Good day and thank you for standing by. Welcome to the Flex LNG Fourth Quarter 2021 Earnings Presentation Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Oystein Kalleklev. Please go ahead.

Thank you. Welcome everybody to FLEX LNG Fourth Quarter and Full Year 2021 Webcast. I'm Oystein Kalleklev the CEO of FLEX LNG Management and I will be joined today by Knut Traaholt, our CFO who will talk you through the financial numbers as well as our recent refinancing a bit later in the presentation. As always, we will conclude with our Q&A sessions. If you'd like to ask a question in the Q&A session, you can either ask questions through our teleconference or use the chat function. So first, before we start with a reminder of our disclaimer, as we will provide some forward-looking statements in relation to future revenue guidance. We're also used some terms like time charter equivalent earnings and adjusted earnings and EBITDA, which are non-GAAP measures and are all amidst through the completeness of the – we can find in this webcast, so we recommend that the presentation is ahead together with the earnings report, which we also released today. So let's kick off with a short summary of or highlight Slide 3. First of all, we are pleased to deliver knockout results with the best ever quarter on most financial method measures. And news came in at $215 million, slightly ahead of our revenue guidance of approximately $110 million. When I was putting the final touches on the slides last night, I put in that time charter equivalent earnings we are the best ever with our average TCE of $95,900 per day in the fourth quarter. I recall that when I presented our Q4 2018 results, we have the bullet point with TCE for the quarter of about 95,000 in the earnings presentation. However, following our listing in the U.S. in 2019, we had to provide more stringent non-GAAP details about historical TCE earnings. And…

Thank you, Oystein. So we'll start with some key figures for 2021. And at the left of the graph, we see the total operating days, which with the 70% increase in total operating days, illustrates the new fleet new building program or fleet growth trend where we have the full earnings capacity from the second half of the year. The TCE numbers for that Oystein already mentioned was just in shy of $96,000 per day for Q4. For the total year, the $15 per day increase year-on-year is mainly driven by the super strong performance by the three versus on variable higher contracts and the Flex Volunteer trading in the spot market. Going to the cash free breakeven, we’re also delivering on strong cost control with the breakeven for the year at $43,700 per day is compared to the guiding one year ago about 45,300 per day. During the year, the OpEx has been affected on average about $600 per day by COVID related costs where $400 per day is direct COVID related costs, while about $200 per day is indirect COVID related costs. These are typical terminal restrictions, making a crew handovers more challenging and therefore some more expensive. Despite the Western world opening up, and easing travel restriction as Oystein mentioned, we still experience restrictions book, recruit changes and we'll also -- we also expect COVID related cost going into 2022. We then turn to slide nine. With a larger plate, we are also delivering all time high revenues for the quarter, about $150 million and about the guiding of $110 million given in Q3, and also all-time high revenues for the year with $343 million in total. This translates into an adjusted net income of $63 million for the quarter and $145 million for the year. That's…

Thank you, Knut. Knut joined Flex in May last year after working as a senior banker for the last 15 years. And some of his fellow bankers asked him what the hell he was going to do as CFO in Flex, given the fact that we had already financed the whole fleet. So while I think we have proved that we can still put him to good use with balance sheet optimization program. That means we are not only happy with the utilization of our fleet during 2021, but also with the utilization of our CFO. So keep it up in 2022, Knut 100% utilization is the minimum boss. So, let's start on the market section. And our market section in November in connection with -- and numbers, we present the gold figures for LNG market with 17 million tonne growth in the period between January to October. LNG export growth slowed in the last two months of the year, due to outages and slower export growth in the U.S. as they recorded zero cargo cancellation during November and December 2020. However, U.S. still managed to increase the export by an impressive 23 million tonnes during 2021, which was actually 120% of the market gold. In any case, we ended up at 19 million tonnes export growth or about 5% growth in 2021, which is pretty decent, but about 6 million tonnes than our expectation going into 2021 with the shortfall caused by lower exports, primarily from Nigeria and Trinidad and Tobago, due to feed gas issues. Norway's decline was however expected as LNG plants at Melkoya is set forth to resume operations during Q2 this year. Egypt also staged a big comeback in 2021, with 5 million tonnes of export gold and there are more potential in Egypt for…

[Operator Instructions] Dear Speaker there are no questions on audio at this moment.

Okay. I do think we have some chat questions, so maybe you can just shoot them over to me.

Yes, we have some question from the web. Hello, I think congratulations on the Q4 results. Can you please comment a bit on the EU Emission plant for shipping?

Yes, yes, I think I already touched upon it. So, we have decided to broaden the scope of that emission trading system, which will also include shipping which will be faced in Nor [Ph] from 2023 onwards. So this means that ships sailing into Europe will have to buy carbon permits for the CO2 emissions and maybe the CH4 emissions, methane slip emissions. This seems not to be concluded yet. But in case of CH4 emissions, this really makes all mega ships incredibly attractive in the market. So, the cargo owners will have to then buy carbon permits and if you have been paying attention to carbon market in Europe, it has been on up here. So the carbon prices in Europe are incredibly expensive at around €90 per tonne. So then you have to and this will then of course significantly improve the competitiveness of all ships, which are consuming as I mentioned, about 60% less fuel on a steam ship, not because we have a more efficient engine, but also because we can have a parcel size, which is about 30% bigger. So we are looking positively to towards our implementation of this. But there are still some rules that are not clear, and especially in relation to CH4 emissions. Because if you are adding CH4 emissions, it’s a big thing. And that first the question you have to ask yourself, if you're adding CH4 emission, what kind of multiplier will you add? If methane emissions don't last long in the atmosphere, but they are very important. So on [Indiscernible] CH4 emission is about 85 times worse than CO2. On -- since methane, this is broken down in the atmosphere much quicker than CO2 on 100-year cycle, they are about 28 times worse than CO2. So then -- so what will the factor -- apply to? Will it be 85 or 25 or 28? So, all some of those random factors so, but still, it means that if you have to pay for the CH4 emissions, that will be very expensive, and it will certainly favor trading efficient ships into the European carbon trading emission. So, let's see when we get all the details. But in general, we think it's a competitive advantage for us.

And we have three questions on the ballast -- the use of proceeds and our cash balance, prepare for opportunities. What are our priorities, phase, new building orders, fleet expansion or consolidation?

I think all of it is super new billing orders. We are all main shareholder. John [Ph] public, and he has been in this shipping game now for 60 years. So, of course, we have seen more cycles than most if any. So of course, shipping moves in cycle. Some mostly bankers might tell you differently this time is different. But they do. And this also reflects new billing prices, and they are pretty elevated now. And given the backlog they all have and the price pressure on inflation and such, we think they will pay elevate. So we bought, we're not going to rush to the arts or the new ships, we're going to focus on the ships we have. We all, we had some ships coming open the next couple of years. I mentioned Rainbow and Amber, and the -- and we think we are well positioned to lock them in on attractive rates. And as I mentioned, term rates are holding up very well. So our focus is on existing fees. So why are we then adding so much liquidity onto our balance sheet? It’s pretty simple. Credit terms for good top tier customers like us are very good these days. I haven't seen as good financing markets since 2014, just before the oil price slump. And before that I saw it back in 2007, when, before the financial crisis hit, old banks were handing out money everywhere. So, we as a very good client can access cheap capital. At good terms, we are now pushing out material with this. We add in flexibility with revolvers, which means that we can have access to a lot of liquidity without having to draw the debt and pay the full input expenses of the credit commitments. So this enables some financial flexibility and financial freedom and it also enables us to continue to pay very good dividends even though our earnings this a bit disappointing in in Q1 So it's more about having a -- ability also to tap the market when the credit markets are good. We do see that the Fed is tightening the policy both in terms of input faith and quantitive easing. So if you look at the most history in terms of recessions and contractions in stock markets is driven by Fed policies. So, we think it's smarter to take someone there when it's available. And, and I as I mentioned, we don't need to pay for it unless we use it. The commitment fee on the revolver is very attractive. So we keep it in spare. And, we think it's a good insurance premium and it gives us some strategic ability to also pursue some opportunities if there were -- but that said we were not planning to use this as a credit card to go to the odds.

There is a question in what kind of mix of fuel [Ph] as the fleet used currently using?

Mix of fuel, of course it's compliant fuel. It’s -- I would say of course, okay, let's just do the basics. So when we are taking LNG cargo, that cargo is like minus 162 degrees, so 265 minus -- six departments. So, of course the ship is thermos [Ph] with a propeller. Thermos are not perfect they are close to perfect now at least economically perfect because of boil off rate is much less than it used to be in the past. So we have a use this boil off from the cargo tanks to fuel our ships with LNG. And then you use some pilot fuel, typically marine diesel oil or marine gas oil. In the recently with elevated LNG prices, which have been trading at big premiums to oil, even though oil prices have been high, we have seen some more heel out being done by charter as well. Actually, you're not retaining part of the car goes to use to cool down the tanks and use for fuel, you're healing them out entirely, and then all the burning, typically marine diesel oil or marine gas oil. So I would say mostly it’s LNG. When you have areas where the prices are elevated, you could also be some, some, some compliance.

Okay, we round up with the two last questions and one is guiding for the cash breakeven level for 2022. And the second part of this, this is possible to switch into more fixed spread contract arrangements.

Okay, let's do the fixed rate contract. So, we did that eight or nine fixed rate time jobs. Last year, we think we think it will be nine because we do expect Cheniere to take the fifth vessels when you look at what the term rates are being quoted today. So I think we already shifted a lot of our revenue base to faceplate contracts. And this has mostly been driven by the fact we have been optimistic on the spot market. What back 2019 and 2021 the spot market was not that good. We elected to do variable time charters and short term time charter and spot in order to have exposure to the market because we thought it was going to improve. And then when we saw the improvement materializing during last year, we elected to fix a big chunk of our revenues to fix that confidence. Whether we will do it again, for the remaining ships really depends on what we think we can achieve. So we like to keep some exposure to the spot market. But we will see, we do expect most of our assets, we also shown them in the [Indiscernible], where most of revenues are on all fixed styles might improve, might improve more but really depends on the terms on the table. And then the other question was about our cash breakeven now. Okay, we guided I believe when we were a percent a year ago, we guided 45,300 for 2021. And we delivered below that, at 44,000. Even though COVID-19 related OpEx expenses were $600 per day, which was a bit higher than expected. So, but of course, LIBOR stayed at more or less zero during 2001. So interest expenses were very favorable. I think if you look at 2022, I think if you are assuming at around $45,000, it should be on target. As Knut mentioned, even though we know raise $125 million through our balance sheet optimization program, we are not increasing or better service cost. And this is driven by a couple of factors. One is that of course, we have got very good attractive terms. Number two, we have been able to stretch some of our payment profiles. And number three, we have structure, a lot of financing with revolving credit facilities, where we don't really have to draw all the debt all the time. So we there's no reason for us to sit with $200 million of cash all the time, we can repay that on the other revolver and save some interest expenses. So it seems like alchemy, you can get $125 million without increasing your financing costs. But it's really a reflection of the fact that banks are also seeing that we have really the risk the company and then they are also willing to provide us with more favorable terms. Yes, or do you want to add something to that?

No I think you covered it well. If your questions are not answered, we will look into it and respond to all of those who are not. If you have any further questions, do please send an email to IR at flexlng.com

Okay, and thank you everybody for listening in. We will be back with Q1 numbers in May. So I hope you can join the conference then as well. Have a good day. Thanks.

That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.