Thank you. And welcome to the Third Quarter Earnings Presentation for Flex LNG. My name is Oystein Kalleklev, and I’m the CEO of Flex LNG management. Together with our CFO, Harald Gurvin, I will guide you through today’s presentation. And a replay of the webcast will also be available on our web page, flexlng.com. Flex LNG is a shipping company focused on the growing market for seaborne transportation of liquefied natural gas and we are relisted both at Oslo and New York Stock Exchange under the ticker FLNG. First, our disclaimer with regards to, among others, forward-looking statements and completeness of detail. The full disclosure is available in the presentation, and we recommend that the presentation is read together with the interim financial report and our annual report, which are all available on our webpage. So first of all, I’m pleased to say today’s presentation is packed with highlights. And we have put up a top 10 list of bullet points on this slide. To start with the financials, in the third quarter, we delivered revenues of $29.8 million, which was $10.8 million higher than in the second quarter. Adjusted EBITDA was also up by $10.5 million compared to the previous quarter. TCE increased from $46,300 per day to $48,200 in the third quarter in line with the guidance of approximately $60,000. Please bear in mind that we took delivery of Flex Constellation and Flex Courageous in June and August, respectively. So we just had two ships doing the maiden voyage in this quarter, which is 1/3 of the fleet on the water in the quarter. Maiden voyage for ships not tied to long-term charter are typically done at a discount to market due to the ship lacking certificates and having to positioning from yard. When it comes to financing,…

Thank you, Oystein. We are pleased to announce that we have secured financing for the five newbuildings delivering in 2020. The facility was substantially subscribed with commitments from KEXIM, and 11 leading international shipping banks, demonstrating our ability to raise financing at very attractive terms. The total facility is $629 million or $125.8 million per vessel. KEXIM will provide a total of $379 million in direct loans and guarantees. And in addition, there is a commercial bank tranche of $250 million. The facility also includes an up-size option of up to $60 million in case of long-term employment, acceptable to the banks. The KEXIM commitment is for up to 12 years. And the commercial bank loan has a term of five years from the delivery of the final vessel scheduled for November 2020. The average repayment profile is 20 years, and the average margin approximately 2.2% per annum over the life of the facility, giving an attractive all-in cost of approximately 5% based on current interest rate levels. The projected breakeven – breakeven rates, including OpEx is also comfortable at $43,000 per day per vessel. As for other financing, there is no requirement for firm employment and the financial covenants are linked to balance sheet. The financing remains subject to final documentation and customary closing conditions and is expected to be drawn on delivery of the relevant vessel. During 2019, we have secured close to $1.3 billion in new financings, of which $525 million was executed in the third quarter. The 10-year $300 million sale and charterback transaction with Hyundai Glovis for Endeavour and Enterprise closed in July. The transaction has six monthly payment structure, giving annuity style cash flow profile at an all-in cost of around 6% and a 20-year repayment profile or 21.5 years age-adjusted. The Flex Rainbow…

Thanks, Harald. So let’s move on to talk a bit about the LNG market. And first, we start with the freight market. Freight market generally tends to improve from the autumn due to higher gas demand. Gas demand is again driven by consumers buying increased volume of LNG following cooling season for inventory injection, but also due to increased demand caused by colder weather, as we are getting into the winter months, and thus, creating more heating demand. 2019 has been no different with freight rates evolving according to previous seasonal pattern despite a backdrop of very low gas prices and generally softer demand from Asia than envisioned earlier in the year. Demand in the three large import nations, Japan, China and South Korea have been on the soft side this year. In Japan and South Korea, mostly due to increased nuclear production. China, we expect to deliver around 15% growth in 2019 versus 2018. This is down from the 40% growth in 2018, but still pretty robust despite lower economic growth as well as significantly reduced import in October due to severe weather. It is, however, important to bear in mind that while low LNG prices can be negatively short-term due to charters' willingness to pay for transportation, low LNG prices spur demand and switch from coal to natural gas. We are these days seeing increased demand from price-sensitive markets. This includes Europe, which also has seen both high regas – which also has a high regas and storage capacity as well as increased incentive to switch from coal to gas, given the fairly high carbon prices in Europe. So when it comes to ship availability, our main market thesis this year have been that increased volume, more cargoes flowing into Asia in the second half of the year…

[Operator Instructions] And the first question comes from Greg Lewis from BTIG. Please go ahead.

So as I think about opportunities for chartering vessels. You kind of made some comments in your prepared remarks about roughly 70% of the fleet being on term charter. As the global fleet, not Flex’s fleet, how should we think about Flex potentially ramping up contract coverage and just some of your comments around having more modern tonnage, which is more probably in demand for time charters with some older vessels going to spot market? I’m just kind of curious if you could kind of talk a little bit more about that in terms of timing? And then just a little follow-up. We’ve seen a lot of operators, not a lot, but enough operators that have newbuilds go out and fix those well before delivery next year, I believe you have five ships getting delivered. Should we think about the potential for those ships to actually be fixed on contracts in advance of their deliveries, just kind of any kind of color you could give around those comments?

Thanks, Greg. It’s questions we receive a lot. So I don’t really have to prepare anything for those questions. What I would say is that, first of all, we have to think where we are and what we have done with this company. It’s basically we have seen that the market will grow very rapidly. We have seen under investments in ship, especially in the period 2016, 2017, early part of 2018. I wouldn’t say 2018 in total, but first half of 2018. That was certainly the case. And then, of course, the reason was a poor freight market, 2014, 2015, 2016, and ordering is typically very pro-cyclical. So we saw that we could get good slots, good, very good prices on the ships, and then there would be demand for those ships when they were coming out now in 2018, 2019, 2020. So we have been kind of in a bit different situation than most shipowners, where we actually just bought the most advanced shift and then having the ability to kind of wait and see a bit and try to kind of find the right contracts for us and also being willing to trade the ships in the spot market. And as long as the company was pretty small, we started off with two ships in the beginning of 2017 and added four ships then, and we added remaining seven in 2018. So as we have been growing, of course, it’s become a much bigger venture. So we do feel that we also need to build incremental backlog. So of course, one way of achieving this is also to build a big organization. So we have been out now, we started this process last year. Actually, how to in-source the ship management process started last summer when we…

Okay, great. And then just one more follow-up for me, more broad forward thinking. I mean I guess, Arctic to LNG was FID and is moving forward. Now realizing the first gas is not even targeted until 2023, I think, early 2024. Has there been any talk in the markets? Because I’m thinking those vessels might need to be. I guess first question, would those vessels have to be ice class? And just in thinking about that, is that a tender, is that going to be – should we expect that to be a newbuild tender process that sort of surfaces in the market sometime next year? Or is that maybe still a little bit farther out?

Okay. For the Yamal – so Arctic LNG-2 is very close to the existing Yamal. The three Yamal [indiscernible] and fourth will be coming on stream as well, probably next year. It’s a bit smaller thing. And this is in Sabetta. And I think Arctic LNG is just close by. So it’s Yamal 17 million tonnes and then 20 million on Arctic LNG-2. Now here you have a situation where you need to have ice-breaking LNG carriers. So this is the ARC 7. Given the time it takes to build those, you have to get started pretty early. I think the ambition is to build more of these ships in Russia for the Arctic LNG-2 project. So Sabetta yards have made certain agreements with technology transfer with Korean yards to build those there and will certainly be placed tender for those ships. They are not – they are very unique ships, the kind of the first series of Arctic ARC 7 ships, typically, again, cost you see $300 million, $350 million. So those ships are like almost Like a shuttle tanker, you don’t take the cargo in Sabetta, you have the ability to break through ice. And then you can go to Europe, usually. So you go to Europe in the winter period. And during the first half of 2019, a lot of the volumes just stayed in Europe because it was better economic to sell them to European consumers. But the intention has been more to ship those cargoes to Asia. Well, a lot of the [indiscernible] off. And then in, I believe, four months of the summer, you are able to break through Northern sea route, and the intention there is to build a terminal in Kamchatka or also a ship to ship transfer. So the leg from Kamchatka and the lag from Europe will then typically be done on conventional LNG carriers, while these ARC 2 will do the kind of the heavy-duty work shuttling the cargoes out of Sabetta into more hospitable areas for ordinary LNG carriers. And last year, they had a bit lack of this ARC 7 LNG carriers due to volumes coming on quicker than expected and at higher volumes than nameplate. So a lot of the Yamal volumes were transhipped in [indiscernible] north of Norway through conventional LNG carriers and Novatek executed 122 of those last season, and we did 12 of those, which is 10% with our ship Flex Endeavor. So for us, it’s more the focused conventional LNG carrier, but Arctic LNG-2 is positive for LNG carriers, the ordinary type because it create demand for LNG carriers in Europe and then also Kamchatka.

Okay. Perfect, thank you gentlemen very much, for the time.

Thank you. Your next question comes from Peter from [indiscernible] Capital. Please go ahead.

Thank you for taking my question. I just got a minor question in terms of your OpEx. Can you perhaps provide some more color on that, to explain the delta between the quarters? And – because I’m just wondering how you see this developing going forward. I see on Page 6 of the presentation, you used $13K in order to calculate the new breakeven with the new financing. Is this an internal figure you use, a sustainable OpEx levels, like once the fleet is fully delivered? Or how do you think about Flex OpEx going forward? Thank you.

Clearly, you have done your math. I would say that what we have guided there is around $13,000 on OpEx. We’ve achieved a bit better number than this. The kind of the OpEx for Q3 looks very low. But usually, when you get new ships, you can kind of sometimes have a bit lower OpEx in the early months because of what I would call accruals. So that’s one factor why OpEx is slightly low in Q3. And then we also have fuel claim, from time to time, you could have a situation where you have a fuel claim or something like that, and you might have to do a provision. And when you talk to auditor, they usually would like to have a high position as possible. And then when you do, the end result that settlement might be much less. And then you have to reverse the settlement. So that’s also a driver of the OpEx. Then we also see our composition change that we put in our ship management in the quarter, expensed a lot of this kind of costs through the admin. You see admin cost is jumping up within Q3 and maybe some of that cost, which probably better be kind of in the OpEx line. So I think we’ve been given a pretty good estimate of $13,000 on average for our ships. And that’s really the number we would expect to see over time, and there might be quarter-by-quarter differences, especially when you have ships delivering because some of kind of the OpEx out. And it could be on the high side or the low side because the OpEx are not really that kind of gone through when – before you have a shipment kind of ordinary transportation – in ordinary kind of journeys.

That’s very clear. Thank you.

Thank you. There are no further questions at this time. [Operator Instructions]

Okay. I think we have some questions from the audience as on the – on web chat, I have to find my glasses, but we have a question from Santos Gupta. Can you please suggest if a lack of clarity on propulsion system with reference to IMO emission reduction target by 2050 will lead to lower LNG new orders going forward, especially from next year? So – okay. So in relation to emissions. And our one of, I think the big benefits, I’m not sure if everybody noticed it, but there is, this called Poseidon Principle, which is a lot of the big banks have made a club and want to kind of flow them onto kind of the more sustainable shipping companies. And we are one of the benefits for [indiscernible] because we are in a situation now that our ships are burning LNG rather than heavy fuel oil or diesel. And we do this in a very efficient way. We take it basically from the cargo, and we heat a bit of the cargo every day. And of course, that’s good for the environment, not only the CO2, the CO2 is actually 20%, 25% reduction compared to oil. But the local pollution, as I mentioned, the significant higher numbers of reduction. And then you also have the propulsion system itself. So a kind of two-stroke propulsion system gives us thermal efficiency of 50-plus percentage, while a steam propulsion system gives typically a thermal efficiency of 30%, 35%. It could be higher for the new hybrid systems. But that kind of improvement in the thermal efficiency means that kind of all ships are in the front when it comes to fuel economy and also what kind of fuel you utilize. So kind of – if you have the whole…

We have one more question by the phone, would you like to take it?

Yes, sure.

Yes. And it comes from the line of Jack Titan from [indiscernible]. Please go ahead.

I think actually, we just went through Jeff’s questions. But Jack, go ahead.

Thank you, for taking one more question. So this final question is about CapEx. So what is the estimated dry dock cost per vessel every five years? And secondly, when you say that your breakeven is $45,000 per day, does it include the maintenance CapEx? And is the maintenance CapEx part of the operating cost? Or it’s separate?

So yes. It’s a good question. Dry docking every five years. We actually have whole thing on some of the ships where you could theoretically do the dry docking often 7.5 years. I – probably not something we would like. So kind of when we are doing our accounting, we are assuming a docking at a five-year, usual kind of CapEx related to our dry docking is around $2.5 million to $3 million for a five-year survey. And then you would have to do a 10-year, 15 years and so on. So the number is around that $2.5 million, $3 million. So – and that would then also ship to dock would be affected and as well as [indiscernible] 2023. When it comes to maintenance CapEx, the OpEx of $13,000 we don’t really have maintenance in the sense you are – if you have like a factory, you shot – shut it down for a month and do maintenance. We have what we would call it, continuous and conditional maintenance. So we are doing this every single day, making sure that the ship is in top performance and operational, to make sure that we can run smoothly. So the whole kind of maintenance CapEx is included in the OpEx number, which we have guided at $13,000 on it.

Thanks a lot, and I wish you best for the future.

Thank you. There are no further questions. Sir, please go ahead.

Yes. I think we just have one more question. We have some on the web. That’s one question, which I will see look today. So I might as well do that before hanging up. And it’s related to dividends. How should we be thinking about dividends? Should have a similar dividend and cetera. So luckily, it’s not for me to decide. It’s the Board that decides the dividends. But what I can tell you is when we are making assessment or recommendation, at least to the Board or management side in relation to dividends, we don’t really look at the charter in installation. We deliver fantastic results end of 2018, but decided not to pay dividends. And the reason for not paying dividends. I would say it was twofold. It was kind of a low visibility. And we also saw that the market softening quite a lot end of 2018. We were then a bit concerned about first half of 2019. And then the second point being the fact that we had a lot of unfunded CapEx and starting to pay a dividend before you have kind of secured financing. It’s a bit not really prudent. So what – the difference this around is the fact that we basically financed all the 2020 newbuildings, and we have some option in the 2020 financing to either also increase the $629 million facility and also swaps. So meaning we could take out a ship and move – the financing and move it to 2021 ship. So we’re really kind of comfortable with the remaining CapEx. We also have done a lot of financing this year, which have increased our cash balance. So ending the quarter with $56 million of free cash and €50 million of our loan range of credit facility plus…