Euronav Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 9 speakers on the call.

Operator

Good day, and welcome to the Euronav Second Quarter 2023 Earnings Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Brian Gallagher.

Operator

Please go ahead.

Speaker 1

Thank you. Good morning and afternoon to everyone and thanks for joining Euronav's Q2 As of today, Thursday, 3rd August, 2023, and may contain forward looking statements that may involve risks and uncertainties. Forward looking statements reflect current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events, performance, All forward looking statements attributable to the company are to persons acting on its behalf and are expressly qualified in their entirety by reference to the risks, uncertainties and other factors discussed in the company's filings with the SEC, Which are available free of charge on the SEC website at www.sec.gov and on our own company website at www.urinout.com. You should not place undue attention or reliance on forward looking statements. Each forward looking statement speaks only as of the date of the particular statement, And the company undertakes no obligation to publicly update or revise any forward looking statements.

Speaker 1

Actual results may differ materially from these forward looking statements. Please take a moment to read our safety our Safe Harbor statements rather on Page 2 of the slide presentation. I will now pass on to our Interim Chief Executive and CFO, Leiva Lager, to start with the content slide on Slide 3. Leiva, over to you.

Speaker 2

Thank you, Brian, and good morning or afternoon to wherever you are, and welcome to our call. I will run through the Q2 highlights and financials before passing back to Brian, our Head of Investor Relations and Communications, To provide some further wider market thoughts, I will return to summarize the outlook. The current year continues to confound tanker market convention. It would be more usual to be discussing Q2 in context in context in context in context in context in the seasonal slowdown in freight activity and refinery maintenance programs. However, the freight market for Q2 was very similar in outcome to Q1.

Speaker 2

This included a spike in rates Towards the end of the quarter, reflecting a relative tight dynamic between supply of vessels and demand for crude movements. What these results also underline is the value of the Euronav and its striking ability to harness this market dynamic for the benefit of shareholders. This was our best ever Q2 operating performance outside the COVID pandemic. I'll say a bit more about operating leverage in a minute. With a new supervisory board in place, A strong balance sheet and good visibility on very positive medium term fundamentals, Euronav Investors We stand to continue benefiting in dividend terms.

Speaker 2

The Q2 dividend of $0.80 per share reflects Board's confidence in the Euronav platform and the strength of the current and upcoming tanker cycle. Turning now to the financials in more depth. This slide reflects the strength of the Euronev platform financially, Operationally, the operational leverage is reflected in strong returns net profit at $161,000,000 Similar to Q1 results, financially, balance sheet leverage is at 47.5%. The finance team has further boosted our liquidity with a new facility to $742,000,000 strategically, the Euronav platform continues to grow. During the first half, we have added 3 brand new VLCCs with maximum optionality to deal with the challenges of fueling tankers going forward.

Speaker 2

Last month, we took delivery of a new Suezmax and look forward to adding 4 more such vessels in the next 12 months. At the start of what we have consistently said over the past year is what we believe to be a multiyear cycle for the large crude tanker markets. With that, I will now pass it over to Brian to give some further thoughts on the current market cycle.

Speaker 1

Thank you, Leiva. Tanker markets as always remain very dynamic, but in our sense also very constructive. Forecast for oil demand has continued to grow consistently over the last 9 to 10 months, and this is illustrated on Slide 8. The IEA forecast consistent upgrades to this number and this is supported tanker markets along with positive ton mile development. On the left hand side, you can see the loadings west of Suez and therefore heading to the Far East have continued to grow at the expense of those coming in the other direction.

Speaker 1

Put very simply, crude is traveling much further than it was previously and that's helping to drive a higher demand for shipping even if consumption and production are at similar numbers. On Slide 9, we now move to a project which we've been involved in over the recent months Operationally, we'll continue to be engaged with off the Yemeni Coast. The salvage of the FSOs SAFR off the Yemeni Coast It's a critical mission that Euronav has provided the VLCC to the UN in order to take the excess 1,200,000 barrels of oil away from this particular This careful exchange is currently ongoing with Euronav continuing to provide operational support and staff to the wider salvage operation. We have been proud to be involved in this operation and hope it will conclude successfully in the coming weeks. We now turn on Slide 10 to an issue which continues to arise in the minds of oil market and tanker investors alike, Iran.

Speaker 1

On Slide 10, we refer to the recent speculation that again resurfaced in May regarding Iran and a potential deal involving the nuclear talks And a return to a more normal oil market engagement for the country. We believe it is important to remind investors of the outsized effect this would have on the tanker markets Should this event occur either in partial or for total terms. As the chart on Slide 10 on the left hand side shows, Iran has ramped up production to a 5 year high at around 1,500,000 barrels per day. Most of this production is being exported by the dark fleet. If and it remains a very big if, Iran were to return to the world economic order and is permitted to export crude via commercial tonnage, This would imply around 1,500,000 barrels per day of export opportunity that is currently denied commercial players like Euronav.

Speaker 1

This is likely to expand as the right hand side of the chart shows as Iran has recently As of 2017, we've been producing up to 3,500,000 barrels per day of crude. Iran remains one of the few nations capable of expanding production relatively quickly. So again, whilst it remains a big if and the world sorry, I'll start again. So whilst it remains a big if, The world is already consuming this Iranian oil. Any production uplift from here would increase the net supply for global consumption.

Speaker 1

However, The shipping now, the effect is far larger as this would benefit from the 1,500,000 barrels per day currently being consumed that it cannot access And any increase on this would also benefit tanker markets exponentially. Clearly, some of this shipping would come from Iran's own fleet, but Iran's return remains With that, I will turn it back to Leiva for any summary comments and I'll focus on the traffic lights. Eva, back to you.

Speaker 2

Thanks, Brian. Q2 was the 2nd best quarter for rates Since 1990, in VLCC terms, it was the 7th best. This gives context to how well underpinned and strong our markets Demand continues to remain robust, supported by ton mile growth. OPEC cuts are beginning to gain traction, but the impact needs to be seen against stronger seasonal demand, which we expect from later this current quarter. We've made no change to our traffic lights, but anticipate a positive seasonal trading pattern to emerge for this winter.

Speaker 2

So to sum up, the Euronav platform is in a robust shape. We are positioned for further growth and have a balance sheet to support further And in the meantime, the platform is delivering returns to shareholders via dividends. All of this means that we can look to the future with confidence. And with that, Brian and I will be very happy to take your questions. So I'll hand it back to the operator for the Q and A.

Operator

And our first question comes from John Chappell from Evercore ISI. Please go ahead.

Speaker 3

Thank you. Good morning or good afternoon. We have a first question for you. I'm sure the answer is it's a Board decision on a quarterly basis. However, noteworthy that the payout ratio moved up to 100% this quarter, not just within the context of your liquidity being so strong and the market being as robust as it is, but also within with the new board members in tow.

Speaker 3

So Should we read this into being a 1 quarter anomaly and we'll take it as it goes? Or is this maybe the view of the new Board that given the market strength, The payout ratio could be above the 80% threshold.

Speaker 2

Hi, John. Good to hear you. Good morning or good afternoon. So indeed, a very good question. We don't know if it's a one off, but the supervisory board clearly has made a decision based on our current LTV, which is 30%, and they don't see bad days coming.

Speaker 2

So based on that, the Q2 payout ratio was 100%. If this continues, it's something that we have to see and have a look at indeed in Q3. But as you rightfully mentioned in the past, it was an 80% payout ratio and to be looked at what Q3 brings. Absolutely, it's like you say, it's a supervisory board decision We propose, but it's in the end, supervisory board representing the shareholders who are taking the decisions. And there you have our dependent shareholders, but you also board members, but also our undependent Board members who are representing the minority shareholders.

Speaker 2

So it's a common decision, which is taken each quarter.

Speaker 3

Okay. Thank you. For my follow-up, Brian, as it relates to the back half outlook, So the Saudi cuts, it seems like they're finally biting from an output perspective, but maybe not so much on the tanker rates. How much

Speaker 4

of this is let's call

Speaker 3

it substitution, as you laid out kind of on Slide 8. And how much of it is more of the fact that just the demand is improving at a greater pace than people had expected and there's probably a little bit of inventory build ahead of the winter in the Northern Hemisphere.

Speaker 1

I think it's both of those John, but I think we'd factor in another situation which is We felt there's been some buyers of the dark trade who've been warned off. There's been some sort of crackdown at moment Every now and then in China and in India and that they've come back into the commercial fleet as it were, so that they're buying barrels from a more conventional sources and being shipped both from commercial players like us, they were not trading with us obviously and we've not been doing those trades anyway obviously as you know. But those buyers of the dark trade I think has been a third Which is offset that, so you've had ton miles and those two factors that you said along with this sort of people jumping across the fence from the dark trade. So I think that's really negated almost all of the cuts that we've seen so far.

Speaker 3

Okay. That's helpful. Thanks, Brian. Thanks, Alib.

Operator

The next question comes from Amit Mehrotra from Deutsche Bank. Please go ahead.

Speaker 5

Hey, good morning, Leivah and Brian. This is Chris Robertson on for Amit. How are you doing?

Speaker 2

Hi, Chris. Good to hear you.

Speaker 5

Yes, you as well. A question for either of you, this is just around the cash breakeven levels currently for the company. So if you could just walk through that?

Speaker 2

Yes. So I'm the number cruncher here. So just the numbers to give you and insight in this, Chris. So our Suezmax cash breakeven for the time being is 16,000 and VLCC 19,000. So this is what we are currently having as a cash breakeven.

Speaker 2

The P and L breakeven was in the presentation, CHF 18,000 Swiss Maxes and 23,004 for VLCC.

Speaker 5

Okay, great. Yes, that's straightforward. Thank you. Brian, this might be a question for you. So over the past few days, we've heard from the some of the product tanker companies talking about their aging fleet, especially as it relates to LR2s.

Speaker 5

And they've mentioned a few times about 15 year old potentially going dirty and coming into the crude trade at some point. Just wanted to get your thoughts around that. And is there any worry from your end? I know you guys don't operate in the Aframax segment, but is there any worry on your end that, That supply could be coming.

Speaker 1

Not on Julie. I think we've always had a strong view that we've never really understood the view that there'd be a lot of jumping between the two segments and of course it's quite costly and and operationally you still have an asterisk against your name when you do flip between the 2 sectors. And it's always something the product guys talk about more than the crude guys. We don't really see anything there. And I still think the as you rightly say, we're not involved in the Aframax.

Speaker 1

You've got this potential another leg of growth for Aframax coming from the Canadian export market with some of If the pipeline is potentially opening there on the Pacific Coast. So, no, it's not something that keeps us awake at night, far from it. And we've always felt that any switching between the products and the crude is reasonably marginal and reasonably specialized and that the trends are too great really that we're seeing to give us any sort of concern on that front.

Speaker 5

All right. Got it. Yes. Thanks for that. I'll turn it over.

Speaker 5

Thank you.

Speaker 1

Thanks, Chris.

Operator

The next question comes from Chris Sung from Weber Research. Please go ahead.

Speaker 6

Hey, good afternoon, Leila and Brian. How are you?

Speaker 2

Thank you.

Speaker 6

Hi, I wanted to just ask about your fleet renewal. You guys have a few 17 year old plus fees and sewage masks, how do you think about that in an era of firming asset prices?

Speaker 2

Here we continue our strategy. So indeed, if there is an opportunity, we will grasp it and indeed continue the pathway we had previously indeed selling and then taking opportunities for new builds to come in. For your information, you have read, we still have 4 to come on the water, Swiss Maxis after the break, which has been delivered in July. So we could continue that strategy going forward. And if there are opportunities, we remain And absolutely we'll propose this to our Supervisory Board.

Speaker 6

Okay, fair enough. And just as my follow-up, I noticed the G and A fell significantly. Is that more of an outlier? Or how should we think of it on like a run rate going forward?

Speaker 2

Yes, good question. Indeed, we touched upon it also last time. Our G and A is still a bit loaded with what we call corporate cost. In the Q1, we still had those legal costs, which were kicking in. And also in Q2, we still have some extra load there.

Speaker 2

But indeed, it goes into the good direction. It's absolutely a very clear focus for us to have that cost under control as much as But good shot.

Speaker 6

Okay. All right. Fair enough. Thanks so much. That's it for me.

Speaker 6

I'll turn it over.

Operator

The next question comes from Chris Wetherbee from Citigroup. Please go ahead.

Speaker 7

Hey, guys. This is Matt on for Chris. Thanks for taking my question. If we could just go over to the red light, green light chart and just thinking about the demand for crude, specifically as you think about the state of the global macro playing out, just wanted to get your sense of the puts and takes about the remainder of 2023 regarding any incremental changes that you might see specific to China, as they attempt to emerge from a little bit of a weaker economic period. I know you noted in the past that China is crucial swing factor.

Speaker 7

So just wanted to hear any thoughts there as well as how Iran could play into the scenario?

Speaker 1

Yes, good question. I mean, there's 3 things on the China side is that clearly from our perspective, we don't see the Chinese just buying from an economic GDP That's clearly a very important part of what they're doing. The second factor which we think is not being probably focused on, partly because it's very hard to get some numbers is They continue to buy from our rationale from a strategic perspective. So they're still they're building reserves. And the third element is obviously there's a very strong chain of refinery expansion in that country, which needs the crude as a feedstock to be then repatriated as diesel and other product back into the global markets.

Speaker 1

So there's a diversity to the Chinese angle, which we think gives it a certain amount of resilience. But again, your guess as good as ours in terms of if they're going to have a substantial slowdown from here, but we're not seeing any entity of that and we get a lot of confidence from those three factors. I think all of us Well, in the call from 6 months ago, I surprised how resilient the global GDP background has been. And again, that's been sort of reasonably well documented and as underpinned and you've seen that in our presentation with the EIA upgrading almost consistently since November and I'll note just a number of investment banks have upgraded this the last few weeks. And with regard to Iran, it's not something that we are sort of hanging your hats on, it's just a fact that it's a story that refuses to go away.

Speaker 1

We were surprised anyone a few weeks ago and we saw it sort of being talked about. And of course, because it's a source of quite rapid production growth potentially and then that turning into exports, but it could happen. There could be some sort of of deal, which would mean Iran would come back into the fold. And I think it just we needed we wanted to test investors and commentators to make sure that they're aware of how outsized the impact would be on tanker markets. It would have a much bigger impact on our market than it would on oil markets.

Speaker 1

So round trip, yes, we feel that there are a number of resilient themes with regard to the outlook for crude demand and that's Reflected short term in the pricing of crude, but also in particular as we see from our specific market, very good freight rates in It's traditionally a very, very quiet time of the year.

Speaker 7

Fantastic. I really appreciate that. And then just following up on the Iran comment. Is there sort of any type of timeline that you guys would be sort of eyeballing in terms of when that potential benefit could come online and then what exactly would that how exactly would that translate for Euronav specifically?

Speaker 1

No, no, we've got no timeline. I mean, I don't want to anyone on call to think we've got a hotline to Mr. Biden or anything. But no, it's more to flag the potential change that could happen. It's obviously the fact that there are very relatively few sources that can be tapped to immediately increase the supply of oil.

Speaker 1

And if with the war against inflation, that could become a very important sort of factor. In terms of time lines and backgrounds to that, no, there's sense of when it would happen, how it would impact on Euronav and other commercial players in the quoted space like ourselves is that you're opening up barrels which are currently not available to us, if they're available to be shipped by Iran, sorry, if we're able to ship from Iran, then that's 1,500,000 barrels per day of potential market, which is completely boxed away from all of us on the commercial side at the moment. That's the reason to flag it. But look, it's a black swan, if you like, a positive one, but one which we don't have any more any greater visibility than anyone else, but we felt it was worth flagging given it had been a story which had sort of risen out of nowhere earlier on in Q2.

Speaker 7

Understood. Okay. Thank you very much for the clarification. Very good. Thank

Speaker 6

you.

Operator

The next question comes from Omar Khanna from Jefferies. Please go ahead.

Speaker 4

Thank you. Hi, good afternoon, Liam and Brian. I just wanted to ask about how things are kind of operating from a corporate standpoint. Clearly, from the results today, things look like they're running quite well, but just wanted to ask given all the changes that have been taking place with Hugo gone and the new Supervisory Board in have there been any changes in how the business at Euronav is running day to day? And really how involved is the new Board with management's decision making.

Speaker 2

Omar, indeed, good afternoon. To tell you indeed there the focus of the current team remains very well on the strategy as always run-in the past. So this is at least Very, very clear for everyone working at TURNAV, also for our stakeholders in there. And then the New Supervisory Board currently gives us a positive dynamic. I think it's professional and contributive in the sense that The current or the new supervisory board is challenging us in terms of costs, fleet renewal and for sure they are wanting us to be the best compared to competition.

Speaker 2

And this gives us a positive dynamic making us very focused on the way forward. And hence you saw the results I will call them robust and even beating expectations there. So from that perspective, I think it's very positive, a plus That we could mention here.

Speaker 4

Okay. Thanks, Levi. That's good color because I was going to ask just sort of strategically about where you see Euronav heading, obviously you mentioned the strategy and whether it's disposable disposal of assets Can the business sort of operate as it is? And is there perhaps maybe a strategic big picture that's going to be announced in the next perhaps few quarters or few months that says, okay, this is what Euronav plans to do going forward, here's our new strategy, is there anything like that that's on the horizon based off of your conversations with the management team and the Board? How would you to characterize what Euronav is strategically here in the coming months?

Speaker 2

So Omar, seen from that And I can understand the question because this is, I think, a lot of shareholders and stakeholders here having that question on the top of their mind. But here I can confirm to you that apparently currently there is absolutely no change in strategy. We run the vertical integrated platform it's delivering And this is where we continue our journey. And in case, I could imagine, if there is a change, we will be informed and everything will be announced directly to the market. But for the time being, no changes.

Speaker 2

We continue and we enjoy the current upcycle. This is where we're standing for. And I cannot say more here than we continue the journey with the teams we have and the strategy which is in place.

Speaker 4

Thanks, Livid. No, that's helpful color. I just obviously, very sensitive questions and sensitive dynamic overall. I just wanted to hear how you viewed it. Thank you.

Speaker 4

I'll pass it over.

Speaker 2

No. Thank you, Omar.

Operator

The next question comes from Frode Marchetto from Clarksons Securities. Please go ahead.

Speaker 6

Thank you. Hi, everyone. Hi, Could we discuss the impact of Russian crude exports? How are the cuts from August affecting the market and what's your outlook for this situation going forward?

Speaker 1

Hi Frode, it's Brian here. Yeah, As we mentioned before, we've seen some evidence that there's been some during Q2 buyers of what previously been sort of dark trade or sanction trade from Russia, that the and also India who've jumped over into the commercial play and engage commercial tanker companies like ourselves and taking some barrels from more likely from the Atlantic than anywhere else. So that's been, as Jonathan said earlier, maybe a bit of a substitution effect. But that preceded any sort of real cuts that we'd seen in production and exports from Russia. So that's only sort of strengthening that trend.

Speaker 1

It's not a trade we're doing ourselves, obviously, as I'm sure you're aware. And of course with the pricing now with the crude underlying where it is against the euros pricing, we think that pressure is going to continue. So I think what we would expect to see is that The dark fleet is going to sort of have to sort of shoulder a more exaggerated element of that trade disappearing, partly because they've been doing most of it themselves, but also partly because it's an inefficient trade. We think a lot of those players will just sort of partnerships for a period of time. So we actually think there's going to be a reasonably muted impact on the commercial players like ourselves for the time being, unless those cuts become very, very profound and we don't really see that outlook either.

Speaker 1

But so for the moment we think it's going to be relatively limited impact on us.

Speaker 6

Okay. Are there any other reasons for the weaker Aframax and Suezmax rates you've seen now? How do you see those relative to VLCCs? They used to trade with a premium to VLCCs, right? And do you expect a comeback with that premium?

Speaker 6

Or That's now behind us.

Speaker 1

Over time, we would expect that longer term, as you say, medium term market sort of structure and profile to return whether these would be more leading. We felt the Versus has been fighting back as a subsector, they've been more and more involved in the STS trades, transfer trades in taking some of that oil ultimately to China and into India and we would expect to see the fact that we're seeing very long haul trade beginning to develop on a substitution basis from the Atlantic to the Far East that that would reestablish itself. We're still going to see pockets as you mentioned before. The Aframax still feels reasonably well positioned to us with some new growth opportunities in particular coming from Canada, but the Suezmax will be somewhere in between. This isn't going to be an instant sort of reestablishment of that orderly market.

Speaker 1

I think it's going to take another we think it's going to take another 6 to 12 months, We see that, but we're very comfortable in the view that these will sort of reassess their preeminence probably more likely in 2024.

Speaker 6

Okay, sounds good. Thank you.

Speaker 3

Thanks, Frode.

Operator

The next question comes from Ben Nolan from Stifel. Please go ahead.

Speaker 3

Yes, thanks. So I have Couple. The first is, I believe that there has been an expansion of Corpus just recently had an expansion of some of the Corpus Christi export capacity that enables greater loading for VLCCs, which removes a little of the reverse lightering dynamic. Just trying to think Drew, Brian, if you guys have considered sort of how we should think about or how you think about the impact of that, is it draw in more of these and thus help the V market or does the inefficiency of reverse spidering sort of to offset that?

Speaker 1

No, I think it's the same as before, Ben, in particular from where we were. If we go back to the ancient prominent ones, we think it's sort of reestablishing itself now as a theme. I mean we're consistently now in the high 4s, low 5,000,000 barrels per day of U. S. Exports.

Speaker 1

So now we think it's going to become a new growth mode. And the good news for the commercial sector, in particular in those quoted companies is that as you know it's a reasonably focused market and the players that can enjoy that market are those big commercial players like ourselves. But now we feel like a trend that's really beginning to reassert itself again. And As we know that the marginal exports or marginal, sorry, production of U. S.

Speaker 1

Crude is being exported. So no, it's a bit of a reheating and we actually did a paper in this in annual reports, I think it was in 2017, a lot of that was obviously taken away with COVID, but a lot of those things we wrote about then we are relevant today again.

Speaker 3

Okay. And then as it relates to the advisory board, and I appreciate the A, there's some Degree of this, we'll see how it plays out. But I'm thinking about the fleet and acknowledging that it's business as usual. But is it fair to assume that in the near term, there's probably unlikely to be any material changes in

Speaker 2

Again, I have a bit to repeat myself. Our Board members, and this is really a plus, have a strong understanding of our business. And they have an interest in maximizing value for Euronav and all its investors, including themselves for sure. But here we are confident that if we come with good files, good things that there will be ears and eyes and a decision taken. So from that perspective also, I only can reiterate what I'm saying is that having the supervisory board currently that if we come with Good topics.

Speaker 2

They are absolutely supportive and will contribute to the net bottom line.

Operator

And the next question comes from Dijs Berkelder from ABN AMRO Auto BHF. Please go ahead.

Speaker 8

Yes, good afternoon. Congratulations with the beautiful performance, especially you, Livan, showing well as Interim CEO, can you maybe give us a bit of an update on how we should look at the procedure of finding or appointing a new CEO and whether you are part of that procedure?

Speaker 2

Thank you, first of all. Good afternoon. So indeed, for your information, the interim position continues. And honestly, we don't ask the question or raise the question. We have now a bit of confidence because of the good results.

Speaker 2

And thanks to the team. This isn't only me, but This is the full Euronav team. So but for the time being, there is no urgency in one or the other direction. The team continues to be focused on the platform delivering results for our shareholders. So seen from that perspective, there is no urgency.

Speaker 2

And let's see where it brings us. We need to give a bit of reasonable time to all Stakeholders to settle in and see what comes, but there is nothing on the horizon in one or the other direction, please.

Speaker 8

But it's not that, let's say, recruiters have been hired to find someone

Speaker 2

also? Not that I'm aware of. I think here not that I'm aware of, Thijs, no.

Speaker 8

Okay. Then a follow-up question on potential change in strategies. Is it possible or happening already right now that you propose vessel CapEx in other vessel classes than VLCC or CS Max?

Speaker 2

At this, to be clear on this, we are Swissmax's PLCC. So there we have absolute expertise. So you could imagine that if we go with files that this will be primarily oriented towards SwissMax VLCCs. You never know that there is an interest in doing something else, but for the time being, we continue with our expertise what we have with the teams and which is very much focused on Swiss Max and VLCCs.

Speaker 8

Okay. Very good. Have a good day.

Speaker 2

Thank you, Tay. You too.

Operator

The next question comes from Sharif Almagrabi from BTIG. Please go ahead.

Speaker 3

Good afternoon. Thanks for taking my question. I wanted to ask about forward bookings. Almost half of Q3 has been fixed at About $45,000 for scrubber fitted VLCCs. Can you remind us how much of your VLCC fleet has scrubbers?

Speaker 3

And is there a program to outfit the rest of the fleet over time?

Speaker 2

So currently, I see it as one, SWISSmax as well certification well balanced from that perspective. So all our new builds having scrubbers and we do indeed for some VLCCs who are below 10 years old, we have done some retrofitting with the scrubber. So in total, 20 on the total fleet for the time being.

Speaker 3

Okay. Thank you very much.

Speaker 2

Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Liva Lager for any closing remarks.

Speaker 2

Thank you, Jason. So thank you to give me the opportunity to thank Brian and India to stand by my side for this call. I would like to thank the whole Euronav team for the quarter, which has been run very, very well and looking forward to what comes next. And I would like to thank all the listeners to this call for their interest in Euronav. I think as a concluding remark or In conclusion, I can say the Euronav platform is well positioned to continue its journey for all its shareholders and taking advantage of the upcycle.

Speaker 2

Wishing you all a very good day and hear you next time. Thank you. Bye bye.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now

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Key Takeaways

  • Q2 delivered a $161 million net profit and a $0.80 per share dividend, marking the best Q2 operating performance outside the COVID pandemic and a 100% payout ratio.
  • Freight rates remained robust, with Q2 levels the second highest since 1990, driven by tight vessel supply versus demand, upgraded oil‐demand forecasts, and continued ton-mile growth.
  • Euronav bolstered its financial position with 47.5% leverage, a new $742 million liquidity facility, delivery of three new VLCCs, and four Suezmax vessels expected within 12 months.
  • Key market drivers include stronger global oil consumption, longer haul loadings west of Suez, involvement in the FSO SAFER Yemen salvage operation, and upside potential if Iran resumes commercial exports (~1.5 Mb/d).
  • The company maintains its core strategy on VLCC and Suezmax platforms under a new supervisory board, with no planned strategic shifts and ongoing focus on cost discipline and fleet renewal.
AI Generated. May Contain Errors.
Earnings Conference Call
Euronav Q2 2023
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