Capital Product Partners L.P.
Q4 2014 Earnings Call Transcript
Published:
- Operator:
- Thank you for standing by and welcome to the Capital Product Partners Fourth Quarter 2014 Financial Results Conference Call. We have with us Mr. Petros Christodoulou, Chief Executive Officer and Chief Financial Officer; Mr. Jerry Kalogiratos, Chief Operating Officer. At this time all participants are in a listen-only mode. [Operator Instructions] I must advise you that this conference is being recorded today. The statements in today’s conference call, that are not historical facts, including our expectations regarding developments in the markets, our expected charter coverage ratio for 2014 and 2015 and expectations regarding our quarterly distribution may be forward-looking statements as such as defined in Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve risks and uncertainties that could cause the stated or forecasted results to be materially different from those anticipated. Unless required by law, we expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations to conform to actual results or otherwise. We assume no responsibility for the accuracy and completeness of the forward-looking statements. We make no prediction or statement about the performance of our common units. I would now like to hand over to your speaker today. Please go ahead, sir.
- Petros Christodoulou:
- Thank you, Lisa, and thank you all for joining us today. As a reminder, we will be referring to the supporting slides available on our website as we go through today’s presentation. On January 23, 2015, our Board of Directors declared a cash distribution of $0.2325 per common unit for the fourth quarter of 2014, in line with management’s annual distribution guidance. The fourth quarter common unit cash distribution will be paid on February 13, 2015, to unit holders of record on February 6, 2015. The Partnership’s operating surplus for the quarter amounted to $32.1 million, which is $2.9 million higher than the $29.2 million of the fourth quarter of 2013. Common Unit coverage for the fourth quarter 2014 improved to 1.2 times. During the quarter the MTS generated $0.6 million in profit share as a result of the strong corporate environment for Suezmax tankers marking the reemergence of profit sharing in our trading operations. We are also pleased to announce that the Partnership has secured long term employment for a number of vessels as increased rate from part of the acquisition front. As previously announced, we have agreed to charter our the MTS trading for a period of three years, $26,500 per day, and the MT Arionas who are sponsor of Capital Maritime for 14 months at $15,000 per day, up from the previous charter was again at $14,250 per day. Earlier this month we also secured long term employment for an additional quarter tankers, namely we have six CMP and MP [ph] to Petrobras for three years at $16,400 per day, up from previous charters at $14,750; and the M/T Agisilaos and M/T Arionas [ph] to CMTC for three years at $15,600 per day, these vessels come off previous charters of $14,950 and $14,850 per day respectively. As a result and as of the end of the month, the fourth quarter 2014 the average remaining charter duration of our charters stood at 7.9 years with approximate charter coverage of 83% for 2015 and 64% for 2016. As most of our remaining charter expeditions in 2015 related product and fuel tankers we are unique in position to take advantage of the improving market fundamentals in these segments. Let's turn to Slide 2; revenues for the fourth quarter of 2014 were $49.7 million, compared to $47 million in the fourth quarter of 2013. The increase is mainly a result of improving employment rates and utilization for certain of the Partnership vessels and the profit share earned by the MTS. Total expenses for the fourth quarter of 2014 were $32.3 million compared to $32.7 million in the fourth quarter of 2013, excluding a $7.1 million loss from the sale of M/T amendment II. General and administrative expenses for the fourth quarter of 2014 amounted to $1.6 million compared to $1.4 million in the fourth quarter of 2013. The targeted net income for the fourth quarter of 2014 was $13.7 million or $10.4 million after taking into account the preferred interest in net income attributable to the Class B unit holders and the GP interest, that is $0.10 per common unit. Moving on to Slide 3, you can see the details of our operating surplus calculations that determine the distributions to our unit holders compared to the previous quarter. Operating surplus is a non-GAAP financial measure which is defined fully in our press release. We have generated approximately $32.1 million in cash from operations before accounting for the Class B preferred units distribution. After adjusting for the Class B units distribution, the adjusted operating surplus amounted to $29 million, which translates into a strong unit coverage of 1.2 times, this is after taking into account the net 11.3 million units issued in the third quarter of 2014. On Slide 4, you can see the details of our balance sheet. As of the end of 2014 the Partners’ capital amounted to $872.6 million, which is $91.2 million higher than the Partners’ capital as of December 31, 2013. This increase primarily reflects five items. First, the issuance of 17.3 million common units in the third quarter which raised gross proceeds of about $181.6 million. Second, the repurchase and cancellation of approximately 6 million common units from the Partnership sponsor Capital Maritime in the third quarter of 2014. Third, the difference of $36.4 million between the average fair market value of the five vessels that the Partnership agreed in September 2014 to acquire from Capital Maritime, and the agreed price for these vessels. Fourth, the payment of the $102.8 million in distribution since December 31 of last year. And lastly, based on the net income of $44 million for the full year of 2014. We need to highlight here the conversion of all the sponsors, approximately 4.7 million Class B units into common units right after the follow on offering of Q4/Q3. As of the end of the fourth quarter 2014, the Partnership’s total debt has decreased by $5.4 million to $577.9 million compared to a total debt of $583.3 million as of the end of 2013 as a result of the loan amortization in one of our operating facilities. Overall, our balance sheet remains strong with a net debt to capitalization of 36.7% and with Partner’s Capital representing 58.4% of our total assets. Turning to Slide 5, in line with our stated intention taking chance of the current favorable rate environment in the product and crude tanker market in order to provide better customer visibility to our unit holders we are pleased to have secured employment for a total of seven of our vessels at increased rate since the end of Q3. Starting over it fresh, the Partnership has chartered the 247,000 rate market tankers to Petrobras for three years at $15,400 gross per day. We have the right to nominate any of our 47,000 deadweight enabled built MR products tankers under these two - these charter parties. And we currently intend to nominate M/T Assos and M/T Axios; both charters are subject to final dead approval by their nominated vessels - for all their nominated vessels. The M/T Assos and M/T Axios from old charters with CMTC at the rate of $14,073 per day. CMTC has agreed to the new and both vessels earlier if required in order for these vessels to commence their employment with Petrobras. Also CMTC has also agreed to charter the M/T Akeraios and M/T Apostolos for two years at a growth rate of $15,600. Currently the M/T Akeraios and Apostolos are employed with CMTC at rates of $14,950 and $14,850 per day respectively. Moreover as we previously announced, one of our Swiss masters MTS was seeking December durational trading for three years at a gross day rate of $26,500 per day. Delivery under the new charter party is expected in early February. The M/T Arionas has also secured the employment CMTC for 14 months at an increased rate of $15,000 gross per day. We believe that these new charters increased upon the substantial visibility and further charter coverage and further diversify our planned portfolio with the addition of Repsol and Petrobras. Let’s now move to Slide 6, and taking into account the new charters the average remaining charter duration is 7.9 years, that is not taking into account the existing charters option to extend. More specifically, we have seven product tankers of which four options to a new and higher rate, and Suezmax’s that will see those charters expire within 2015. There are also two container vessels, Archimidis and Agamemnon, which we see in the slide that's coming off charter this year but no slides have the option to extend. On the product and crude tankers we expect to continue to take advantage of the attractive fundamentals of the market to secure favorable serial deployment for our vessels. Let’s now move to Slide 7, you can see the composition of our fleet which is built at first year yards and at the high specification and has more than tripled since our IPO in 2007. At the bottom right, you can see the average fleet age standing at 6.8 years compared to the industry average of 9.6 years. Let’s now move to Slide 8, we review the product tanker market development in Q4 2014. Product tankers spot earnings registered strong gains in the fourth quarter rising to the highest level since the third quarter of 2008. The dramatic drop in prices gave refineries a marginal boost that sudden rating run sharply resulting in increased petroleum production and exports. According to the IEA global refinery crude throughputs surge to a new record high of 78.9 million barrels per day in December, lifting [ph] to the Q4 2014 estimates to 78.2 million barrels per day. At the same time strong diesel charters spending from the tanker and oil that weather as a subsequent to developed patterns were also helpful. In these the market was also buoyant on the [indiscernible] and higher exports from the Middle East resulting from the new increased refinery capacity while from LR or tanker rates further boosted demand for MS. The three year tanker period market remains active during the fourth with rates moving upwards by more than 10% over the back of the improvement in the spot freight rates. The buoyant for the product tanker is expected to - the market is expected to further support period rates and activity going forward. On the supply side, the MR product tanker order book has stabilized over the last month. Currently it's standing at 18.4% as a percentage of the fleet as the ordering activity for MR tankers has slowed significantly. Highlighting this year's positive development, 66 orders were placed in 2014 compared to 261 in 2013 as most quality shipyards have exhausted their capacity through 2016. Slippage for full year 2014 remains material as approximately 29% of the expected MR product tanker new buildings were not delivered on schedule. Turning to Slide 9, we'll talk about Suezmax spot market which continued improving in the fourth quarter as average for earnings declined to the highest level since the fourth quarter of 2008. Favorable supply and demand dynamics drove the positive segment in the market in 2014. As Suezmax fleet contracted by 0.5% while at the same time the market employed stronger term oil demand on the back of longer businesses as charters continue to diversify supplies away from the Middle East securing crude from further fields such as West Africa, Libya and Venezuela. Highlighting the positive shift in 30 charters, the number of Suezmax fixtures from West Africa to East reached an all-time high in 2014. In the meantime, the steep decline in oil prices during the last month of last year further boosted demand for crude as it resulted in inventory building and stronger chartering volumes. As a result of the substantial improvement in the stock market compared to earlier in the market, the Suezmax period markets saw more activity with bigger yields, the 25% to 30% higher compared to the end of the previous quarter. According to the IEA, world oil demand is set to grow by 29 million barrels per day in 2015 while overall industry experts expect Suezmax tanker deadweight demand to expand by 4.6% in 2015 compared to a projected fleet growth of only 1%. Finally, given the market backdrop over the last couple of years, only limited new Suezmax orders have been placed which should help improve the demand supply picture going forward. The total Suezmax order book now stands at mere 14%. In conclusion, I'm very pleased to see the improved operating surplus of the Partnership for the fourth quarter of 2014 which reflects the employment of the Partnership fleet at higher daily rates. In addition, we are pleased that the strong fundamentals of the product and crude tanker markets are increasingly reflected in the respective period markets. Another positive development is the emergence of profit sharing in our trading operations. A number of our product as Suezmax tanker charters expire across 2015 and we expect to take advantage of the improving market conditions going forward. This should provide us with the opportunity to employee these efforts on higher rates and for longer periods. In the previous we agreed and secured both debt and financing for the addition of financial rights [ph] in container vessels and two MOM [ph] product tankers in 2015. Given the improving backdrop of the underlined markets we remain convinced that the Partnership has entered into a new growth phase. We expect that this will provide the basis for reviewing the Partnerships annual distribution guidance with an eye towards an upward revision in the first quarter of 2015, concurrent with the expected timing of the delivery of the first of five agreed vessel acquisitions from Capital Maritime. And with that, I am happy to answer any questions you may have. Thank you.
- Operator:
- Thank you. [Operator Instructions] Your first question today comes from the line of Ben Nolan of Stifel. Please go ahead.
- Ben Nolan:
- Thank you. My first question relates really to the traces back to the year - coming off charters in the near term and then there was the one that you put on a three year contract in December. Is the thinking pretty similar with respect to those other three vessels, should we - do you feel that the long term market is strong enough at the moment such that you can't put those vessels into the market on a long term basis and get a rate that needs serve your threshold levels?
- Petros Christodoulou:
- Well, indeed we see the continued spot strengthen the Suezmax’s market. We are expecting to get the right period charters with the right time and then obviously we're trying to secure the best rate going forward. That's a developing story which we would expect to fix in the first quarter.
- Ben Nolan:
- Okay, perfect. And then my next question relates to sorting to the distributions but also to the debt. You guys have yet or did not so far increase the level of the distributions but I know that there is a credit facility that is up for renewal in 2016, first of all, are you - what is the status or how are you thinking about financing and refinancing debt and does that at all impact how you are thinking about the potential of increasing distribution?
- Petros Christodoulou:
- Okay, as you have correctly said we have some of our facility start one more type quickly in Q1 2016, one year from now. And as we have communicated already for the market we have rate in advance trying to refinance these facilities, we are in advanced stages of this planning, I would expect - I can only tell you that you should see some interesting decision in the first quarter right ahead of time.
- Ben Nolan:
- I see. And maybe in color that you can maybe provide with respect to what we should be thinking about in terms of annual amortization and debt, what number should we assume or are you guys assuming that your allocated source of repayment of debt has in terms of thinking how much cash flow is available?
- Petros Christodoulou:
- Yes, we have at the moment four facilities that start to amortizing in Q1 2016. These are - we expect about $5.4 million in 2015, at the moment we have $98.5 in 2016 and much bigger number in 2017. If we do nothing unlike as I have said, we are addressing this way ahead of time, one year in advance, and we would expect to have made the payment in 2016 and 2017, not far off from the 2015 number.
- Ben Nolan:
- Okay. So pretty substantial reduction and relative to what it currently is. Okay, that's very helpful. And my last question relates to the two containers that you guys have on contract with - which come off contract later this year and they have options, it's a little over $30,000 a day. When will they need to give you information or inform you they intend to whether or not they are going to exercise those options? And do you have any expectation as whether they would or not at this point?
- Petros Christodoulou:
- Thank you. I'll ask Jerry Kalogiratos to take on.
- Jerry Kalogiratos:
- Firstly we are committed - it ends on mid-November of this year and for the amendment end of August of this year. Next line of the charter has options to - two years of flexible options, at $31,500, then of $3,500 and then another one plus one, at $32,000, so a total of four years if you want the functionality. And they would have to give us notice, 70-days in advance [ph] firm period. That market has been improving as of late and we have seen twelve month fixtures taking place at just below the numbers that most line has auctioned at. And given also the very flexible structure that they offer, I think we will only know much closer to the actual due date, the multi-date as they are going to proceed. But indeed a very attractive structure for the charter and what we have an offer here.
- Ben Nolan:
- Okay, great, that's very helpful Jerry, I really appreciate it. And that's it for my questions, thanks guys, nice quarter.
- Petros Christodoulou:
- Thank you.
- Operator:
- Thank you. Your next request comes from the line of Amit Mehrotra of Deutsche Bank. Please go ahead.
- Amit Mehrotra:
- Thanks so much. So my first question is on the distribution surprisingly, you guys have been clear that there is an upward revision coming in April but I'm just trying to get a sense in what type of magnitude that version can be because it looks like your next three rollovers will actually be a little more accretive than the previous seven. So the question is will the distribution take into account sort of this perspective growth or do you envision relatively modest increase followed by maybe additional increases in subsequent quarters as the cash flow is realized?
- Petros Christodoulou:
- Thank you Amit, you are right, we are a bit ahead of your time. This is an announcement and discussion we will be having in few months’ time. I would like you to appreciate that we do not want to add way to this discussion at this stage, we ask you renew all the metrics that you have get back to your mind in terms of what we can deliver and what we will deliver we'll announce in pretty much time.
- Amit Mehrotra:
- Okay, alright, thought I'd try anyways. Just a second question, with respect to the dropdown opportunities and when you expect to make the decision on those rates and for strategies also, how you're thinking about financing, I mean should we think of it of those additional dropdown opportunities or mix of additional beyond debt and equity to the course of the year next year?
- Petros Christodoulou:
- We start from - first things first, we have good options ahead of us but our first concern is to fix our currency, our common unit price which at the moment what we are doing, we're announcing and doing the operations by telling you entering into new period charters significantly better rate than before and also addressing the issue of refinancing our debt which is vis-à-vis two key items for us to fully to reach our operation and provide more transparency and visibility to our investors, and we believe that this is going to do wonders to our common unit price. After that then which - after we fix our currency we talk about growth.
- Amit Mehrotra:
- Okay. And just last question, pro forma for the role overs for this year, can you just give us some indication on where you think the average remaining life of your contract is going to go to because obviously we do see some contraction this quarter which is perfectly explainable but once you're through these explorations do you think you would get back to the 9/10 year range?
- Petros Christodoulou:
- Even I guessed somewhere in the reason between 8 to 9, we are revenue is up - this will be very much depending on how many of the charters exercise their options and how much through them we have to go further out to plus two plus three years, you need to get market. So - but I as a ballpark we should be in the 89% - 8 to 9 year range.
- Amit Mehrotra:
- Okay, great. Thank you very much. Congrats on the good results.
- Petros Christodoulou:
- Thank you.
- Operator:
- Thank you. Your next question comes from the line of Dean Bram [ph] of Raymond James. Please go ahead.
- Unidentified Analyst:
- Hi, good morning. Thanks for taking the question and congrats on the good quarter. I just asked one of the previous questions in a different way, is it fair what the charters that are coming up in 2015, is it fair to think of those as being kind of on average at 5% below market rate as in the last year they have come up on the market?
- Petros Christodoulou:
- Let me ask Jerry to answer that.
- Jerry Kalogiratos:
- Do you mean in compare to the fuel market?
- Unidentified Analyst:
- Yes.
- Jerry Kalogiratos:
- Well, the fuel market it does reflect towards an extent the current spot market but we also reflects expectations going forward, so while for example you have seen the one year period rate for MR product tankers move from below $14,000 at the end of the third quarter to more than $15,000 by end of January this year. For the same time spot earnings were averaging in excess of $25,000 per day. So it takes a while for a strong sport market performance to get flexible on these rates, especially for longer period rates. And what we fix with Petrobras on CMTC for three year and two year respectively, these are quite strong rates that we haven't seen for a while.
- Unidentified Analyst:
- That's helpful. And just a broader longer term question, obviously the fundamentals are strong in the fourth quarter and 2015, as you think about where oil is now in the $45 to $50 range, just your color or thoughts from the medium term outlook through - over the next 12 to 18 months, if oil stays in that range what does that do the tanker market?
- Petros Christodoulou:
- Well, there are two aspects to the product tanker market, one is what they describe which is what lower oil prices did for the product tanker market, mostly adversary timing margins, so we have great hiring, you have very high refining margin, a refining utilization in the fourth quarter and the second in December and January, a lot of product being moved around. It also helps with the trading as the content loads on the product means more storage and more inventory building and that indirectly boosts demand for product counters. It also means that traders can use their credit lines to move almost double the product volume that they moved before and give them more arbitrage opportunities, and all these was reflected in demand for product tankers. But at the same time the underlying demand from them remain as a big part of what you saw in terms of the performance of the product tanker market over the last few months was also driven by the refineries location, you have many of the new refineries and in the end there is some Gulf opening up right now as we speak. We have seen the boost in demand for LR IIs which - when drives demand for product tankers, or some of the LR IIs have been attracted to the crude tanker and in recent time made the product tanker market more tight. And secondly you have the increasing demand out of mostly Latin America, their demand growth is very strong and it hasn’t been only dependent on product size, and I think most of them expect that this year is also going to be driven by a lot by demand outrageous goals to Latin American countries; Mexico, Chile, Brazil. So I think the falling oil prices, that will be helpful, and helps the trading and early opportunities and more volumes in trading, but of course at the same time you have now in Q1 2016 you have - if you want the full impact of the product fundamentals.
- Unidentified Analyst:
- Great, thank you for the color.
- Operator:
- Thank you. Your next request comes from the line of Arey Rosa of Bank of America. Please go ahead.
- Unidentified Analyst:
- Hi guys, congrats on the strong quarter. I wanted to ask about the supply picture, just - you know you noted that currently the order book is a bit low but I wanted to understand a little bit better what's really driving that and what's causing a deserved backlog in production there?
- Jerry Kalogiratos:
- Hi, this is Jerry. Is the order book on the product side?
- Unidentified Analyst:
- No, on the vessel side.
- Jerry Kalogiratos:
- Sorry, on the product tankers or the Suezmax’s?
- Unidentified Analyst:
- On the Suezmax.
- Jerry Kalogiratos:
- On the Suezmax, the reason that the order book is - we expected the net fleet growth for Suezmax is very small. I think we'll find the analyst expect from negative growth to up to 1% for 2015. It's that firstly because the Suezmax market was at very low levels for couple of years, very few new orders were placed. Secondly it was a segment without many - real talking away because it was mostly written in the past by the West Africa, US East Coast trade and not lending expected that the West Africa, India, the continent match of the Atlantic and China trades that we pick up so much that will also boost the Suezmax market. And finally it's also because of the fact that many Suezmax’s order were placed but a couple of yards that never delivered, and I think even at the order book that you - the nominal order book that you will find today in many reports, I think many analyst would expect that only 40%, 50% of that will be delivered in time. Slippage for sewage market for 2014 was quite strong; it was more than 73%. So it was a variable market, it was some secure as we performed [ph], and also because the specific segment was not popular, so the order book is really small.
- Unidentified Analyst:
- Okay, great, that's helpful. And then the other question I had was just on global growth, seeing some of the weakness, in kind of some of these developing markets, is there any risk that carries through at some point into where rates are? It sounds like you guys are pretty optimistic on the future for rates, obviously kind of short to medium term future but it seems like there is divergence obviously and how developing market countries are doing, is that a threat at all?
- Petros Christodoulou:
- Well the proceeds slowdown and if you like the low oil price of oil quickly transfers wealth overtime for - from energy producing nations to energy importing nations. So that's going to be a tremendous boost for these economies, and overall for global economic growth, I mean the low oil is stand amount to a big cut in interest rates globally.
- Unidentified Analyst:
- So it's fair to say that as long as oil prices stay low you guys are expecting rates to continue to improve?
- Petros Christodoulou:
- Yes, that's another infinite process, at some point it will start tapering off but it's - we believe that the economic boost from such - from the impact of lower oil has not been fully discounted in the market, there is not only [ph] before the next two years.
- Unidentified Analyst:
- Okay, great, that's helpful to hear. Thank you.
- Petros Christodoulou:
- Thank you.
- Operator:
- [Operator Instructions] Our next request comes from the line of Sunil Sibal of Global Hunter Securities. Please go ahead.
- Sunil Sibal:
- Hi guys, congratulations on a good quarter and thanks for taking my question. I'm just curious you know if you could address on the distribution coverage side, now that you've got good visibility into this strong recontracting market, if you could tell how should we think about what level of distribution coverage that you guys are comfortable with going forward.
- Petros Christodoulou:
- Look, you have seen some consistency on our side, in the past we have talked about consistently being about 1.1 times, I cannot talk more about distribution like I said to Amit earlier, this is - the discussion will elaborate on in three months’ time. In the meantime we'll do what we can to totally derisk our operation with entering into period rates where we have openings and also refinancing our bank facilities and doing that way ahead of time. So we aim to - we respect the courteous sleep of our investors, we want to make sure that we did not create eyebrows on negative side and we are providing as much on - whether it's been possible to earnings. How that is translated into distribution we'll talk about in the next call.
- Sunil Sibal:
- Okay, that's helpful. And just one quick clarification on the timing, I think you guys have said previously that once you start receiving those new belts that's when you will take a call on the distribution timing, I think the first one of those gets delivered in March this year, so we would expect to see more clarity on the distribution strategy by the first quarter call, is that fair?
- Petros Christodoulou:
- That’s exactly what we have said, we have been saying and we say it once again, yes.
- Sunil Sibal:
- Okay, that's all for me. Thanks guys.
- Petros Christodoulou:
- Thank you.
- Operator:
- Thank you. You now have a request from the line of Jon Chappell of Evercore ISI. Please go ahead.
- Jon Chappell:
- Thank you. Just two quick questions; one on the crude, the VLCCs - I'm sorry, the Suezmax’s and their chartering optionality. You talked earlier in the Q&A session about thinking the charter rates are going to come up, they definitely have so far. We started all about the optionality and employing those vessels on the spot market. We already have 83% time short of coverage for this year, pretty much full coverage of the distribution and distribution increase, those markets are very strong, they are lot more volatile than the MR segment. So have you thought about more than diversified portfolio for the crude shifts and putting them on shorter turning point and the media term?
- Petros Christodoulou:
- Thanks for the question. This gives us the opportunity to highlight one of our core assets we're seeing in MMC. We're not here to actively trade the market, and we have not operating in the stock market. We are here to provide period charters two of our vessels provide visibility. And as I have said before, we try do our investors quality of sleep. We have an excellent relationship with our sponsor which is a traditional - if you like spot operator, so a fore player in the market, and have been dreamed out [ph] for the past history of 75 years and they are to - in a very complimentary function to provide time charter rates that have for us for the MOP, and they take us for [ph]. As we see the sponsor is very supportive, we are doing every effort we can at the moment to reduce the number of vessels that we have with the sponsor from 13 at the end of Q3 to 10 now and as we have communicated in the past, we aim to go down to single digits, ultimately we want to keep our other sponsor cargo drive so that eventually we can lean on the sponsor when we need period rates if the time - when the time comes, let's say when market is shallow. So this is - the stock market exposure is not an exposure, although it may be tempting as you said but it's non-disclosure, we are structured and we give to play.
- Jon Chappell:
- Okay, understood. Then the last one, just briefly, in two ships to Petrobras, I'm just curious are the issues specific to that company, tying up with that use at all, are there potential delays because of some of the things going out at Petrobras and if so or if not, what's the timing that you think that those contracts would actually begin?
- Jerry Kalogiratos:
- Hi Jon, these are new contracts, they were just concluded and these are normal contracts with deliveries - with a late end that starts from February down to the end of April, I think we will deliver those receipts to Petrobras in April. As you noted we will have something similar to which nominate [ph], and the names that we gave you today are the most probable candidates but - otherwise it's quite a straightforward deal.
- Jon Chappell:
- Okay, thanks Jerry, thanks Petros.
- Operator:
- Thank you. [Operator Instructions] We do not have any further request gentlemen, please continue. We do not have any further questions.
- Petros Christodoulou:
- Okay. I would like to take this opportunity to thank you all for listening to our earnings calls. And now I wish you a good day and good weekend coming up. Thank you.
- Operator:
- Ladies and gentlemen that does conclude this conference for today. Thank you for participating. You may all disconnect.
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