Thank you for standing by, ladies and gentlemen. And welcome to the Dynagas LNG Partners Conference Call on the Second 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 point, 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. At this time, I would like to read the Safe Harbor statement. 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. Investors are cautioned that such forward-looking statements involve risks and uncertainties which may affect Dynagas LNG Partners’ business prospects and results of operations. Such risks are fully disclosed in Dynagas LNG Partners filings with the Securities and Exchange Commission. And now, I will pass the floor to Mr. Lauritzen, Please go ahead, sir.

Good morning, everyone, and thank you for joining us in our 3 and 6 months ended 30 June 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. Moving on to slide 3. We are pleased to report results for the 3 months and 6 months ended 30 June 2020. Each of our six LNG carriers are operating under their respective term charters. For the second quarter of 2020, we reported net income of $6.4 million and earnings per common unit of $0.10 after accounting for $3.4 million in non-cash mark-to-market interest rate swap losses. Adjusted net income and adjusted EBITDA were reported at $9.9 million and about $24.1 million, respectively. And adjusted earnings were reported at $0.20 per common unit, excluding non-cash mark-to-market interest rate swap losses. This improved performance is attributable to an increase in voyage revenues and a decrease in interest and finance costs compared to the corresponding period of 2019, coupled with stable vessel operating costs during this period. Despite the ongoing operational challenges the industry is going through with respect to COVID-19, we are pleased to report 100% utilization for the fleet for the second quarter of 2020. The ongoing impact of COVID-19 has been operationally manageable due to our manager’s COVID-19 response plan, which has been implemented with the support of our seafarers, employees and charterers for which we are grateful. In August 2020, we entered into an at-the-market offering program, pursuant to which the Partnership may offer and sell common units having an…

Thank you, Tony. Turning to slide 4. We are pleased with the second quarter results. Net income for the quarter increased by close to 611% to $6.4 million over the second quarter of 2019. Net income includes a non-cash unrealized mark-to-market loss to $3.4 million on our interest rates swap, which if excluded along with other minor non-cash terms, results in adjusted net income of $9.9 million, up 39% over the prior quarter and up 11 times over our second quarter 2019 adjusted net income. Our adjusted EBITDA increased by 15% or $24 million, compared to the second quarter of 2019. Moving to slide 5. The improvement in our financial performance compared with the same period last year is attributable firstly to all of our vessels having been delivered and trading without downtime under the long-term contracts, at an average daily gross rate of about $62,200 per day per vessel, compared to $55,100 per day per vessel for the corresponding period in 2019, and secondly, due to reduced financing costs. Our weighted average interest expense was reduced from 6.73% in the second quarter of 2019 to 3.49% in the second quarter of 2020, resulting in cash interest savings of about $6.4 million for the quarter. This was attributable to lower LIBOR interest rates for this quarter compared to the second quarter of 2019. The reduction in the margin we are paying on our new $675 million credit facility compared to our prior debt instruments and a decrease in our weighted average indebtedness from $722 million in the second quarter 2019 to $651 million in the second quarter of 2020. Full utilization and stable operating expenses have also contributed and as a result, our profitability has been on a positive trajectory the last couple of quarters due to the aforementioned reasons,…

Thank you, Michael. Let's move on to slide 9. Our fleet currently accounts 6 LNG carriers with an average age of about 10.1 years. We have a diversified customer base with substantial gas producers, namely Equinor Gazprom and Yamal LNG. The fleet’s contract backlog is about $1.18 billion, equivalent to an average backlog of about $197 million per vessel, and the fleet average remaining charter period per vessel is about 8.1 years. We have a unique and versatile fleet. Five out of the six vessels in our fleet are assigned with ice class 1A notation. Therefore, the fleet can handle conventional LNG shipping as well as operate in icebound areas. In general, we view the ability to perform conventional and niche operations as an important driver in securing attractive long-term charters. Moving on to slide 10. Older vessels are employed on time-charter contracts under which the charters pays all major voyage-related variable costs such as fuel, canal fees and terminal costs. Two of the vessels are under OpEx cost pass-through contracts, and in general provide for protection for inflation in operating expenses. Our counterparties are mainly asset-strong energy producers that are typically able to forward program the vessels for periods of time, which gives us a certain degree of planning ability and cost control. Our earliest potential availability is the Arctic Aurora, which will be available in the third quarter of '21, 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 contract expires in the year 2026. Based on current charter coverage and bar any unforeseen events and not taking into account scheduled dry dockings, the fleet is estimated to be…

[Operator Instructions] The first question comes from the line of Randy Giveans from Jefferies. Please ask your question.

Gentlemen, how's it going?

Hi. We're good. Thank you.

Excellent. All right. Two questions for me. I guess, first, on the ATM program. Do we have plans for that in terms of timing or expect the use of proceeds? And with that, could that be used to maybe offset or repurchase some of the preferreds, which are trading at a relatively steep discount or would that only be to build the balance sheet for additional dropdowns?

Yes. No, that's a great question, Randy. Well, I think ATM program, it's going to be used very opportunistically and selectively. I mean, we've already had it first July. We haven't raised that much money. We are very mindful of the price at which we're going to raise the money and dilution. So, I think the intent of the ATM is going to give us the opportunity to raise the capital opportunistically when we believe the timing and the pricing is reasonable. Now, you're absolutely right. I think, the money that will be raised, probably right now the best use of proceeds is the buyback of the preferreds. So, we do expect that that will be a very good use of proceeds. Now, as far as timing is concerned, as I said, we don't know. It depends on where the share price is and how we feel if it's the right time to issue shares.

Got it. Okay. And then, I guess second question, for the Arctic Aurora, when does that option has to be declared or rejected? I know there's an option period starting, I think, next July. So, I guess, what’s the timing of that? And then, what is the kind of expected rate in the re-charter market if that option is not exercised?

Yes. Thank you, Randy. These are good questions. When it comes to the exact timing of the option, I don't think we have communicated what it is, for the reason that potentially there will be competition for the extension. That being said, options are typically declarable, let's say 3 to 9 months prior to the expiration of the firm period. So, it won't be too long until we have to start thinking about what to do. When it comes to the rates expectations, this is also too early for us to think about. We have seen second quarter of this year, which was pretty bad when it comes to charter rate. This obviously was driven partly by a lot of LNG around and disruption on the demand side due to COVID. So, that being said, what we've seen now in the last few weeks, I think it started in kind of August onwards is an improvement in the spot chartering market that is driven by a decline in the U.S. cargo cancellations, improved gas pricing and higher demand. So, we've seen a pretty significant improvement on the spot side. I cannot say that we have seen this affecting the term market yet and I don't think it's been tested so much. So, we're going to wait until the end of the year or well into next year before we start marketing the vessel.

Got it. Okay. Well, I'll check in later then. Thanks for the time.

Thank you.

Thank you.

Thank you. Next question comes from the line of Ben Nolan with Stifel. Please ask your question.

Hi. Good morning, guys. So, I have a couple. One, I wanted to follow on to Randy's question as it relates to the potential of buying back preferred, the using the ATM proceeds to be able to do that. I'm curious, is there any restrictions in your covenants of your loan agreement that prohibit cash being used for preferred buybacks, or are you -- available to do that with cash flow in excess of your minimum required liquidity?

Well, we're permitted to use proceeds of the ATM to buy back the preferred. We cannot buy back the preferred with existing cash on hand, so.

Okay.

Yes.

Okay. No, that's very clear and helpful. I appreciate it, Michael. My next question is sort of bigger, longer term, big picture. Obviously, the sponsor still has quite a lot of LNG exposure. And I don’t know what sort of future aspirations are there to grow it or not. But, from a big picture perspective, how do you think the Partnership here sort of fits into that broader portfolio of LNG? Is it still sort of an integral part of the big long-term plan, and are there future or longer term aspirations? Obviously, not at the moment, but longer term aspirations of continuing to drop down assets, or do you think that maybe those are taking different paths, the sponsor and the Partnership?

Thank you, Ben. So, as we've communicated, we've made a very conscious decision putting the Company on the path towards reducing debt and building equity value over a period of time. And so far, that strategy seems to be working well. We do not have the means at present to acquire a vessel or a significant fraction of one from the parent. That is why we are focused on reducing our debt going forward. So, as an alternative to that and it’s exactly as we said, it could be to utilize the ATM selectively and opportunistic and from the proceeds of that to potentially buy back some preferreds and thereby reducing our cost of capital. So, look, our strategy may be appear a bit boring at present. However, a conscious and steady building of equity value over time is very descriptive of what we are doing.

Right. And I appreciate that. And I guess, the question is less about sort of now. And I think, it's pretty clear that you're limited in your options at the moment. But maybe, Tony, if you could talk to the aspirations of Dynacom, the parent to continue to grow and build on the LNG side, if that is the aspiration? And longer-term, is it still the focus of the group to eventually -- after the balance sheet is sorted out, to eventually incorporate Dynagas Partners into that growth strategy?

Yes. Thank you, Ben. Look, on the parent side, there is still very much an interest to continue to grow in the LNG sector. And as you know, sometime ago some new buildings were placed in [indiscernible] for some larger vessels. So, I think that underpins the ambition to continue to grow in the market. I mean, of course, for the Partnership, at some point, we have to grow too. That is just a question of time. But yes, of course, the aspiration is to grow over time.

[Operator Instructions] There doesn’t appear to be any further questions. If I can hand the conference back to the CEO, Tony Lauritzen, please go ahead.

Yes. Thank you to everyone for listening in on our earnings call. We look forward to speak to you again on our next call. And in the meantime, stay safe. Thank you very much.

Thank you. That does conclude our conference for today. Thank you for participating. You may now all disconnect.