Welcome to BW LPG's First Quarter 2024 Financial Results Presentation. Bringing you through the presentation today are CEO, Kristian Sorensen and CFO, Samantha Xu. We are pleased to answer questions at the end of the presentation. [Operator Instructions] Before we begin, we wish to highlight the legal disclaimers shown on the current slide. This presentation, held on Zoom, is also recorded. I now turn the call over to Kristian.

Hi, everyone, and welcome to our 2024 Q1 presentation. Thank you for taking time to join us today as we present our financial results and recent events. It's been a busy period for our company. So let's turn to Slide 4, please. We delivered another strong quarter with a result of $150 million net profit after tax on the back of a strong time charter equivalent of $61,500 per available day, which includes a positive IFRS adjustment of $26 million. We booked a net gain of $20 million from the sale of the BW Princess, and it was another good quarter by a trading unit's BW Product Services showing a profit of $21 million, where we subsequently returned $30 million to its shareholders in April through the preannounced capital return. The quarterly end [indiscernible] translates into an earnings per share of $1.07, and the Board has declared a $1 per share in dividends, which is equivalent to 106% of the earnings from our shipping activities, which calculates to an annualized dividend yield on a 22% basis Tuesday's closing price in New York. On the shipping side, we have mutually agreed with Vitol to terminate their pool and charter back arrangements. There is some financial impact anticipated from the termination of the agreement and we look forward to continuing doing business together in the day-to-day chartering markets. For our trading activity, we are happy to announce that product services have concluded a multiyear extension of the cargo contract with Enterprise Product Partners, which will significantly improve our optionality and ability to capture profits in the LPG value chain. In addition, the transaction is enabling us to grow our business at a time when growing in shipping is more expensive than ever, and it bolsters our business model for the future markets.…

Thank you, Kristian, and hello, everyone, in the call. Good to speak to you. For the first quarter of 2024, we delivered a TCE of USD 59,400 per calendar day and USD 61,500 per available day, a continued solid performance. We have a healthy coverage through our time charter and FFA portfolio, which represents about 37% of our shipping exposure. For the second quarter, we have fixed 84% of the available days, about USD 49,000 per day. For '24, our time charter-out fleet generates a profit and around USD 25 million over our time charter in fleet. Additionally, more shipping capacity that is fixed on time charter during the quarter is estimated to generate about USD 39 million for year 2024, up from USD 19 million as reported in Q1. Moving to Slide 11. Product Services delivered a solid performance in the beginning of the year. In Q1, the yield and net profit of USD 20 million and increased its net asset value to $82 million as of end March. The net profit was contributed by gross profit of USD 33 million after netting off G&A and tax provisions. The gross profit includes realized gain of USD 18.7 million and unrealized cargo and derivative gain of USD 40 million. The reported net profit does not include unrealized fiscal shipping valuation which is $31 million at the end of March, based on our internal valuation. This shipping valuation dropped from the previous quarter, reflecting a decline of a 12-month freight forward market at the end of March compared with the substantially higher market in Q4. For Q1, we reported an average value at risk of USD 5 million on a well-balanced trading book, including cargoes, shipping and derivatives. As announced earlier, we concluded a multiyear contract with the Enterprise product partners…

Thank you, Samantha. We will open the floor for questions now.

[Operator Instructions] We have two questions. Erik, please go ahead.

Just a question, Kristian, because you're saying that, obviously, growing within shipping now is challenging or expensive or I mean, depending on how you're going to frame it. But then what's the alternative? Because, of course, you are now -- I mean you're basically now if you exclude the debt on BW India, your are debt free. So what's the alternative because your cash earnings are significantly higher than your net profits. So obviously, we're entering a stage where you're either going to build substantial cash coffers or are you going to have to pay out more? Are you considering doing some kind of extraordinary payout or -- how should we think about your balance sheet a year or two down the road at the current market outlook?

Thanks, Erik. Like you say, it's -- and again, it's not our aim to be debt-free or anything, but it's simply hard for us to find any profitable ways to invest at the moment and thereby increase our debt side. So I think when it comes to the dividend, that's something -- and the balance sheet composition is something which we always discuss with the Board. So I don't want to rule out anything. But again, this is something which is at the Board's discretion, and we'll see what the future brings. But you're right, we are a bit, I would say, too robust on our balance sheet. But again, it's not an aim for us to be debt free or anything. So -- but we like to -- if you raise debt, it should be against projects that we believe are creating value for the company and the shareholders.

Okay. That's fair. And just on the market now. I mean, we're seeing some time charter activity and think we're seeing 2-, 3-year deals now being done $50,000 a day, which is approximately where it should be also based on share prices at least. What are you seeing? And if I also may ask, are you surprised about the strength you've seen over the past few months compared to where we were. I mean it's been quite a turnaround in sentiment at least in a few months' time.

Yes. I think if you look at the U.S. exports specifically, they have -- I think it's fair to say that they have surprised us on the upside. The resilience in the U.S. production and export volumes is more than also we anticipated. But again, we do see that the -- on the time charter front, this is -- there are definitely discussions out there with and among market players who are in need for shipping going forward. And if you need a ship these days, you simply have to pay up. I think that's the way it works. So I believe you referred to a 3-year deal around $50,000, which is something we are not surprised to see. And there are other market participants also looking for ways to cover their shipping needs in the future. So I wouldn't be surprised if we see other time charters done around the same level.

Okay. And one final one. I mean we're sitting some distance away from this. But obviously, you are seeing quite decent investment activity into both fractionating capacity, export capacity, et cetera, out of the U.S. So given your relationship to enterprise. I mean, on the production side, is that potentially becoming a bottleneck as you see it. I mean it doesn't look like infrastructure is going to be a bottleneck. But given the drilling activity we're now seeing and expectations ahead, is that at all becoming anyone's fare? Or is it just business as usual?

I would say that we wouldn't have seen the recent investments done by the terminal operators and other players in the U.S. shale gas market had it not been for them actually believing in the shale gas story also going forward. So -- and the fact that, for instance, energy transfer, both WTG Midstream. I think it's another sign of these big operators and terminal operators consolidating because they see there is still an upside potential in the U.S.

Thank you. Eric Peter [ph], please go ahead.

Yes. Just firstly, a quick question on the Vitol ships. You're right that there is no financial impact from it. But can you share some of the background behind those ships being pulled from the pool?

Yes. Well, this was a CoA -- sorry, pool participation with shipping capacity, charter back kind of CoA, which was tested for a year, and it didn't work out as intended, and then we have amicably agreed with all that let's rather meet in the spot market. So it's very undramatic in all ways.

Okay. Good to hear. You also write that the Panama passages now is normalized. But I suppose then you refer, of course, to your market, in the overall market, it's still a substantial reduction in the number of transits. And to the best of my knowledge, there is still a substantial auction premium to be paid. So question, part 1 is, what is the auction premiums these days? And two, very good, if you can elaborate on what the consequence of still hefty payments to use the Canal is impacting the VLGC markets?

So the -- on the Panama Canal side, there have been great fluctuations in the auction price, and we have seen levels from $600,000, $700,000 per day up to $1.8 million, a couple of weeks ago, and then it fell back to $500,000 again. And now I think -- as far as I can recall, it's back to $700,000 thereabout. So this is a daily auction, which is hard to predict, but there is definitely big fluctuations from week to week. And I think in general, you can say that there is -- there has been a willingness to pay up to get the ships through the canal, both from the charter side and also from the owner side. But in general, you can say that the Panama Canal capacity, it is what it is. The more ships coming into the market, and we anticipate that there will be congestion in and around the Panama Canal also in the future because the capacity is pretty much fixed and especially during the high season, it's going to be more congestion coming than what we see today. That's what we anticipate at least.

Okay. But I read you asked, if you now pay the auction fees on used Canal predominantly and not to do the long-kept good hope around.

No. It depends on where we are discharging in Asia. So basically, if you are in Northeast Asia, you try to see whether it's possible to go back via the Panama Canal. If not, you go around South Africa on the way back to the U.S. So -- but it depends on where you are coming open after discharge. And then there is obviously a view on the situation in and around the Panama Canal before you decide on which direction to go.

And that applies also to the laden leg, the front haul?

On the front haul, it's negotiated on a case-by-case basis with a charter. So -- and then it typically have a rate to go around the Cape or you can have a rate to go via Panama, but the -- this is something which is discussed with the charters on a case-by-case basis depending on the situation at a point in time in the Panama Canal.

A final question from me. As also [indiscernible] alluded to. It's pricey, but just how pricey is it really because you sold some old ships last year. which I think is fair to say surprised most people on sort of the upside of that price, but -- or those prices. But if you were to dispose of some of 15, 16 tonnage. What would that price be? .

Well, I think the last reference point is deal done by Petrodex where they sold it in the low $80 million, wasn't it? So I think that is the last reference point, but I can double check that, [indiscernible], I'm not misguiding you.

Would you sell on those prices, Kristian?

We have no plans to sell any more ships at the moment, [indiscernible]. And the reason for that is also because we -- if you sell ships at one point, you start reducing your capacity to generate revenues. So it's important for us to keep a certain size to be able to generate revenues also in the future. .

The next question comes from Axel.

Axel Styrman from Kepler Cheuvreux. I have a question related to the PDH plants in China, if you can comment related to recent market intelligence regarding the margins there, which has been weak lately. Do you think this is a consequence of increased capacity? Or do you think it's a consequence of softer demand?

I think when you look at the PDH plants run rate, they have been weak to relatively weak for quite a long period of time, but we still see that they continue to run a new PDH plants are opening. And there are -- many of them are also linked to other petrochemical projects in China. So we don't really see any big change in this since the last half year or so or even longer. So for us, there is no change in the way we regard the Chinese demand from the PDH side.

Over to you, Kaia, for questions from the Q&A channel.

Sure. Thank you, Lisa. We have 1 question here from Nino Rodrigues asking about the TCE guiding for the second quarter, which is lower than the actual Q1 TCE. And does this mean that the net profit for Q2 is expected to decrease?

Kaia, I'm happy to answer the question. I think let's remember the timing when we fixed 4 TCE out in order to secure our earnings and hedge for it is earlier than the quarter. So that's why -- let's also don't forget that last quarter, we come from an extremely strong historically high freight market. Hence, by comparison, we feel it's a little bit low. But let's reassure that compared with our $17,300 operating cash breakeven, $49,000 is a very healthy rate. And also, that doesn't mean that the net profit would necessarily be decreasing, in compared with this quarter. The reality is that we do not know until the book is closed, but there are also other elements, for example, product services performance as well as other accounting-related factors can impact the net result.

Then next, we have a question from Blaise Francis, [indiscernible], I apologize for the pronunciation. A question slightly overlapping with the previous one. Your guidance of TCE revenue per available day for the second quarter, $49,000 per day is down compared to last year's TCE revenue of $52,500 per available day. Can you go a bit more in detail with regards to the reasons? What is your guidance with regards to the impact of this on earnings? Will the decrease in net finance expenses, which helped earnings in the first quarter also be able to offset the TCE revenue per available day decline in the second quarter?

Well, thanks for the question. I believe that was also answered early on. As for the net finance expenses, I will assure that that's a natural outcome of a very, how to say, it's -- we're almost debt-free at the moment. In addition to that, we also run a very healthy cash management program. which means that the net finance expenses will be trending low as well.

And if I can also make a comment to the reasons why it's coming off compared to TCE revenue of $52,500, it's because of the events in the first quarter. And there is a backlog on the earnings and revenues. So since we had this sharp rate drop in January, we are not immune to it, and it affects some of the positions also into the second quarter.

[Operator Instructions] Finally, a question from the chat channel, Kaia?

Yes. Another question here from Blaise Francis, [indiscernible] Yes. Thank you for your answer. Highly appreciated. No question. Sorry. .

[Operator Instructions]

I think we are coming to the end of the presentation here. So thanks, everyone, for the questions and for your participation. And I think we can round it off here. Thanks, everyone. .

Thank you for attending BW LPG's First Quarter 2024 Financial Results Presentation. More information on BW LPG and BW Product Services are available at www.bwlpg.com and www.bwproductservices.com, respectively. Have a good day and a good night.