DHT Q1 2024 Earnings Report

DHT EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.31
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $0.23

DHT Revenue Results

• Actual Revenue: $106.30 million
• Expected Revenue: $106.87 million
• Beat/Miss: Missed by -$570.00 thousand
• YoY Revenue Growth: +13.20%

DHT Announcement Details

• Quarter: Q1 2024
• Date: 5/14/2024
• Time: After Market Closes
• Conference Call Date: Wednesday, May 15, 2024
• Conference Call Time: 8:00AM ET

DHT (NYSE:DHT) (NYSE: DHT) is a Bermuda-based independent crude oil tanker company that provides seaborne transportation of crude oil on a worldwide basis. The company’s core business involves the ownership and operation of a modern fleet of Very Large Crude Carriers (VLCCs) and Suezmax tankers, which are chartered to oil producers, trading houses and national oil companies. Through spot charters, time-charters and tanker pooling arrangements, DHT connects crude oil exporters with refining hubs in Asia, Europe, North America and other global markets.

Founded in 2005 and listed on the New York Stock Exchange later that year, DHT has grown its presence in the maritime sector by focusing on operational efficiency and disciplined capital management. The company is incorporated in Bermuda and maintains its principal commercial office in Singapore, while corporate headquarters and board activities are conducted out of Hamilton, Bermuda. This dual-hub structure enables DHT to leverage both local regulatory advantages and proximity to major shipping lanes and chartering markets.

DHT’s fleet is managed by an experienced team of maritime professionals who oversee vessel operations, technical management and crewing to maintain high standards of safety, reliability and environmental compliance. The company deploys modern tankers, many of which are equipped with energy-efficient designs and emissions-reduction technologies, reflecting DHT’s commitment to meeting evolving regulatory and customer requirements in the tanker industry.

Under the leadership of Chief Executive Officer Gabriel Panayotides, DHT’s board of directors comprises individuals with deep expertise in shipping markets, finance and corporate governance. The management team’s strategic focus is on capturing freight market opportunities across key oil trade routes while preserving financial flexibility and shareholder value through prudent investment and capital allocation decisions.

DHT Q1 2024 Earnings Call Transcript

Key Takeaways

• Strong Q1 performance with TCE revenues of €106.3 million, EBITDA of €83.7 million and net income of €47.1 million (€0.29 per share), driven by spot earnings of $54,000 per day.
• Robust balance sheet featuring 17.8% financial leverage, net debt of €13.5 million per vessel and total liquidity of $289 million (cash and undrawn credit).
• Maintained capital return policy with a $0.29 per share quarterly dividend (100% of ordinary net income), marking the 57th consecutive quarterly payout.
• Positive Q2 outlook as 72% of expected spot days are already fixed at $51,000/day, comfortably above the estimated cash breakeven of $25,300/day, with market rates mid-to-high $50,000s.
• Ordered four super-eco VLCCs for 2026 delivery to boost fuel efficiency and capacity, financed through operations, liquidity and mortgage debt, while aging fleet dynamics support a tightening supply.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Q1 2024 DHT Holdings Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laila Halvorsen, CFO. Please go ahead.

[Laila Halvorsen, CFO at DHT Holdings]

Thank you. Good morning, and good afternoon, everyone. Welcome, and thank you for joining DHT Holdings Q1 2024 Earnings Call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available at our website, dhtankers.com, until May 22. In addition, our earnings press release will be available on our website and on the SEC Edgar system as an exhibit to our Form 6-K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature.

[Laila Halvorsen, CFO at DHT Holdings]

These forward-looking statements are based on our current expectations about future events, as detailed in our financial report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports available on our website and on the SEC Edgar system, including the risk factors in these reports, for more information regarding risks that we face. We will start the presentation with some financial highlights. We maintain a very strong balance sheet, represented by low leverage and significant liquidity. At quarter end, financial leverage was 17.8% based on market values for the ships, and net debt was $13.5 million per vessel. Q1 ended with total liquidity of $289 million, consisting of $73 million in cash and 260 million available under our revolving credit facilities.

[Laila Halvorsen, CFO at DHT Holdings]

Now over to the P&L. We achieved revenues on TC basis of $106.3 million and EBITDA of $83.7 million. Net income came in at $47.1 million, equal to 0.29 per share. We continued to show good cost control, and operating expenses for the quarter were $19.2 million, and G&A was $4.7 million. We are pleased with the results for the quarter, and the vessels in the spot market achieved robust earnings with $54,000 per day, and the vessels on time structures made $39,500 per day. The average TC achieved for the quarter was $50,900 per day. And then over to the cash flow highlights. We started Q1 with $74.7 million in cash, and we generated $83.7 million in EBITDA.

[Laila Halvorsen, CFO at DHT Holdings]

Ordinary debt repayment and cash interest amounted to $15 and 35.5 million was allocated to shareholders through a cash dividend, while $3.9 million was used for maintenance CapEx. We prepaid $24 million on the ING revolving credit facility, while $7.2 million was related to changes in working capital, and the quarter ended with $73 million in cash. Switching to capital allocation. DHT has a defined and predictable capital allocation policy, and in line with our policy, we will pay $0.29 per share as a quarterly cash dividend, which is equal to 100% of ordinary net income. The dividend will be payable on May 31 to shareholders of record as of May 24. This marks the 57th consecutive quarterly cash dividend, and the shares will trade ex-dividend from May 23.

[Laila Halvorsen, CFO at DHT Holdings]

On the left side of this slide, we present an update on estimated P&L and cash break-even rates for 2024. P&L break-even for the full year is estimated to $27,500 per day for the fleet, while cash break-even is estimated to $18,300 per day, resulting in $9,200 per day per ship in discretionary cash flow after dividends. So assuming the vessels earn P&L break even, this means about $79 million in discretionary cash flow for the year. On the right side of the slide, we illustrate the quarterly cash dividend we have returned to shareholders since we updated the dividend policy in the second half of 2022. This amounts to a total of $1.70 per share. And with that, I will turn the call over to Svein.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Thank you, Laila. This slide compares DHT spot market performance over the last twelve months with the quoted TD3C index. The TD3C index is the most prominent index representing the largest VLCC trade, namely loading in Saudi Arabia and discharging in China. The green lines and the numeric legends illustrate our spot earnings for each quarter in the period, and the orange lines show the index earnings. Several reports refer to the index when assessing the VLCC market. As one could clearly see from these numbers, the index is not an appropriate reference for DHT's spot earnings. The earnings powers of the ship used in the index calculation is inferior to our average vessel, but this does not represent the whole delta. The other part reflects our customer base and related trading patterns and what we actually get out to the market.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

The average delta during this period is about $15,000 a day. On this slide, we have an additional reference to DHT producing competitive spot earnings, and that is when compared to peers. The peer group consists of the usual suspects listed in the U.S., all with similar trading policies with respect to geographical areas and origin of oil. One of the four in the peer group is yet to report for Q1 of this year. We illustrate quarterly spot earnings for each peer over the same period as the previous slide, and the numbers speak for themselves, with DHT coming out on top. Now to the outlook for the second quarter. As per usual, we provided our business updates on 10 days into the current quarter. The spot market softened a bit following our update, but is now on a strengthening path again.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Of the total estimated spot days for the second quarter, we have booked 72% at $51,000 per day. You should see this number in relation to the spot P&L breakeven for the second quarter being estimated at about $25,300 per day. As stated in the report, the freight market continues to show steady and reassuring conduct. The slumps in the market are grinding higher, with recent lows leveling out above $40,000 a day for an eco vessel fitted with exhaust gas cleaning systems. We assess the current spot market for the three main routes on average to be in the mid- to high 50s for DHT's average type-weighted fleet. US Gulf to the Far East is currently a tad behind Arabian Gulf, South America, and West Africa, but is likely on the rise.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

The North Sea to Asia has been absent for close to two years, but is now back in the market with a couple of cargos per month. We understand that the VLCCs are gaining market share, now about 50% of seaborne crude oil transportation, underscoring end users increasing focus on cost per unit transported. This is in particular for the long-haul trades, but is also now a result of the Red Sea challenges, with parts of the AG to Mediterranean trade having moved from Suezmaxes to VLCCs, sailing around Cape of Good Hope. There's limited time charter activity for periods in excess of one year. However, we currently estimate the three-year time charter market for a good ship to be in the mid-$50,000 per day.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

There is one client in the market now asking for bids on this, and there is a field of owners offering on this, although higher than our estimated markets. In sum, we are increasingly confident about what is ahead of us. The discussion of fleet development and demographics might be repetitive. We have here a presentation of the development with a somewhat different illustration. We have applied some key market observations and assumptions. One, over 90% of the ships now older than 20 years of age are engaged in the shadow markets. Two, this fleet's productivity is estimated to be some 50% of its nominal capacity. This is largely due to these ships rarely calling ports, but often doing transshipments of cargos involving numerous ships and hence delaying the delivery of cargo.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

And three, we assume ships will disappear from the shadow trade when they reach 25 years of age. As we have stated on numerous occasions, we expect the fleet to shrink over the coming years. The blue bars represents the fleet that has been or is below 20 years of age. This part of the fleet is employed in the compliant markets, and its size probably peaked in 2021, with some 768 ships. When applying our observations and assumptions, we estimate the sub 20-year-old fleet to shrink to less than 730 ships by the end of 2027. As most of you well know, this happens at the time of growing oil demand and expanding transportation distances. The ships in the shadow trades are serving a purpose in a market, but with a significant haircut in its productivity.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

We also take note that following the recent contracting of VLCCs, the activity has receded, with apparently limited interest from shipowners in contracting large tankers now. We are being told that interest is being directed to other ship types and classes. The VLCC order book now stands at some 5% of the sailing fleet, supporting our constructive market view. On that note, we will discuss our new building project. As announced, we have contracted four VLCCs, all for delivery in 2026. They are contracted at what we deem to be the top quality shipyards for large tankers. The ships will be of super eco designs, implying premium earnings power and related reduced emissions. These ships will have a new engine model that is different from what is being adapted to most of the other new building orders that have been reported over the past few months.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Further, our new building orders are of larger carrying capacity, both in deadweight and cubic terms. Again, when compared to most of the other orders that have been placed. This is expected to offer better economics for both customers and DHT. For the sake of clarity, we have no plan to declare the options for the additional vessels. Our next priority would be second-hand acquisitions, should we be able to identify opportunities attractive to DHT. As stated, we do not intend to issue any new capital in relation to this new building project, and our debt-financing plan consists of cash flow from operations, available liquidity, and new mortgage debt. With respect to new mortgage debt, our base case assumes about $60 million per vessel, with a DHT-style financing structure.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Importantly, the product of our strategy assume that the dividend policy with 100% of ordinary net income shall remain in place. This last slide is familiar, so we will wrap up by saying that our markets are robust, providing good support, and are steadily, albeit gradually, improving. Our team is doing a great job in getting the most out of what the markets have to offer, delivering premium earnings for our ships. Contracting on new ships seems to have receded, supporting the highly constructive supply outlook. And we'll stick to our knitting with a focus on first-rate operations and related financial results in anticipation of an increasingly rewarding times ahead. And with that, operator, over to you.

[Operator]

Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Frode Mørkedal from Clarksons Securities. Please go ahead, your line is open.

[Frode Mørkedal, Analyst at Clarksons Platou Securities AS]

Thank you. Hi, Svein.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Hi, Frode.

[Frode Mørkedal, Analyst at Clarksons Platou Securities AS]

I had a question on the VLCC and the trading patterns. I feel like the smaller tankers we all know have been benefiting from diversion around Africa and longer ton miles. But what do you see on the VLCC trade pattern? I think you mentioned briefly that VLCCs are taking Suezmax cargoes. Maybe you can elaborate on that, and are you seeing any other changes?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

It's you know really related to the Red Sea, as I stated, that some of that Suezmax trade that typically went through the Suez Canal into the Mediterranean are now being sort of put together on large ships, on the VLCCs, and thereby sailing around South Africa. So this is a smallish part of the market, but is nevertheless sort of adding distances, if you like. So it's I would say this is the primary change in the current environment.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

We have one trade that is on sort of the doorstep of evolving, and that is the TMX project, out of Vancouver, West Coast Canada, where we expect a meaningful portion of that crude oil to head further south for transshipments over to the VLCCs and then to head to Asia, to China in particular. And we base this partly on the fact that one of the two Chinese state-owned oil companies, they own a quarter of the equity in this project. And they have been discussing this with us, and I'm sure with others, and expect that trade to evolve. So that is an interesting addition to the VLCC market.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

But beyond that, it's just a general trend of really, you know, there's more barrels coming from the Atlantic. Petrobras is increasing production. Guyana will also, at some point, get more involved in VLCCs. So, and as I mentioned, the North Sea seem to be back, although sort of only with a couple of cargoes a month, but there's some new incentives in Korea in particular, we understand, that will maybe stimulate that trade to potentially grow.

[Frode Mørkedal, Analyst at Clarksons Platou Securities AS]

Okay. That's interesting. That's good color. On the new build, you mentioned that they are super eco. Can you quantify the fuel consumption versus, you know, existing fleets you have?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

The simple answer is no. So we know what it is, obviously, and we will be in detailed discussion with some of our key customers that are interested in these ships, so on, on those particular sort of features, but it is a marked improvement from the five ships that we have that were all built in 2018, which is sort of the last class of these large vessel ships. So it's a marked improvement. So we're very excited about getting these assets into the water, and get to see what they can deliver.

[Frode Mørkedal, Analyst at Clarksons Platou Securities AS]

Yeah. Will be interesting to know those facts when this arrives. Well, my last question is on, let's say sentiment. I feel like in the stock market, at least the investor sentiment has improved a lot, recently. Basically switching from, let's say, cautious approach to basically reflecting the fair fundamentals as we see at least. But how do you see the sentiment among shipowners in the physical world, so to speak? What's the mood right now?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

I think some of the traditional tanker owners have at least a couple or three of them have sort of made their bets on the new building side, and they seem to be sort of content with what they have done. They seem to be still, you know, interested in the medium age to maybe older spectrum on the product side. But I'm not the authority on that market, so it's not our market, so you should challenge other people on that. The asking prices for modern ships are quite on the large tankers are quite elevated. And there are some interest around, in particular from a couple of state-owned actors. One being Bahri, which is Saudi Aramco's shipowning arm.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

I think that's sort of an encouraging sign because they are, of course, very close to significant state-owned oil company who plays a very important role in the oil market in general. So if they are in need of more ships, I think that might be an indication of what, what their expectations are. They're focusing on modern secondhand ships.

[Frode Mørkedal, Analyst at Clarksons Platou Securities AS]

Perfect. Great. Thanks. That's all for me.

[Operator]

Thank you. We'll now move on to our next question. Our next question comes from the line of Omar Nokta from Jefferies. Please go ahead. Your line is open.

[Omar Nokta, Managing Director at Jefferies]

Thank you. Hey, hey, guys. Good, good morning, good afternoon. Svein, just wanted to just ask about the VLCCs. You know, you mentioned and we've seen that the market for new orders has kind of cooled from other shipowners. You decided not to exercise the four options. And just wanted to ask, just in terms of, I guess perhaps maybe on sentiment, but maybe just in general, big picture, why do you think there's been a cooling in terms of new orders? And then also, is that cooling as a transition towards DHT, or was the plan all along not to really exercise those options?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Well, that cooling has nothing to do with DHT. I think we stand independently in making our decisions. So this is sort of a coinciding event. I think there's sort of a couple of other markets that maybe now are looking attractive for some reason or another. And this is maybe a market that I'm not following so much, so I can't give you all the details on that, but that seems to be the case. But I think also at the get-go now, there were not sort of a big hoard of owners ready to order ships for a variety of reasons. I think they had other maybe projects and ambitions or, you know, priorities when it came to allocation of capital.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

So, LNG seems to still to suck up a lot of capital from the shipowning industry, and as you all know, those ships are cost, you know, at least twice as much as a VLCC. So, yeah, it's probably a mix of reasons. I think lastly, you know, deliveries now are really four years, no, no, three years out at least, so you're looking into 2027. I think that could also be a bit of a turnoff for most people. They would like to have ships, you know, earlier delivery, and which is why we were a bit sort of keen to get that, our deal done quickly because we had deliveries, which is now... The first ships is less than two years to deliver, so we found that attractive.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

It's probably a mix of things.

[Omar Nokta, Managing Director at Jefferies]

Okay. Thanks, Svein. That was very helpful.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

But just to add, so you know, our decision is more that, you know, when you go to a yard, you typically are offered options, and of course, you would like to have them. Even, you know, if we had a long-term project for several of these ships, then we would probably have gone ahead with one or several of them, but that is maybe not realistic in the short time. And this new building project is not $500 million. It's already a big commitment financially for the company. So to sort of double up on that, we think would be a too big a commitment at this point, hence, priority would be second, and if we can find it.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

There's a big if on that, because it's not a given, so.

[Omar Nokta, Managing Director at Jefferies]

Yeah. No, no, clearly makes sense. And maybe, you know what, I'll just one quick follow-up. Just you mentioned, which I thought was interesting, the discussion of, you know, the vessels that are over 20 years of age having 50% productivity. Is that an assumption you're making on perhaps the future, or is that something you're actually seeing now? And is that—is there anything similar for maybe vessels over 15, also in line with that?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Well, for the ships over 20, you know, as we mentioned, over 90% of those ships are in the shadow trade, and this is what we see now. This is happening because many of these ships are not fit to go into many of the load and discharge ports that is being used. So there's a lot of transshipment in, you know, from smaller and into smaller ships. And this all takes a lot of time. It's very inefficient. So that fleet sort of very quickly is not as productive as its nominal capacity would suggest. When it comes to ships between 15 and 20, the utilization is the same as for younger ships. We have four ships in this category, and there's no difference in utilization and productivity.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

The only thing is from time to time, the freight rate that you are offered for a ship that is between 15 and 20 is then mostly at the marginal discount to what a more modern ship would achieve. But there's no change in the productivity or efficiency.

[Omar Nokta, Managing Director at Jefferies]

Okay, very good. Thank you, Svein.

[Operator]

Thank you. We'll now move on to our next question. Our next question comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.

[Benjamin Nolan, Managing Director at Stifel]

Yeah, thanks. Good afternoon. Actually, I wanted to follow up on the question about the options that Omar was talking about. I was just curious how long you have those options or assuming that they're still outstanding, just trying to think about the possibilities as if, you know, would it be possible to maybe flip those should they get into, you know, become in the money and you can, you know, place the order and then resell it at a higher price? Or is there any way to potentially monetize that, or is the option duration just not probably long enough?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Well, we did not communicate the timeline of those options, so they have various declaration times and sort of a staggered schedule. So we will leave it at that. I think, you know, the options would be in the money today, if you can say that. I think realistically, to sort of resell those contracts or berths, you would have to declare them, and they can make them a firm contract for that to really be realistically possible. So it's hard to sort of sell that paper and think you can sort of get, you know, a few million in between. So I think that's not an unrealistic case. And if we were to sort of pursue that avenue, it meant we had to commit to the contract first, right?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

As I mentioned, we have other priorities if we are going to invest at additional money now going forward than to add new buildings at this point.

[Benjamin Nolan, Managing Director at Stifel]

Okay, that's helpful. I appreciate it. And then just secondly, on the time charter contracts, you mentioned that the charter market was especially thin, which it seems it's a little bit surprising given the, to me at least, the discount between where the spot market has been trading for a while and the kind of rate that you put out there. Is that something you expect, the margin to narrow, or especially as we move into the back half of the year and things normally get tighter? And just sort of how are you thinking about where you would like the fleet to be positioned from a spot versus contract standpoint?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

I think, one aspect here is that, shipowners with sort of, you know, in-house operations, quality ships that are, so to say, eligible for these term businesses, they have, quite, solid expectations for the future, so the bid-ask spread is quite wide. There is currently one project in the market, where, you know, an oil company is looking for a three-year charter for one or, or more ships. You know, all the bids, you know, came in at, sort of, average, let's call it around $60. We, we believe, although we don't have the details, but we believe so, asking prices. And I think if, you know, a project like that might clear in the, sort of, mid-$50s, that, that's where the market probably is. So let's see if the, if this project will happen.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

So I think it's a result of bid-ask, but I think eventually, you know, there will be more end users coming to the market to try to secure tonnage. Because as this market evolves, it will be attractive for them to secure ships for three years, also five years, I would think so. But it's a bit early in the upcycle for that to truly evolve.

[Benjamin Nolan, Managing Director at Stifel]

How are you thinking about sort of where you would like to be positioned from a percentage of your fleet?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Yeah. So as we stated before, it's, we have a clear ambition of building more fixed income for the company. But we prefer that fixed income to be of longer term nature, so we will not, we are not entertaining, say, inquiries for one-year charters or two-year charters. And we also, of course, looking for, the right money for the right ship. So there's sort of final details there for us to, to do things. But so but you know, our customer base involves customers that typically will look for term, term charters. So you know, assuming that we are right in this market evolving, then you should expect us to, to work hard to try to put some of that to bed.

[Benjamin Nolan, Managing Director at Stifel]

All right, great. I, I appreciate it. Thank you.

[Operator]

Thank you. We'll now move on to our next question.

[Operator]

Our next question comes from the line of Petter Haugen from ABG Sundal Collier. Please go ahead. Your line is open.

[Petter Haugen, Analyst at ABG Sundal Collier]

Thank you. A quick question from me on prices here. So, in the new building markets, we've been told that there are discrepancies between geographies, obviously. But could you please help us quantify what it would actually mean now if you were to, not with options, but coming fresh to the yard, ask for the eco, and also then what timing of delivery should one expect?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

As if you go to Korea, the yards are asking north of $130 million, and that is for essentially 2027 delivery. Those ships will be of 300,000-ton designs, so i.e. smaller than the ships we have ordered. And the sort of headline price also excludes scrubber. But so but this, of course, will all be basis for negotiation, right? But I think it would have to start with $130 handle for it to make it happen. If you go to China, to the top yards in China, I call that three of those yards, they will be asking $123-ish, I think, today, also for 2027 delivery.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

That is also the smaller ship, and also typically the asking price excludes the scrubber. But, it will be sort of, again, down to negotiations. So that is the price delta and the delivery. Some of the top yards in China are running out of space for 2027, so they actually have a tighter backlog than at least one of the Korean yards. Whereby two of the other big Korean yards seem to be more content to their backlog and not really entertaining inquiries that, you know, with any excitement, so.

[Petter Haugen, Analyst at ABG Sundal Collier]

Okay, that's very helpful. Thank you. And just as a quick follow-up, in the gray fleet or black fleet, if you will, what sort of TCE equivalence would you retrieve if you were to do illicit trading these days?

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

We're not venturing into that, so we're not even trying to smell it. So it's... But, you know, we've-- of course, we are being told a little bit here and there what it is, and some of the lump sum prices that are being paid are, call it sort of twice what is being done in the, in the compliant markets. And then it's sort of down to how long time does it take to deliver cargo and so forth. But the capital, of course, invested in those ships are very different to what sort of the big public companies and the leading Greeks are running. So, so I guess the returns are quite attractive, which is why they're doing it, so.

[Petter Haugen, Analyst at ABG Sundal Collier]

Mm-hmm. Okay. Okay, no, that's, that's all for me. Thank you. Thank you so much.

[Operator]

Thank you. There are no further questions at this time, so I'll hand the call back to Svein for closing remarks.

[Svein Moxnes Harfjeld, President and CEO at DHT Holdings]

Well, thank you very much to everyone who's been on the call and listening to us, and thank you for staying tuned to DHT. Wishing you all a good day ahead. Bye-bye.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

Participants

Executives

• Laila Halvorsen, CFO
• Svein Moxnes Harfjeld, President and CEO

Analysts

• Benjamin Nolan, Managing Director at Stifel
• Frode Mørkedal, Analyst at Clarksons Platou Securities AS
• Omar Nokta, Managing Director at Jefferies
• Petter Haugen, Analyst at ABG Sundal Collier