Teekay LNG Partners L.P.
Q4 2014 Earnings Call Transcript

Published: 20 Feb 2015

[Operator:]

Welcome to the Teekay LNG Partners' Fourth Quarter and Fiscal year 2014 Earnings Results Conference Call. During the call, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in the question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Now for opening remarks and introductions, I would like to turn the call over to Mr. Peter Evensen, Teekay LNG Partners’ Chief Executive Officer. Please go ahead sir.

[Scott Gayton:]

Before Mr. Evensen begins, I would like to direct all participants to our website at www.teekaylng.com, where you will find a copy of the fourth quarter and fiscal year 2014 earnings presentation. Mr. Evensen will review this presentation during today’s conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the fourth quarter and fiscal year 2014 earnings release and earnings presentation available on our website. I will now turn the call over to Mr. Evensen to begin.

[Peter Evensen:]

Thank you, Scott. Good morning, everyone, and thank you for joining us on our fourth quarter 2014 earnings call. I am joined today by Teekay Corporation's; CFO, Vince Lok; and MLP Controller, David Wong. During our call today, I will be talking you through the earnings presentation, which can be found on our website. Turning to slide number three of the presentation, I will review some of Teekay LNG’s recent highlights. For the third quarter of 2014, the Partnership generated distributable cash flow of $69 million, an increase of 9% from the same period of the prior year. For the fourth quarter of 2014, the Partnership declared a cash distribution of $0.70 per unit, an increase of 1.2% from the previous quarter, reflecting the increased cash flow contribution from our existing fleet and our recent LPG acquisition. The Partnership reported a strong Q4 coverage ratio of 1.09 times, which includes the fourth quarter distribution increase. In early December, the Partnership secured time-charter contracts with the shipping subsidiary of Royal Dutch Shell for five newbuilding LNG carriers. I will talk about this important transaction more in a moment, which we believe validates our strategy of pre-ordering optimally sized MEGI LNG carriers to meet the expected demand for modern fuel-efficient vessels in the global LNG market. In order to meet our Shell time-charter commitment, in December 2014, the Partnership exercised option to order three MEGI LNG carrier newbuildings at DSME with two of the Partnership's previously ordered uncommitted newbuildings also allocated to the Shell time-charters. Subsequently, in early February, we ordered an additional MEGI LNG newbuilding and received options to order up to four additional LNG newbuildings. All told, Teekay LNG currently has two uncommitted newbuildings with options to order an additional four newbuildings. In November Teekay LNG acquired the 2003 built LPG carrier Norgas Napa for $27 million from I.M. Skaugen and concurrently entered into a five-year charter back to Skaugen at a fixed rate plus potential upside through a profit sharing component. This immediately accretive on the water acquisition represents another example, while the Partnership can deliver near-term distributable cash flow growth to supplement the Partnership's portfolio of visible organic growth projects delivering from 2015 to 2020. Lastly, in January of this year Teekay LNG's LPG joint venture with Exmar took delivery of the fourth of its 12 mid-size LPG carrier newbuildings, which form part of that joint venture's fleet renewal and growth strategy. Turning to Slide 4, I will discuss Teekay LNG's five new time-charter contracts with Shell. The five MEGI LNG carrier newbuildings are scheduled to deliver between the second half of 2017 and into 2018 and will operate under fixed-rate time-charters with initial firm periods ranging between six and eight years, each with extension options. We view this transaction as strategic for Teekay LNG because it both, builds upon and strengthens our existing relationship with Shell, and provides another validation for major oil company for our innovative MEGI-propelled newbuildings, which are designed to be significantly more fuel-efficient and have lower emission level than engines currently used in LNG shipping. Including our two time-charter Cheniere, which are expected to commence in early 2016, seven out of the Partnership's currently ordered nine MEGI LNG newbuildings are now contracted upon their delivery and we are actively working with customers to time-charter the two remaining MEGI newbuildings prior to their delivery. Turning to Slide 5, I would like to spend a few moments looking at the expected impact of the current low oil price environment on large LNG project timelines. Over the past few months both, spot and oil-linked LNG prices have fallen and this is affecting the short-term time-charter market as well as long-term plans for new LNG export projects. As shown by the chart on the top-right of the slide, LNG spot prices in Asia have declined over the past 12 months from $19 per Btu at the beginning of 2014 to less than $7 per Btu today. This decline is due to a combination of high inventories in Asia following a mild winter and the impact of new LNG supply from export projects coming on in Pacific. The rapid decline in LNG spot prices has weakened arbitrage trading from the Atlantic to the Pacific in recent months and has contributed to significantly lower short-term LNG charter rates as utilization of the fleet has dropped. This drop in oil prices has also reduced the price of LNG sold under long-term oil price-linked contracts, particularly in Asia. If oil prices remain low in the future, it will negatively impact the economics of new oil price-linked supply projects and will also reduce the price advantage of Henry Hub-linked LNG exports in the United States. This may delay or cancel development plans for some projects that require a high LNG price to breakeven as most Greenfield sites do. As a result, we have slightly lowered our own outlook for LNG supply growth to 2020 as shown by the chart on the bottom-right of the slide, However the changes relatively small, as we had initially taken a fairly conservative view of which LNG projects were likely to proceed. While we have slightly delayed our forecast of capacity additions, roughly 80% of the volumes in our forecast have already taken FID and most of these projects are already under construction. Therefore, we continue to have good visibility of LNG trade growth through the end of this decade and it gave us further confidence to order more LNG carriers for later delivery. We also see demand upside from lower LNG prices. Over the past few years, the high price of LNG has kept some buyers out of the market and this has led to renewed competition from other energy sources. Lower LNG prices will therefore attract new buyers, which in turn better supports long-term demand growth. Turning to Slide 6, given the current weakness in the global energy markets it is important to highlight that with the exception of two of our 52% owned vessels, Teekay LNG's entire LNG fleet is employed on long-term fixed-rate contracts. As a result, we have minimal near-term exposure to the weak LNG shipping spot market I spoke about of moment ago. In fact with the recent award of time-charters from Shell, the Partnership has added to an already strong base and now has over $11 billion of forward fee-based revenues with large and diversified group of high quality customers. Within each of our main asset classes, we have assembled an attractive long-term average contract profile led by our LNG sector, which collectively has been average remaining contract duration of over 13 years and comprises over 90% of our total forward revenue. On Slide 7, I will review our financial results for the fourth quarter of 2014 as compared to the third quarter of 2014. For a reconciliation of distributable cash flow to net income, please refer to Appendix B of our earnings release. Starting at the top of the statement net voyage revenues decreased due to the sale of the Huelva Spirit Suezmax tanker in August 2014 and scheduled and unscheduled off-hire days related to two vessels. Partially offset by the acquisition of the Norgas Napa in November 2014 and the Madrid Spirit being off-hire during Q3 for its scheduled dry dock. Vessel operating expenses remained consistent with the prior quarter. Higher crew training and repair cost for certain vessels were partially offset by a decrease due to the sale of the Huelva Spirit Suezmax tanker. The maintenance capital expenditure reserve was consistent with the prior quarter with a slight increase due to the Norgas Napa acquisition. General and administrative expenses decreased by $1.3 million as we had had higher business development costs in Q3. The Partnership's share of the distributable cash flow related to our equity accounted joint ventures net of estimated maintenance capital expenditure reserves decreased by 600,000 primarily due to unscheduled off-hire for the repairs on the Woodside Donaldson, which is in our 52% own Malt joint venture. We expect the Partnership's share of distributable cash flow related to the Malt joint venture to decrease by approximately $3 million in the first quarter of 2015 compared to the fourth quarter of 2014, due to off-hire higher related to the Magellan Spirit's grounding incident. Further off-hire dates for the repair of the Woodside Donaldson and a lower expected higher rate on the redeployment of the Methane Spirit as its existing above market charter expires in mid-March. Interest expense net of interest income remained consistent with the prior quarter. However both interest expense and interest income decreased by similar amounts primarily due to the termination of interest rate swaps in the RasGas II joint venture in conjunction with lease terminations. Capitalized distributions relating to equity financing of newbuildings increased by $800,000, due to additional installments paid on the newbuilding MEGI LNG carriers in the fourth quarter using proceeds from the units issued under our continuous offering program during Q4. Other adjustments increased by $2.5 million, primarily due to the charter rates on the Bermuda Spirit and Hamilton Spirit, reverting back to their original charter rates on October 1. As a result, our coverage ratio improved to 1.09 times during the fourth quarter compared to 1.05 times in the third quarter. Wrapping up on Slide 8, we have updated a slide we presented to you last quarter for our recent transactions, including the four newbuilding vessels ordered from DSME and the acquisition charter back I.M Skaugen, Teekay LNG's total committed growth CapEx now stands at approximately $3.4 billion. Despite the recent headwinds in the global energy markets and short-term weakness in LNG shipping rates, the long-term fundamentals of the LNG and LPG shipping markets remained strong. We believe our strategy of pre-ordering optimally sized MEGI LNG carriers will continue to serve the Partnership well. As these vessels are attractive to a wide range of potential LNG and floating storage projects, the robust pipeline of growth projects depicted on this slide will provide Teekay LNG with steady and consistent distributable cash flow growth over the next several years and I look forward to updating you on new projects that will employ our two current uncommitted newbuilding vessels and hopefully our options as well. Thank you for joining us on the call today. Operator, I am now available to take questions.

[Operator:]

Thank you. [Operator Instructions] The first question is from Darren Horowitz of Raymond James. Please go ahead.

[Darren Horowitz:]

Good morning, Peter. Two quick questions for you, the first one, if we could just revisit Slide 5, that chart that you have on LNG supply growth forecast in the lower right-hand side of the chart. How much the downward revision is due to a delay versus cancellation of liquefaction capacity additions? I am just trying to get a feel if some of that revision to LNG supply growth that you have outlined in 2019 and 2020 might just be pushed out. I guess more importantly, how you think that might align with LNG vessel deliveries.

[Peter Evensen:]

Sure. Well we actually looked at more on the U.S. side of things and we saw for example that probably Lake Charles will be delayed by at least a year BG made an announcement as it related to that, so we still think the brownfield projects that were originally re-gas will get turned around. We still think for example Dominion's Cove Point will go forward and we think that the projects that were put on for British Columbia will be deferred, so they have fallen away.

[Darren Horowitz:]

Okay. Based on the current commodity price environment and that revised LNG supply growth forecast that you outlined, how has that changed the bidding activity for either FSU or FSRU projects either in terms of the amounts of bids that are outstanding or from a competitive perspective, you know, how your peers might be might be looking at those bids and are you seeing any variation with maybe them sacrificing margin just to try to attain their contract stability.

[Peter Evensen:]

Well, that is actually where we been really pleased, because our 174,000 MEGI LNG carriers that are delivering into the proper window, will be competing with some of the speculatively order 160,000 TFDE ships. What we have seen is that, on a lot of these tenders, people are specifying that they want MEGI. While some of the tenders allow you to order to put in TFDE, you have to realize that if you have a ship now, you are putting it in for a tender three years from now and you have to put it in at a discount, so we actually see a three-tier market and we take comfort in that. People want long-term MEGI LNG carriers as you saw with Shell tender and the 160,000 TFDE are going to have to discount themselves make up for the fuel savings as well as for the cargo-carrying capacity being less. We are happy with that and, of course, steam; we are not quite sure what will happen with steam. Steam maybe heavily discounted or it may get scrapped early, in which case that would help the demand for the MEGI as well as for the DFDE TFTE ships.

[Darren Horowitz:]

Thanks Peter. That is all I have.

[Peter Evensen:]

Great. Thank you.

[Operator:]

Thank you. The next question is from Michael Webber from Wells Fargo. Please go ahead.

[Michael Webber:]

Hi. Good morning, guys. How are you?

[Peter Evensen:]

We are good. Thank you.

[Michael Webber:]

Peter, I wanted to jump back and touch a bit on some of the competition around new tenders and where returns are right now. It seems like across the space that returns on some of the recent tenders sector wide has been coming in as they have been more competitive regardless of asset class. Can you talk to where without getting into specifics, where the Shell tenders fell on IRR basis may be relative to your historical hurdle rates. Then maybe talk to how much pressure if any you guys are really seeing on some of these newer tenders?

[Peter Evensen:]

Well, I have to say that the competition continues to be pretty fierce, so that is the general environment and that is what you would expect. As I said to Darren,, what is comforting to us is that the existing 160,000 ships even if you discount them are not preferred over the MEGI's, so we have an advantage, because we had ships as we had with Shell that are in the right delivery window. If you order one today, you are going to be taking delivery in 2018 or 2019. DSME is basically sold out, so we like the fact that we have been able to get the tonnage with the right delivery window. For example, BP ordered six MEGI's at Daewoo, which took up a lot of their slots for their Freeport volumes, so we like our market position, but it is tough and it is competitive, but we are very happy that Shell took us for five rather than split the order.

[Michael Webber:]

Sure. I am just curious as to where that relative IRR fell compared to say Cheniere or some of the more recent business that you guys have done?

[Peter Evensen:]

We are very happy with it. It is accretive, but it was the hard-fought area. I am not going to get specific on unlevered IRRs for competitive reasons.

[Michael Webber:]

That's helpful, though I appreciate the color. Actually sticking with tenders, it looks like the GAIL tender just went unfilled, at least from what we are reading, I know have you guys and a bunch of your competitors are looking at that, but it built into your component to it, that it was scaring people away. Is that something you guys are still looking at? Can you maybe kind of talk through how you thought about that tender and is a realistic opportunity going forward if they can reconfigure it or is it just off the board at this point?

[Peter Evensen:]

No. GAIL needs ships in order to fill their requirements to lift gas from Sabine Pass, so it was just a question of whether - so we are prequalified along with a limited number of our competitors. Not everyone is qualified and the question was, are you interested in building one out of three ships in India. The fact is, India like the United States has no shipyard that can build LNG carriers, so we were not interested in being part of a tender nor were any of our competitors, because you are asking yourself to do something that is impossible, which is to build LNG carrier in India, where it does not exist, so there's a lot involved with building an LNG carrier, so we expected that that tender will ultimately come out with just ships built outside of India, but they need nine ships.

[Michael Webber:]

Fair enough. I guess in terms of how you guys think about it from a capital budgeting perspective. Would that be kicked into the 2016 by the time and they have been under the tender comes around and gets rewarded? How long would that reboot process take if everyone just kind of stayed away from it - just go around, do you have a sense yet?

[Peter Evensen:]

I they already passed the point, but they may do like Exxon did with Papua New Guinea of chartering short-term ships until their long-term more efficient MEGI-type or DFDE ships come in. That is what Exxon did, because they ordered some ships in China for Papua New Guinea and those came later than the volume. I mean, there are enough existing ships out there that you can charter in short-term. I think that is probably given the delay in GAIL what will happen, but they will still charter long-term in order to lift those volumes.

[Michael Webber:]

Sure. Okay. That makes sense. One more for me and I will turn it over. You mentioned something at the end of your prepared remarks, I think not quite sure what is happen with steam assets on a go-forward basis. I am just curious, you guys have a diversified fleet and you have been replenishing it, but you got your steam assets, I am just curious as to whether any of your counterparties at this point are looking or talking to you guys about actually replacing existing tonnage on long-term contracts, newer tonnage or whether not those conversations would be still a couple of years down the line?

[Peter Evensen:]

We actually haven't seen that all of our steam contracts go out well into the 2020s, with I think the first one being 2022, maybe. That is not a concern for us right now.

[Michael Webber:]

Okay. That is all I have got. Thanks for the time, guys.

[Peter Evensen:]

Thank you.

[Operator:]

Thank you. The next question is from Fotis Giannakoulis from Morgan Stanley. Please go ahead.

[Fotis Giannakoulis:]

Yes. Hi. Peter.

[Peter Evensen:]

Hi, Fotis.

[Fotis Giannakoulis:]

I would like to ask you if you can give us your outlook similar to what you did for LNG vessels, for the LPG sector and how the lower oil prices have impacted the trade and the future outlook that you have on this particular sector.

[Peter Evensen:]

Sure. I would just give a couple of caveats. First of all, when people think about the LPG market, as far as investors are concerned, they usually think about the VLGC market. That of course looks like it has a lot of new buildings that are coming on order now. Ultimately, we think that as short-term strength and it has longer-term weakness, because there are, as you know, 50% of the fleet is on order in the VLGCs. However, Teekay LNG is not in the VLGCs market. We have been selling our existing ships out of the joint venture group for very handsome gains. Instead, we are in the medium size market and I have been very pleased with what's happening there because of the environmental rules in the eco-zones, we have been able to charter up our ships, so you see in the slide that we have got Statoil and Potash, which is a continuation of some existing charters, so we have been able to charter up those ships on time charter. We are not as much exposed to the spot market as other LPG players, but that is to answer your question in a bigger realm, I don't think we have really seen that market or we have not seen the effects of the market, because we do not really know what the production changes will be and that will of course affect whether there is as much cargo available for export from the U.S. as people had previously seen. If oil production goes down and you miss the associated gas, but that is not really our market, so I would say nobody really has a crystal ball on that right now.

[Fotis Giannakoulis:]

Can you also explain to us, all this long-term contracts [ph] big agreement that we see primarily in the LNG space, but if you can also comment on the LPG space? Do they have any flex in terms of volume. Although, that the FIDs [ph] have already been taken if oil prices and gas prices stay low, can that have any impact on the volume that will be transported consequently on the number of vessels that will be needed?

[Peter Evensen:]

Well, I am actually going to pounce on that question, because that is VLGCs. We do not have any, so I am not going to answer that question.

[Fotis Giannakoulis:]

Let me ask also about the LNG market and agreements in the LNG market?

[Peter Evensen:]

Well, I think as I said in my remarks, the market used to be pretty easy, because you could deliver gas out for $9 or $10 into Asia and sell it for $13 to $18. That margin is gone away, so what we are seeing now is people are reverting back to where we were a few years ago, where people are looking for long-term agreements. I think that is what is going to hold up FID on some future projects as people are going to wait till they get more confirmed agreements, because the sense that you could always sell your gas has disappeared from the market, because they are not sure you can sell it at a profit. I think that is true in Australia, where you seen some write-downs, because that gas comes in that $16, $17, $18 breakeven. Right now you are selling it for $9 or $10.

[Fotis Giannakoulis:]

Given this new situation, we used to think that it may on time of liquefaction capacity correspond to one-and-a-half vessels. How much of these multiplier can range in your opinion?

[Peter Evensen:]

My personal opinion is that Henry Hub-type projects will continue to get sanctioned. I think, there are certain flexibility built into the U.S. export projects that make it very attractive to export LNG out of Henry Hub. I also believe, as I said yesterday at the Teekay Corp call that oil prices ultimately will end up higher, so people are just taking a wait-and-see attitude toward things. If I look at the BP energy outlook, I still believe LNG will be the fastest-growing energy source, and it is still environmentally friendly. Now, it is cost competitive, so we actually see in places like India and China many more projects, probably we are more excited about regasification opportunities in India and other places, because of the low price, because it shows that the consumers can actually afford it.

[Fotis Giannakoulis:]

My last question is regarding the number of vessels that there are right now without long-term charter, so if you can give us an estimate, and I am talking about the ones that there currently in the water, plus the ones that are coming over the next couple of the years. What is the split between tri-fuel vessels and conventional steam-turbine vessels and if you can give us your view in a normalized market a couple of years from now of the potential discounts that the stream-turbine vessel might have to accept in order to be chartered versus their tri-fuel vessels?

[Peter Evensen:]

Well, I do not have all those figures to hand, but if you want it, Fotis, I would refer you to our research people and they can give you that data off-line. Since we are sold out short-term and we are not really exposed to the spot market, we sit and look at what the LNG carrier order book is and we see a lot of ships have been ordered, but we see out of 140 ships on order, 28 without contract, so that is what we are focused in on. Then when we look at the 28, we see how many of those are TFDE and how many of those are MEGI or the virtual solution and that is how we are looking at it, because we are very comfortable not being exposed to the spot market readily now, so we are sitting there looking at what ships can compete with us. I think it is difficult if you have a ship on the water now and you want to compete for a tender that starts in 2018 or 2019, because that severely limits your ability to trade the vessel in the meantime, and you therefore have to accept some sort of discount to it. That is why we are not seeing the competition from existing ships, because people would rather take their chances in the spot market. Obviously, as I said the spot market is low, but that can turnaround if the arbitrage comes back. Right now to be quite honest with you, LNG is moving regionally. It is not the Atlantic to Pacific arbitrage is an open, so people are selling their gas regionally inside the Atlantic or flipping it around to Chile, so that is what cutting the tonne miles, but that can flip seconds flips so we should all be careful about looking at the market right now and assuming that is going to stay forever.

[Fotis Giannakoulis:]

All right. Thank you very much, Peter.

[Peter Evensen:]

Thank you.

[Operator:]

Thank you. The next question is from Sunil Sibal from Global Hunter Securities. Please go ahead.

[Sunil Sibal:]

Hi, good morning guys. Thanks for taking my questions. My first question related to kind of your broader view on LNG markets. It seems like you are seeing the pricing action side exposed long-term demand, how on the supply-side some of the high cost supply side probably comes under pressure. I was kind of curious in this kind of situation playing out, do you anticipate alternate sources of LNG kind of coming in and trying to fill this disconnect. I know probably some interest in floating LNG projects through your sublime joint venture and any thoughts you have there?

[Peter Evensen:]

Sure. I think, again, these are the questions that are that we ask our customers, so we are just the supplier on the shipping side. As I said what our customers are telling us is that they are trying to line up longer-term supply. Therefore, we are seeing the growth that we thought we would have is going to be take a little bit longer time, but we think as I said that the U.S. projects especially the brownfield projects will go ahead. They are just trying to get a little bit more certainty as to where they will sell the gas, so if there is one takeaway it is that the trading of gas is reverting back to where it was a few years ago, where there was more long-term supply. As a shipper that sets up well for us, because that means they want long-term contract so that they know they have the ships in order to move the volumes on dedicated trades.

[Sunil Sibal:]

Okay. That is help. Then on your distribution growth for '15, I think the Analyst Day the number that you had shown in your suggested valuations et cetera, was basically practically no distribution growth for TGP in '15. I was wondering if you had any thoughts there considering on the MGC sides. It seems like market has firmed up a little bit and any up thoughts on any updates there of distribution growth?

[Peter Evensen:]

No. I don't have an update on that. As we said, we have lost some one of our short-term charters is expiring in March we are still picking up, we have a high coverage ratio of 1.09, so that gives us some room. Right now, the real growth in our partnership will come in a 2016 to 2020 timeframe, so we are not giving any guidance as to 2015 distribution growth.

[Sunil Sibal:]

Okay. Thanks. That is all I had.

[Peter Evensen:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] The next question is from Spiro Douni from UBS. Please go ahead.

[Spiro Douni:]

Good morning. Thanks for taking the question. Peter, you talked about, I guess, near-term growth and maybe getting some more on the water growth. I am just wondering and sorry if you touched on this in the past, if there any ability or does it make sense for you may be fully acquire some of your JV on vessels and could that actually also help simplify the structure. If not, I guess, could you be more specific in terms of near-term growth how I think something more in the line of Skaugen again or some bigger?

[Peter Evensen:]

We continue to look at on the water acquisitions, but we have not found anything in significant size that would significantly lead to big distribution growth. We have done it in the path, but we are pretty picky because of this technology change. When we look at the idea of buying an existing LNG carrier with a contract as opposed to ordering MEGI LNG carrier, we like the economics of the MEGI better than buying an existing contract, because we think that the MEGI will become de facto standard. That has meant we have been more picky on our acquisition side of it. I do not rule out that we could make on the water acquisitions which will lead to meaningful distribution growth in 2015 and 2016, but that is not I am guiding on.

[Spiro Douni:]

Fair enough. Then just the second question with respect to the $2.6 billion of LNG capital equipments could you just mind us again when full financing of your Malt comes through how much that will impact those commitments how much it will bring those down?

[Peter Evensen:]

Sure. David, do you want to take that?

[Vince Lok:]

This is Vince here. For most of that you are right, it is related to the Malt [ph] ships there. In addition to that, we are in the processes financing the newbuildings so those of the two big types of ships that we are going to financing over the next for a while.

[Spiro Douni:]

I guess the question was just more around. I guess when you finance them through the JV. You actually see the capital commitments required by TGP goes down from that 2.5 is that correct?

[David Wong:]

Well, the 2.5 is shown on a 50% a basis there if that is what that you that is what you are getting at so this was on the enterprise basis as opposed to on equity basis, so what we are showing there is really 50% of the CapEx payments for the ML [ph] ships on that table.

[Spiro Douni:]

Got it. Okay. Great. Thanks, guys.

[Operator:]

Thank you. There are no further questions at this time. Please continue.

[Peter Evensen:]

All right. Thank you all very much. We look forward to reporting back to you next quarter.

[Operator:]

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day.