Thank you for standing by, ladies and gentlemen. And welcome to the Dynagas LNG Partners Conference Call on the First Quarter 2020 Financial Results. We have with us, Mr. Tony Lauritzen, Chief Executive Officer; and Mr. Michael Gregos, Chief Financial Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Friday, June 5, 2020. Please be reminded that the Company announced its results with a press release that has been publicly distributed. At this time, I would like to remind everyone that in today’s presentation and conference call, Dynagas LNG Partners will be making forward-looking statements. These statements are within the meaning of the federal securities laws. This conference call and slide presentation of the webcast contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The statements in today’s conference call that are not historical facts, including among other things, the expected financial performance of Dynagas LNG Partners business; Dynagas Partners LNG ability to pursue growth opportunities; Dynagas Partners LNG expectations or objectives regarding future and market charter rate expectations and in particular, the effects of COVID-19 on the financial conditions and operation of Dynagas Partners LNG or the LNG industry in general may be forward-looking statements as such as defined in Section 21E other Securities Exchange Act of 1934 as amended. Matters discussed may be forward-looking statements, which are based on the current measurement expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to slide 2 of the webcast presentation, which has the full forward-looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. I now will pass the floor to Mr. Lauritzen, Please go ahead, sir.

Good morning, everyone, and thank you for joining us in our first quarter ended 31st March 2020 earnings conference call. I’m joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the same period. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful, in our press release. Let’s move on to slide 3. We are pleased to report the results for the three months ended March 31, 2020. Each of our six LNG carriers are operating under their respective term charters with an average remaining contract term of 8.3 years. Despite the operational challenges the industry is facing with respect to the COVID-19 outbreak, we are pleased to report that all of our employees onshore as well as offshore are well and healthy. We are fortunate enough that the impact of the COVID-19 outbreak has been operationally manageable due to our manager’s effective COVID-19 response plan, which has been successfully implemented with the support of our seafarers, charterers and employees, and to all we are grateful too. For the first quarter of 2020, we reported net income of $7 million and adjusted EBITDA of about $23.8 million. The latter, which is in line with our previous estimate of an annualized EBITDA of approximately $95 million and which assumes that all of our vessels have been delivered pursuant to their respective long-term charters. Our revenues for the quarter were in line with the fourth quarter of 2019. However, net income increased by 26%, primarily as a result of lower interest expense. As we seek predictability going forward and also pursuant to our general objective to manage the cost of debt and reduce…

Thank you, Tony. Moving on to slide 4. We’re pleased with the first quarter results with our vessels having achieved 99% utilization under their charter contracts. Net income for the quarter increased by 268% to $7.1 million over the first quarter of 2019 and was up 26% over the fourth quarter of 2019. Our adjusted EBITDA increased by 9% to $23.9 million compared to the first quarter of 2019. The increase is attributed to the two factors. Firstly, all of our vessels are delivered and trading under their long-term contracts, at an average daily growth rate of about $63,100 per day per vessel, compared to $57,700 per day per vessel for the corresponding period in 2019 in which the Lena River was trading under a short-term contract prior to the delivery to Yamal in July of last year. Secondly, our weighted average interest expense was reduced from 6.74% in the first quarter of 2019 to 4.89% in the first quarter of 2020, resulting in savings of about $4 million in loan interest for the quarter. This was attributable to lower LIBOR interest rates for this quarter compared to the first quarter of 2019, a reduction in the margin we are paying on our new $675 million credit facility compared to our prior debt instrument and a decrease in our weighted average indebtness from $723 million in the first quarter of 2019 to $662 million in the first quarter 2020. For the quarter, we were marginally cash positive as the cash flow from our long-term contracts was utilized to service our amortizing debt and pay distributions to preferred unitholders. Moving on to slide 5. This slide shows our balance sheet metrics as at the end of Q1 and our scheduled debt repayments over the next years. In light of the current…

Thank you, Michael. Let’s move on to slide 8. Our fleet currently accounts 6 LNG carriers with an average age of about 9.8 years. We have a diversified customer base with substantial energy companies, namely, Equinor, Gazprom and Yamal LNG, which the latter is a joint venture between Total, CNPC, Novatek and the Silk Road Fund. Our contract backlog is about $1.21 billion, equivalent to average backlog of about $202 million per vessel, and our average remaining charter period is about 8.3 years, which compares well versus our peers. Moving on to slide 9. With the Lena River delivered into her multiyear charter on 1st of July 2019 with Yamal LNG, each of our six energy carriers are now fully delivered and operating under their respective term charters. Our fleets of LNG carriers are fixed on term time charters with key energy companies. We believe that drivers for our charters were the characteristics of the fleet including its ice class notation and our organization’s track record. All the vessels are employed on time charter contracts under which the charter pays all major voyage related variable costs, such as fuel, canal fees and terminal costs. Our counterparties are mainly active strong LNG producers that are typically able to fully program the vessels for periods of time, which gives us a certain degree of planning, ability and cost control. We estimate our fleet to be 100% contracted in 2020, 92% in 2021 and 83% in 2022. Our earliest potential availability is the Arctic Aurora which will be available in second half of 2021, provided that Equinor does not exercise their option to extend the contract. So far, the vessel has served Equinor with good feedback and results. The next available vessel after the Arctic Aurora may be the Clean Energy which contracts…

[Operator Instructions] Your first question comes from Randy Giveans from Jefferies.

So, you mentioned briefly you’re getting paid on all your contracts, 100% utilization, revenue is flat, that’s clear. Has there been any changes in fleet functionality, right, with all the production shut-ins, some of the high inventory levels in Asia and Europe? Are there more vessels balancing for longer? Just kind of asking about operations of the vessels?

Yes. Thank you, Randy. That’s a good question. I would say, earlier -- in the early part of the COVID situation, I would say that there were more interruptions than today. There was a period where we saw many cargoes going into China or originally they were going to China were redirected. And it could cause some waiting time until we mean where the discharge port would be et cetera. Also, there were interruptions in terms of if you had discharged in China, then you couldn’t -- the vessel couldn’t call another port until at least 14 days have passed. So, clearly, there are disruptions as a result of this epidemic. This will probably continue for a while. But, we are seeing that the logistical change is going more smoothly now than what it was previously.

And then, clearly, the spot market has been pretty volatile, pretty weak now in recent months. How has the market for maybe three, five or upto seven-year time charters responded to that? And then, secondly, how was the Qatar order of at least 100 LNG carriers? How do you see that impacting the market in the coming years?

Definitely, the spot market has been challenging with unhealthy charter rates, to put it that way. What we’ve seen now is that although charter rates are low, volumes -- the volume and the activity is quite good. So, we don’t have any spot vessels in the market. So, we don’t see day to day exactly what the situation is. Obviously, what we’re doing is to prepare going forward for the Arctic Aurora, which potentially comes open second half of next year. That’s what we’re focused on. So, I think that this low LNG charter rate that we’ve see in the spot now, is also driven by very low gas prices environment. When we look forward gas prices into the winter, when normally there is more gas demand, they are richer and they are better. So, we think that the market is going to improve with that. And when it comes to your question, how do we see the three, five and seven-year market? I think that also there is some activity picking up. There was a period that I guess there was no demand for it. Now, we see that there are some discussions. We have not entered into any of these discussions ourselves. But, we are starting to feel that there is potentially some long-term buying interest again in gas. Although we have to caution and say, this is still early days. When it comes to the question of Qatar order, I think that we view that in the positive way, we would potentially have seen project that would push things out or maybe don’t go for FIDs. So I think that what we’re seen now on the Qatari reorder, it’s positive. It means that the big players are there to stay. They believe in the market that they are in. It’s important for them to build market share. And that means more products. And of course they will order ships against this expansion. But, at the same time, I don’t think that we’ll see a lot of speculative orders going forward. I think now that, if we look back at the last wave of LNG orders, I think it was almost an all-time in speculative orders. And I mean, there is no reason why projects wouldn’t take those available vessels going forward to their projects. Yes.

Okay. And then, I guess, one quick question for you specifically. I think it looks like there is a $6 million guidance for the second quarter. Is this down from the $8.7 million in the first quarter? Is it hard to tell the exact numbers on that chart there?

Yes, yes. It’s down. Because we fixed that lower rate in the first quarter. I mean, LIBOR was going down after the first quarter is completed. So yes, we expect the lower interest expense in the second quarter compared to the first quarter.

Okay. Because I know the 3.41%, that doesn’t start till end of the quarter, right, June 29?

Right, yes. I mean, we’re going to get the benefit of that essentially after June 30th. Yes.

Got it. Yes. All right. Well, thanks and congrats on that deal.

Thank you.

Thank you.

Your next question comes from the line of Ben Nolan from Stifel.

Hey, thanks. Michael and Tony, I hope you guys are well. I wanted to follow up a little bit on hedge or really the interest rate expense. It looks like subsequent to the hedge taking, you guys are going to say around somewhere around $10 million a year. First of all, is that correct relative to where we are now? And then secondly or in conjunction with that, how does that cash savings, which should increase the rate of leverage reduction, how does that change -- or does it change the timeline as to when you guys can be able to bit more active looking at maybe growth opportunities or the pace at which you don’t have to be as laser-focused on debt reduction?

Yes. You’re right. I mean, listen, I mean if you look at our Q1 interest, it’s around $8 million. And then, once the swap arrives per quarter, once the swap starts, it’s going to be around $5 million, $5.5 million per quarter. So, there are some savings there. I mean, the situation is that we’re going to build up some free liquidity over our restricted cash, $50 million. But, it’s a slow process. I mean, we are in an environment where we are insulated to a certain extent. We do want to attain some free liquidity as a protection, in case there is an operational issue or something unexpected occurs. So, how we are going -- what we’re going to do, it also depends on our valuation. As I said, we have a focus on organically deleveraging. And it’s little too early to discuss the prospects for fleet expansion, given the fleet expansion is going to require an equity component. And this is subject to specific use of proceeds and what our valuation looks like. But, we are thinking about what are we going to do with this free liquidity and how we could utilize it to increase unitholder value.

Okay. And is there any capacity -- does this hasten your ability to refinance that back would say?

Listen. I think, this is probably the cheapest debt that we see public shipping MLPs having. I mean having a 3.41% total cost of debt is something I don’t think that is going to be easy to be replicated. So, no, we’re not looking to refinance our debt, because I don’t think we’re going to be able to get anything cheaper.

I would agree with that. Just to make sure that you said first quarter interest was around $8 million. So, this was $0.75 million or so of the other fees that we should model those to continue as well going forward, correct?

Yes.

And I guess, to that end, while you’re a little bit limited in terms of your ability to do anything and sort of longer term that excess cash flow grows but grows slowly. Is there any ability to maybe do a little partial let’s say by a quarter of a ship from the parent company or something like that or is that also still sort of off the table?

I think, that it goes back to what we were discussing earlier. Listen, our market cap is below $100 million. So, even a quarter of an LNG carrier, which is a very high-value asset, it’s something extremely material, given where our equity value is being placed on by the market. So, it’s a bit of a -- I can’t really respond to you. It is a bit some early to discuss these type of things. We have to see first of all where we ended up in terms of what the market think our equity is worth, because that’s a crucial component of this discussion. We just can’t go out and make recipe of any price.

Sure. No, I understand. Well, Michael, hats off to you. I think that is the best interest rate hedge that I have seen. And also, Tony, hats off to you that those Gazprom contract renegotiations from a few years ago are looking better and better all the time. That does it. Thanks a lot, guys.

Thank you.

Thank you.

The next question comes from Liam Burke from B. Riley.

You published the cash breakeven rate of fleet at roughly a little over 50,000 a day. Obviously, you’ve got a floor or pretty close to a floor in your interest or cash interest expense. Are there any operational benefits that you can reap going forward to move that number down?

Not really. I mean, there could be a slight variation up or down, but I don’t think it’s going to have a material effect.

And I just want to verify, you have no drydock until 2022?

Yes, correct. Yes.

So, from -- until 2022, you have no meaningful CapEx to bounce off your operating cash flow from operations. Is that right?

Yes, correct.

I’ll now turn the call over to Mr. Tony Lauritzen.

If there are no further questions, then we would like to thank you for your time and for listening in on our earnings call. We look forward to speak with you again on our next call. Thank you very much and stay safe.

This concludes today’s conference. You may now disconnect.