DHT Q2 2025 Earnings Report

DHT EPS Results

• Actual EPS: $0.24
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.27

DHT Revenue Results

• Actual Revenue: $92.80 million
• Expected Revenue: $95.41 million
• Beat/Miss: Missed by -$2.61 million
• YoY Revenue Growth: -10.50%

DHT Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:00AM ET

DHT (NYSE:DHT), through its subsidiaries, owns and operates crude oil tankers primarily in Monaco, Singapore, and Norway. The company also offers technical management services. As of March 15, 2024, it had a fleet of 24 very large crude carriers. The company was incorporated in 2005 and is headquartered in Hamilton, Bermuda.

DHT Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q2 performance with $92.8M TCE revenues, $69M adjusted EBITDA and $0.24 adjusted earnings per share on a combined $46.3k/day average TCE.
• Positive Sentiment: Fleet renewal moves included acquiring a modern 2018-built VLCC for $107M and selling two older vessels for a combined $103M, yielding significant capital gains.
• Positive Sentiment: Secured a $308.4M credit facility at SOFR+132 bps for four newbuild VLCCs, leaving just $31.6M in remaining CapEx to be funded by operations.
• Positive Sentiment: Declared a quarterly dividend of $0.24 per share under its policy to distribute 100% of ordinary net income, marking the 62nd consecutive payout.
• Neutral Sentiment: Q3 bookings cover 805 time-charter days at $40.5k/day and 73% of spot days at $38.5k/day, with breakeven at $20k/day, despite a slow start.

Presentation

[Operator]

day, and thank you for standing by. Welcome to the Q2 twenty twenty five DHT Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, DHT President and CEO, Svein Moxnes Harfeld and Lila Halverson, CFO. Please go ahead. Your line is open.

[Laila Halvorsen, Chief Financial Officer at DHT]

Thank you. Good morning, and good afternoon, everyone. Welcome, and thank you for joining DHT Holdings' second quarter twenty twenty five earnings call. I'm joined by DHT's President and CEO, Svein Moknes Harfjerg. As usual, we will go through financials and some highlights before we open up for your questions.

[Laila Halvorsen, Chief Financial Officer at DHT]

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 on our website, dhtankers.com, until August 14. In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exhibit to our Form six ks. As a reminder, on this conference call, we will discuss matters that are forward looking in nature.

[Laila Halvorsen, Chief Financial Officer at DHT]

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. As usual, we will start the presentation with some financial highlights. In the 2025, we achieved revenues on TCE basis of $92,800,000 and adjusted EBITDA of $69,000,000 Net income came in at $56,000,000 equal to $0.35 per share.

[Laila Halvorsen, Chief Financial Officer at DHT]

After adjusting for the $17,500,000 gain on sale of vessels vessels related to the sale of DHT Lotus, the company had a net profit for the quarter of $38,600,000 equal to $0.24 per share. Vessel operating expenses for the quarter were $19,600,000 and G and A for the quarter was $4,600,000 For the second quarter, the average TCE for the vessels in the spot market was $48,700 per day. The vessels on time charters made 42,800 per day, while the average combined TCE achieved for the quarter was $46,300 per day. DHT continues to show a robust balance sheet with low leverage and significant liquidity. We have continued to strengthen our balance sheet and the second quarter ended with total liquidity of $299,000,000 consisting of $82,600,000 in cash and $216,500,000 available under our two revolving credit facilities.

[Laila Halvorsen, Chief Financial Officer at DHT]

At quarter end, financial leverage was 14.1% based on market values for the ships, and net debt was $10,000,000 per vessel, well below estimated residual ship values. On this slide, we present the cash flow highlights for the second quarter. We started the quarter with $80,500,000 in cash and we generated $69,000,000 in EBITDA. Ordinary debt repayment and cash interest amounted to $19,000,000 and $24,000,000 was allocated to shareholders through a cash dividend. Dollars 6,100,000.0 was used to acquire the additional shares in Goodwood Ship Management, 1,000,000 was used for maintenance CapEx and $39,000,000 was used for our newbuilding program.

[Laila Halvorsen, Chief Financial Officer at DHT]

Proceeds from the sale of DHT Lotus was 51,000,000 $52,600,000 was used for prepayment of long term debt, while net issued related to the refinancing of DHT Jaguar was 4,500,000.0 Positive changes in working capital and other amounted to $16,500,000 and the quarter ended with $82,700,000 in cash. With that, I will turn the call over to Svein.

[Svein Moxnes Harfjeld, President & CEO at DHT]

Thank you, Laira.

[Svein Moxnes Harfjeld, President & CEO at DHT]

It has been an active quarter for DHT, both closing projects that had been in the works for some time as well as new ones. You will here take you through our quarterly highlights, although several of these events has been communicated previously as subsequent events to the first quarter report or as separate events post the first quarter report or in the most recent business updates. Firstly, the DHT Appaloosa entered a seven to nine year time charter contract with a global energy major. The contract has a fixed base rate of 41,000 per day plus a profit sharing structure in which earnings in excess of the base rate will be shared $50.50 between the customer and us. She delivered into the contract in May.

[Svein Moxnes Harfjeld, President & CEO at DHT]

We went entered into agreement to acquire a modern secondhand vessel built at Hyundai, South Korea in 2018. She has large deadweight, is fitted with exhaust gas cleaning system, and is a sister of vessels already in our fleet. We have very good experience with these ships both commercially and operationally. The price is 107,000,000 and is in line with current broker values. This fleet addition will replace some of the divested earnings following the sale of older ships.

[Svein Moxnes Harfjeld, President & CEO at DHT]

The acquisition will be financed with available liquidity and projected new mortgage debt. We expect to take delivery towards the end of this quarter. We sold the DSG Lotus and DSG Pony built in 2011 at Buhai Shipbuilding in China. The two vessels were sold for a combined price of 103,000,000. These two vessels were acquired in 2017 as part of the acquisition of VW Group's VLCC fleet for an aggregate price of 115,800,000.0 and that served as well.

[Svein Moxnes Harfjeld, President & CEO at DHT]

The DSG Lotus was delivered in April and we recorded a capital gain of 17,500,000.0 during the quarter and net proceeds were 50,900,000.0. The DHCP only was delivered in July, and we expect to record a gain of 15,500,000.0 in the third quarter with net cash proceeds of 50,100,000.0. DHC Bahena built in 2007 was fixed on a one year time charter contract with global energy company at 41 and a half thousand dollar per day. She commenced the contract in May. Then we acquired minority legacy shareholder positions in Goodwood Ship Management for 6,100,000.0, and the company is now 100% owned by DSG.

[Svein Moxnes Harfjeld, President & CEO at DHT]

The company undertakes technical management and crewing for all our vessels, including recruitment, employment and training of our seafarers through our offices in Singapore and Mumbai, India. The entire DSC fleet has been reflagged to the Marshall Island registry, and there were some expenses recorded in OpEx related to this during the second quarter. We have entered into a new credit facility to refinance the DST Jaguar built 2015. The facility is 30,000,000 with a six year tenure and a twenty year repayment profile. It is priced at sulfur plus a margin of 175 bps and is otherwise in line with the DHT style financing.

[Svein Moxnes Harfjeld, President & CEO at DHT]

On this slide, we will provide you with a new building financing updates. We have entered into a 308,400,000 secured credit facility to finance our four new buildings. The facility is co arranged by ING and Nordea with backing from KSure. It is competitively priced at sulfur plus an average weighted margin of a 132 bps. The facility has a twelve year tenure and a twenty year repayment profile.

[Svein Moxnes Harfjeld, President & CEO at DHT]

We should highlight that the facility does not include a prepayment option in favor of the lenders halfway through the tenure. Hence, it has a true twelve year tenor with respects to both maturity and pricing. The financing underscores the confidence existing lenders have in DHT, our robust financial position, and our strategy. The new building project has a total CapEx just shy of $520,000,000 We have paid basically $180,000,000 in installments to date. Combined with announced credit facility of 308000000Dollars we have an estimate $31,600,000 in remaining CapEx, which we plan to fund through cash flows from operations and or existing liquidity.

[Svein Moxnes Harfjeld, President & CEO at DHT]

We view this as a very comfortable position for the company. Now we will discuss capital allocation and dividends. As per our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, the dividend for the 2025 is declared at $0.24 per share and marks our sixty second consecutive quarterly cash dividend. The shares will trade ex dividend on August 18 and the dividend will be paid on August 25 to shareholders of record as of August 18. In the graph to the left, we estimate our estimated P and L and cash breakeven levels for the 2025.

[Svein Moxnes Harfjeld, President & CEO at DHT]

As you will see, the difference between the two is estimated at $7,800 per day for this period. This discretionary cash flow will remain in the company and be allocated to general corporate purposes with the intention being to fund the remaining installments under our newbuilding program. The graph on the right illustrates the accumulated dividends since updating our capital allocation policy from the 2022. Accumulated amount is now $2.75 per share and reflects well during a period in which our share price has appreciated and we made share buybacks equal to 2.3% of the company in addition to the quarterly cash dividends. Now with an update on the bookings to date for the 2025.

[Svein Moxnes Harfjeld, President & CEO at DHT]

We expect to have eight zero five time charter days covered for the second quarter at $40,500 per day. This rate assumes profit sharing for the month of July and only the base rate for the month of August and September for the time charter contracts that has profit sharing features. We assume eleven hundred and fifty spot days in this quarter, of which 73% have been booked at an average rate of 38,500 per day. The third quarter started in a disappointing fashion, but we sense a potential turnaround as we speak. The spot P and L breakeven for the third quarter is estimated at $20,000 per day, a number you may use to estimate the net income contribution from our spot fleet for the third quarter.

[Svein Moxnes Harfjeld, President & CEO at DHT]

As we have repeatedly stated, it is our view that the dynamics of our market is increasingly being a favorable supply story with a rapidly aging fleet exceeding a benign order book of new ships and a string of sanctions making it increasingly challenging to trade all the ships in the Shadow Fleet. There are a number of other factors as well that we expect to come into play. The US is proposing tariffs on India's continued import of Russian oil. There are already signals of a shift in India sourcing its feedstock, supporting the Suezmax and the VLCC trades. OPEC has announced several increases in production.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So far, this has had limited impact on our markets. But with peak season for domestic power generation demand in The Middle East nearing its end, we expect the rise in seaborne exports toward the end of the third quarter. We noticed that refining margins are reassuring, supporting demand for feedstock. And Brazil has recently entered into a supply contract for crude oil to China, which is supportive of the VLCC trade. In addition, we see several potential triggers that could act as tipping points in favor for a very strong VLCC market.

[Svein Moxnes Harfjeld, President & CEO at DHT]

One, improved arbitrage economics for Atlantic Basin barrel to be sold to Asia. Two, escalating levels of sanctions and importantly enforcement of these. Three, reentry of Venezuelan crude oil into the compliant markets. Four, renewed attention to transshipment of sanctioned oil in Malaysian waters. Five, de escalating in trade and tariff tensions.

[Svein Moxnes Harfjeld, President & CEO at DHT]

And six, macro tailwinds with a resilient global economy, reasonable oil prices, and a positive Chinese economic read through. We continue as always to focus on what we can control and delivering on what we believe is a resilient business approach and strategy. We receive encouragement from our key stakeholders here on the shareholders, customers, and lending banks. Irrespective of which constituency you belong to, you should expect us to focus on solid customer relations with safe and reliable services, a company in our competitive cost structure with robust breakeven levels, a solid balance sheet, a clear capital allocation policy to create long term shareholder value. We appreciate the encouragement and the entire DSG team continue to work hard and operate a leading governance standard and a high level of integrity. And with that, we open up for questions. Operator?

[Operator]

Thank you. Our first question comes from the line of Frode Morcadel of Clarkson Securities.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Yeah. The first question I had is on the you mentioned it briefly, you know, this tariff from India. Maybe you could elaborate what kind of effects you've seen so far in terms of chartering activity. And do you expect that to continue basically have a meaningful impact on the, let's say, type of market going forward?

[Svein Moxnes Harfjeld, President & CEO at DHT]

It's a bit early days, but some sort of numbers so far. At the end of the second quarter, so I. E. June, India imported basically two barrels per day of Russian oil. And this oil was transported predominantly in smaller ships.

[Svein Moxnes Harfjeld, President & CEO at DHT]

For July, this has come down some 20% in volumes and we see also similar sort of trend lines for August. And this role in general does favor larger ships. So we have to, of course, continue to see this development. There could, of course, also be some sort of deal within The U. S.

[Svein Moxnes Harfjeld, President & CEO at DHT]

That will maybe not take out all of this. But so it's a bit early to say. But I think 20% start for July, maybe similar levels for August, if not more, and then let's see what happens. But there there are already inquiries in the market, you know, for them to purchase feedstock from further afar for to be loaded on big ships.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Okay. That's good news. Second question I have is on this fixture. You fixed an 18 year old ship, for one year at 41 and a half thousand per day, which given the age of that ship is everything is strong. Right? At least when I look at the best values, you know, probably 44,000,000 or so for a similar type of shift. If you assume, let's say, 12% unlevered return, you only require, like, 30,000 per day over time to justify that type of valuation. Right? So, you know, that rate you achieved look quite strong. So, yeah, the question is, do you think this kind of fixture is can be repeated?

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

And what does it tell you about the, you know, the case of higher segment values?

[Svein Moxnes Harfjeld, President & CEO at DHT]

I think, you know, for the last year or so, we have been quite successful in securing time charters for our older vessels. And all these charters have basically started with the four handle. I think the lowest was 40 and the highest was 49.5. And there are several things. This one, of course, is the return on the capital employed in this asset based on the cost.

[Svein Moxnes Harfjeld, President & CEO at DHT]

It's very good return for our shareholders. But also the older ships are a bit more exposed when you get the volatility in the spot market. So when you have sort of weaker periods, then you are sort of exposed to waiting time and maybe less customers being willing to fix an older ship unless there's a discount. So to create sort of stability in earnings for those ships, for us, we think has made a lot of sense. And of course, we appreciate the customers are fine with also using ships that are older.

[Svein Moxnes Harfjeld, President & CEO at DHT]

They are in technically excellent condition and they run very well, we believe. So so, you know, this is something we will try to continue to do, I think, as long as the the money makes sense.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Sounds good. Thanks, Sven.

[Svein Moxnes Harfjeld, President & CEO at DHT]

You're welcome. Thank you. Bye bye.

[Operator]

We will now take our next question. Please stand by. Our next question comes from the line of Sharif Almagabi of BTIG.

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

So, you know, you talked about it in the presentation earlier this week. OPEC announced they're gonna finish unwinding those cuts earlier than expected. Most of that crew is probably gonna find its way onto these. And I'm wondering how that's changed your conversations with charters given all this unexpected crude entering the market.

[Svein Moxnes Harfjeld, President & CEO at DHT]

Yeah. We you know, as a company, we have a very sort of key focus on on customer relationships, and we have a lot of repeat business with our customer base. And we we, you know, we are regularly talking with them, and we do sort of sense that there is increased interest and focus on having good access to VLCC capacity in some shape or form. And that should bode well for us. Of course, the customers are very close to the action.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So if they are increasingly interested in having those conversations, I think this is a bullish signal for the VLCC market and also for the UST then.

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

Thanks. And for the vessels you sold, LOTUS and Peony, you've got two other ones in the fleet of a similar age and a handful that are just a little bit younger. When you think about fleet renewal, is there a focus on maintaining fleet size the way you have with the acquisition of the newer tanker on the water, or is it more of a case by case approach?

[Svein Moxnes Harfjeld, President & CEO at DHT]

Of course, we have a fleet renewal, you know, concept in a way, but we are looking at what creates most value for the company. Lotus and Peony had a particular feature that they were built at Buhai Shipyard in China. And given some of the dynamics with The US, there were some benefits in sort of fine tuning our proposition to customers. Hence, we decided to sell them. There have also been very profitable investments and we think we got a good price for them.

[Svein Moxnes Harfjeld, President & CEO at DHT]

And the business that they have mostly been involved in would sort of come to an end because of age. This is a particular trade where they've been active. So it was a natural for us to sell them. We had a buyer who would take both of these sister ships in one go. And we did replace, of course, one of them you could argue with more modern ship we acquired in the second quarter.

[Svein Moxnes Harfjeld, President & CEO at DHT]

We are always on the lookout of new things. Dare suggest that we get to see everything and we also get to see things that we pass on. So it's not like we will buy everything that's being presented to us. So but the focus is on creating shareholder value and on earnings per share. So if we can, you know, do that confidently for the business, we are still able and willing to invest.

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

Understood. That's great color. Thank you.

[Operator]

Thank you. We will now take our next question. Please standby. Our next question comes from the line of Jonathan Chappell of Evercore ISI.

[Jonathan Chappell, Senior MD at Evercore ISI]

I'm fine on the market commentary. You laid out all the possible positive catalysts that could happen in the VLCC market. But you also said the third quarter started out somewhat disappointing. So it feels like we've been waiting for this VLCC reversion to being the best performing crude carrier class for some time, and it's just kind of stubbornly hasn't gotten there yet. So maybe what's been, in your mind, the reason for the disappointment recently?

[Jonathan Chappell, Senior MD at Evercore ISI]

And I guess just to be balanced, what are some of the negative potential catalysts that can keep the VLCCs from performing as you expect for the rest of the year?

[Svein Moxnes Harfjeld, President & CEO at DHT]

Yes. So it's a good question, of course, and it's always difficult to be very precise on this. But we do believe that the well, the second quarter had a significant markup in earnings compared to the first quarter. And I think some of that has been inventory building in China. And then when you build inventory, then suddenly that comes to a halt or a temporary halt.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So that combined with these additional barrels from OPEC certainly being in and used for power generation has not been a good combination also with the loss of the sort of West East arbitrage of The U. S. Crude. But also production frankly has tapered off a bit. And read reports now that The U.

[Svein Moxnes Harfjeld, President & CEO at DHT]

S. Refining refinery utilization is now up to 96%. That is not only because of demand growth in or robust demand in The U. S, but it's also of some domestic production tapering off. I think the combination of these factors is what sort of now gave us a little bit one on the nose coming into the third quarter.

[Svein Moxnes Harfjeld, President & CEO at DHT]

But I do sense it's temporary. So and I view Saudi Aramco in particular, I don't think there's anybody else that knows more about the oil market than those guys. So I have some confidence in them knowing what they're doing. And if you look at oil price, the market seems to be willing to absorb these reversals of cuts and that oil coming to the market. There's still sanction barrels at risk here.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So exactly how this will play out is hard. I think the bigger question in terms of risks is so far the world economy has shown resilience to a lot of the, call it, noise since or uncertainty created by created by trade and tariff discussions. So, you know, if if the world economy is not able to hold up that that resilience, then of course, that will have a negative impact on on where we are. But so I think that's really the the the key risk is is is the latter to see how that really plays out. So far so Thank you.

[Jonathan Chappell, Senior MD at Evercore ISI]

Little bit of a housekeeping. If I can get a follow-up really quick. It seemed like there were some, scheduled off hire days in February. It's been a while since that happened. Can you just, give us an update on what the dry dock schedule looks like, for the rest of this year and maybe even into '26?

[Svein Moxnes Harfjeld, President & CEO at DHT]

Yes. We have one ship now in the second half for dry dock. That's it.

[Jonathan Chappell, Senior MD at Evercore ISI]

That's it. Great. Thank you.

[Operator]

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Omar Nokta of Jefferies. Please go ahead. Your line is open.

[Omar Nokta, Managing Director at Jefferies]

Thank you. Hey, guys. Good afternoon. A couple of quick ones for me and maybe just a follow-up to start on the India discussion. Vinay mentioned volumes from Russia into India are down 20%, which is, say, 400,000 barrels.

[Omar Nokta, Managing Director at Jefferies]

From your sense or from if you're able to see, has that 400,000 just disappeared from the market or is it being shipped somewhere else?

[Svein Moxnes Harfjeld, President & CEO at DHT]

From the report that I've read on these details, it is suggesting that the feedstock is acquired from other sources and predominantly The Middle East. But India has sort of widened their sourcing of feedstock. So if you look at sort of statistics over time or pre maybe the Russia Ukraine conflict, then Middle East represented about 60% of feedstock and then the rest being sort of Atlantic barrels. So I'm not sure exactly how this is played out now. I guess we'll have to look at this after the fact once these trade statistics come out.

[Omar Nokta, Managing Director at Jefferies]

Okay. Yeah. I that. Thank you. And then just a financing question in terms of the twenty eighteen vessel that you're acquiring.

[Omar Nokta, Managing Director at Jefferies]

Looking at the Jaguar, you've refinanced that with 30,000,000 which is looks maybe to be about one third or so, the value of that ship. What kind of debt are you looking to put on to this latest acquisition?

[Svein Moxnes Harfjeld, President & CEO at DHT]

You know, we we like to run with a strong and maybe for some people a bit of a conservative balance sheet. So, you know, we have several offers to to finance this vessel. There are different considerations because we have a sense that we can set a new level of costs in financing secondhand vessels for the company. So it will be probably very competitive, maybe a bit longer tenure. So maybe we on this particular facility, we'll borrow on a relative basis a bit more, but use maybe that excess funding to prepay some other debt and just improve the general cost for debt for the company.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So but this is sort of stuff in the works. So we will advise the market in due course on that, but it's a super comfortable position to be in. So it's gonna be competitive, we think.

[Omar Nokta, Managing Director at Jefferies]

Okay. Good. And then maybe just one one final one, then I'll pass it back. You know, the first of your four new buildings delivers in, say, perhaps maybe six months or so. What's the charter appetite look like to take that on charter?

[Omar Nokta, Managing Director at Jefferies]

And I guess, what's your appetite to to do so?

[Svein Moxnes Harfjeld, President & CEO at DHT]

The first ship is coming in January, and there's been, you know, I would say, high level interest from some of our core customers in these ships for sort of different type of discussions, but it's a bit early yet. So but, you know, these ships are gonna be very, very good. I think there's gonna be there's nothing like it in the water today. So they do attract interest from some big customers. So let's see.

[Svein Moxnes Harfjeld, President & CEO at DHT]

It's we order those ships without employment and they're comfortable of keeping them also in the market. They're going to be phenomenal earners. But if there is some true long term business available to those at acceptable returns to DHT, then of course, we will entertain that. So it could be a mix, you know, and we have to see. I I do think that the next sort of six months or maybe less four or five months will will give us a better feel for how how this will develop.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So maybe on our next earnings call, we have a, you know, better views, maybe the wrong word, but then more clarity on on, you know, whether it's initial interest will actually develop into real business interests.

[Omar Nokta, Managing Director at Jefferies]

Yep. Great. Okay. Well, thank you for that. Fine. I'll pass it back.

[Operator]

Thank you.

[Svein Moxnes Harfjeld, President & CEO at DHT]

Thank you.

[Operator]

We will now take our next question. Please standby. Our next question comes from the line of Jeffrey Scott of Scott Asset Management.

[Geoffrey Scott, President at Scott Asset Management]

Two questions. The first one has to do with demolition activity or actually the lack of same. The sanctioned fleet, the dark fleet is primarily the over 20s. To the extent that that dark fleet is highly utilized, there's little incentive to send them to the breakers. Are you able to track the utilization rate of those sanctioned vessels, the dark fleet vessels?

[Svein Moxnes Harfjeld, President & CEO at DHT]

It's limited because they are not always keeping their AI systems on board. So you need pretty advanced satellite systems to keep track on this. There are some companies doing this. So we have access to some of that information. We assume that in the best case, the productivity of this fleet is maybe 50% compared to the compliant fleet, possibly less.

[Svein Moxnes Harfjeld, President & CEO at DHT]

So but they get phenomenal freights for doing these jobs. So they maybe can afford it and the ships are older. I think lack of scrapping is the dynamic is so that people that buy these older ships for to operate them in the shadow fleet or sanction fleets, They are paying quite robust prices. And of course, this is then influencing the price ship owner wants to sell the script for the for demolition. And if you run a scrapyard, you know, you buy a ship and it takes you quite a good while to, you know, take it apart and to recycle and sell all the pieces.

[Svein Moxnes Harfjeld, President & CEO at DHT]

It's not just the steel, it's also equipment, spare parts, you know, copper from cables and stuff like that. So the working capital load for a break yard is quite significant compared to what it was when the old lease received cost $10,000,000 So this is a challenging dynamic. And I've been on the record saying, I think you need some global efforts to get this business going because these guys, if they want to finance such an acquisition, they cannot do that with bank financing from a buyer that's sanctioned or been in sanctioned business. So this whole business sort of stalls. We would need a global effort, somebody like the World Bank stepping up to sanction the demolition of these ships and provide financing for all these breakers so to for for that to happen.

[Svein Moxnes Harfjeld, President & CEO at DHT]

Otherwise, the the new scrapping will be that these ships will just be abandoned and left as sort of, you know, with with no people on board and the anchor drops somewhere and become environmental disasters.

[Geoffrey Scott, President at Scott Asset Management]

Okay. Thank you for the color. Another real quick question. Back in April, you announced the financing at SOFR plus one seventy five, and then in July, the $308,000,000 facility at SOFR plus one thirty two. Was there something unusual in this facility, or are banks just more interested in financing shipping business?

[Geoffrey Scott, President at Scott Asset Management]

Or is DHC just qualitatively better than any of your competitors?

[Svein Moxnes Harfjeld, President & CEO at DHT]

You know, we have a very strong balance sheet and we've been in this game for quite a while now. So I think our track record in running the company in a sort of credible fashion is is there. So we have a very stable group of banks, seven banks that are supporting us. Our leverage is very, very low and the only thing they complained about is that they they cannot lend us enough money. So when we need that, it's competitive.

[Svein Moxnes Harfjeld, President & CEO at DHT]

The Jaguar is a bit of, I think, not typical financing. It has a combination with part of the newbuilding package, you can say, and it's a bit of an older ship that was refinanced. We expect the acquisition we made now in the second quarter, the 2018 build ship, to be priced meaningfully less than that DST Jaguar financing.

[Geoffrey Scott, President at Scott Asset Management]

The the spread is is substantially lower than than what's been disclosed by your competitors. Is that is do you see that as well?

[Svein Moxnes Harfjeld, President & CEO at DHT]

I I think, you know, we are viewed as an attractive counterpart for our banks, and, of course, that is then reflected in in in the pricing.

[Geoffrey Scott, President at Scott Asset Management]

Thank you very much.

[Operator]

Thank you. There are no further questions. Speakers, please continue.

[Svein Moxnes Harfjeld, President & CEO at DHT]

Well, thank you very much for all listening in on DHT's conference call. We appreciate the interest and support, and wishing you all a good day ahead.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Laila Halvorsen, Chief Financial Officer
• Svein Moxnes Harfjeld, President & CEO

Analysts

• Frode Morkedal, Equity Research at Clarksons Platou Securities
• Sherif Elmaghrabi, VP - Equity Research at BTIG
• Jonathan Chappell, Senior MD at Evercore ISI
• Omar Nokta, Managing Director at Jefferies
• Geoffrey Scott, President at Scott Asset Management