to spot the vessels ourselves.

So yes, I mean, there is within the fixed employment, because what we want to do is full utilization. That's why we have so high utilization of 98%, which this utilization is unprecedented in such a market, and in general in shipping, full utilization is usually 85%. But we have the three or four vessels are included in your -- in the fixed employment, I would say..

Okay, great. And then, just a couple other questions. The VLCC, the La Madrina, that was operating in the second quarter, I believe.

Yes.

Do we sort of have an estimate of what that revenue was for the quarter?

Paul, I think it was breakeven or a bit better.

Yes, it was exactly breakeven. I think -- well, let's say, a $50,000 or $60,000 loss in the quarter. So it was earning around $30,000 there? Just a second.

On a TCE basis, after taking the voyage costs here, it was about -- nearly $20,000 a day.

Okay, and then that vessel now is, I believe, idle -- idled again?

Well, the vessel -- yes, you can visit her in Singapore if you fly over.

But yes, I mean, we are not -- we do not understand how some of our, I do not know what -- we always learn as we grow old, but I still had not understood why other owners are willing to accept negative employment, which means to pay. As of today, $10,000 in the market today, so today you have to pay $10,000 a day on top of all of your expenditures to a major company to move your ship from one place to another.

So this is like having -- hailing a taxi in New York City where you are located and actually asking the nice Afghan guy who drives the car to pay you after you arrive to your destination. So this is -- I do not understand. People do it.

We decided not to subsidize the major oil companies through transportation. I think we are fine to break even. I think we are there for transportation, so we are fine to cover our expenses and do that, but we are not there to subsidize the major oil companies for a first-class service that we provide. I mean, you see that a lot of (multiple speakers) for reasons really aren't understandable are doing it because I don't think anybody's making anything or losing $10,000 a day.

So yes, the ship right now is waiting. She has all her approvals, she's in very good condition. If we can see something starting with the breakeven, including our downtime. In the meantime, she's been inspected by a lot of buyers for an eventual sale and becoming an FSO or a storage business.

Okay, but in thinking about the Madrina, is it something where we could maybe see it sit in Singapore and maybe come back into service if we see a rate rally in the VLCC market at some point in Q4? Is that how we should think about that vessel?

Yes, yes. I think she is ready, she has a very good performance as a name, and she's -- as soon as we see the worth scale getting somewhere in the midst -- in the 50s and these routes would start to make sense, yes, she's a vessel that has next special surveys close to nine or 10 months down the road. So she has quite some time to take advantage of any market or any political instability, which if something happens in the rate out there, she's there to take.

Okay. And then, just shifting gears a little bit over to the Nippon Princess, I mean, that charter was announced a couple weeks ago, I guess -- or about a week ago, at this point. Clearly when you take a step back and you look at the day rate on that fixture, it seemed like that was above market, a pretty attractive charter. Could you sort of talk about or provide some color on how that rate came about and is there any back story to that vessel earning that rate?

This [special] business, the Group has been operating in this country since -- has been working since 1978 on a continuous basis, so with the same -- in the same contract.

The ships tend to change. The last ship we had there was, I think, the [vergina] for a couple of years ago, so this is a contract that we have and we just renew as it goes by. It's a contract of 34 years. We just renewed it for another two years, so it will be a 36-year contract, and it works really on a five-year average rate because it's a long-term contract rather than what the spot market would be today.

So yes, you are correct. You could look at it as she might be a couple thousand dollars more above the spot market, but that's -- it's calculated on a five-year average.

In thinking about the operating costs on that vessel, operating with that state entity, does it tend to be more expensive to operate a vessel with them or is it about -- should we think about the OpEx on that vessel at about market rate?

I think if you want to go down to the nitty-gritty, I would give you the 5% higher operating expenses that other spot Aframaxes because here's looking at the -- in west Africa, which is not an easy place to get groceries to buy to and to repatriate crew. But that's all. It's nothing more than that, I would say.

If I look at her operating expenses in front, yes, they're in line with the other vessels, perhaps, as I said, the 5% higher just to -- this -- the purchasing of needed goods.

Okay, perfect, guys. Thank you for the time.

David Beard, Iberia Capital Partners.

A question on the longer-term charter rates and duration. Are we still seeing longer-term charter rates in the teens per day and would you look to fix year charters or are you looking out further?

If we have -- if we are forced to accept a fixed rate by a very good client, then we would be looking to do the shortest period we could, six months to one year.

However, if we are there to look at the longer period, we are there and we have -- we will be achieving escalations or we will be getting profit sharings.

So, I would say for as long as we can get a profit sharing, which is a minimum that covers our bottom line, and then we become flexible in allowing a longer period because the market is what the market is and we tend to -- we have a good signature to pay our base rate and we're sharing this good signature, meaning the client, the upside.

But if it's a fixed rate, we try to do the shortest period possible.

That's helpful. Thank you.

(Operator Instructions). And as there are no further questions, I'll now hand the floor back to the speakers for closing remarks.

Ladies and gentlemen, thank you very much for participating in our call and supporting the Company. I think this quarter's results are another example of how we differentiate ourselves because of the strategy we've been following, and we have followed the very conservative strategy of the Company.

Unfortunately for all of our shareholders, the financial environment that we're operating, the shipping environment, including, of course, the tankers and the other sectors of shipping that are depressed, is making our share price be at this very low level. However, I think 19 years of operation counts, so that the Company that follows its own model can make a difference from the spot environment that other colleagues of ours are participating.

Unfortunately, we are penalized -- our share price is penalized being a small company from what is happening in the spot markets, but there's nothing we can do on that, other than being big buyers of our shares ourselves. The only thing we can do is maintain our Company's stated strategy, which is try to keep low-cost asset acquisitions and long-term profitable employment. And I think the results of this quarter are an example of this, and hopefully in the next couple of quarters we will -- we can be able to report a profit, as we have done for 18 years in the past.

Again, thank you for your support, and I will ask our Chairman to -- enjoy your summer and make sure we will be working to try to make the next quarter even better. Mr. Chairman?

Thank you, Niko. I think you've summed it up. We look at our shares as a buying opportunity and we continue to do so. There's a famous quote by a former economist who said, The market can stay irrational longer than I can stay solvent. I hope that doesn't apply in my case. Thank you.

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