Hi, everybody. I'm Oystein Kalleklev, CEO of Flex LNG and today we are presenting our second quarter numbers. I will be joined today by our CFO, Knut Traaholt, who will walk you through the financials a bit later in the presentation. Before we begin, I would just also mention we do have our Q&A session at the end of the presentation where you can send in your questions either using the chat function or sending an email to ir@flexlng.com, and if you have the best question for today, we do have some gifts for you. So gift number one is our Flex LNG boiler suit. We just completed the docking of four of our ships. So -- and these are very nice when you do some improvements or maintenance. So, you can have it while doing some home improvements. We also have, then your Just Flex It, Running T-Shirt, which we will be using in Oslo Marathon next month. And lastly, we have a new addition of Flex LNG sunglasses. So I hope you do send in some good questions. It's always the most fun part of these presentations. So before I begin, I will also highlight our disclaimer. We will be providing some forward-looking statements in this presentation. We will be using some non-GAAP measures as TCE and adjusted numbers and of course, we cannot cover everything in detail during this short presentation. So we would also like you to highlight the fact you can read our earnings release, which we also presented today. So, let's kick off with the highlights. So let's begin with the highlights. Revenues for the quarter came in at $86.7 million, in line with our guidance of $85 million to $90 million. This resulted in strong earnings, $39 million translating into $0.73 per share.…

Thank you, Oystein. Let's have a look at the key financial highlights for the quarter. Revenues came in at $86.7 million and was impacted by that 57 days of scheduled drydock of the three vessels in the second quarter. It's also impacted by seasonal lower earnings of the variable hire contract for the Flex Artemis. On the operating expenses, we see a slight increase this quarter to $17.3 million and this is explained by timing effects of spares and maintenance. Last quarter, we were bit below budget and this quarter we have paid some of those OpExes. So OpEx per day is $14,600, but if you look at the first half of the year, the average OpEx per day is at $14,000. Interest rates continue to increase. So, we have an increase of interest expenses to $27.2 million. However, this is offset by our gain on derivatives of $17.1 million. Included in that is realized gains of $6.2 million versus $5 million in the first quarter. And if we look at the comments on this slide, we also then compare with the first half of the year. So, we see, we have realized gains of $11.2 million versus a loss of $2.4 million last year. So, despite the rapid increase in interest rates, we see the positive effect of our hedging strategy where the not paid interest is only $10 million higher despite the rapid increase in the interest rate levels. Last quarter, we completed the balance sheet optimization program and therefore also booked the write-off of debt issuance costs of $10 million. So that's no longer applicable this quarter. So for the second quarter, we end up with a net income of $39 million or $0.73 per share, and adjusting for the unrealized gains on derivatives, we end up…

Okay. Thank you, Knut. So let's have a look at the market, starting with the volumes. So these are the volumes from January to end of July. In that period we see that export growth is about 3%. U.S. was flat in Q1 due to the shutdown of Freeport but with Freeport up and running again, the U.S. volumes are increasing and are the main contributor to volume growth. We have also had shutdowns in Norway and Norway is back exporting. So they are also adding $1.6 million, same as Algeria. On the import side, we continue to see strong growth in Europe, adding 5 million tonnes in those seven months. We've seen less demand for Japan with nuclear restarts. But China bouncing back. China, after they loosened up the COVID restrictions, we did see Chinese demand rebounding from March. And in the second quarter, Chinese import growth was about 20%. So then looking at the gas prices, they have been incredibly volatile like the last couple of years, driven mostly by supply events as well as of course COVID. So looking back the last 1.5 year or so, of course, we saw high gas prices coming out after the invasion of Ukraine and also the strong demand in the end of '21. We had the Freeport shutdown middle of last year, which started to bring prices up. And then, of course, we had the Nord Stream explosion which cut off a lot of Russian pipeline gas to Europe and actually sending the price of gas as high as $100 per million BTU. For those who are not too familiar with million BTU, that's 5.8 million BTU in a barrel of oil, so that means that we are talking here about gas prices equivalent to about $600 per barrel of…

Okay. Let's start the Q&A session, Knut. And I think we have received quite a lot of questions today as well. Even though I think most of the analyst reports coming out this morning was, this is boring stuff. No news. Everything as expected, but we rather be boring and profitable than funny and losing a lot of money. So let's see. Okay.

We have a good group of questions. So thank you for sending them in. Let's start with the contracts. And Wolfsburn, he questions, if it's a surprise that Cheniere declared the option on the Vigilant that early, and can we expect any other options to be declared by Cheniere any soon?

Yeah. Well, he is a loyal shareholder. Now it's not a surprise at all. Actually, if you read the press release we sent out last year when we did this deal with Cheniere for three ships which we extended then, we vowed the fact that the Vigilant had early option, due Q3 this year, it's now Q3, even though we reporting Q2. So, it comes as no surprise. And they also have an early option to extend Endeavour in spring next year where the period is slightly bigger or longer, 500 days. So I would expect that to happen as well. So, no surprise, as planned.

And then a follow-up on the contracts from Eirik Haavaldsen in Pareto Securities. In the fixed rate contracts, are there any inflation adjustments?

No. We have them on a fixed rate level. Of course, there are some facts in those contracts. That's why we're making some money. However, we have hedged the risk in terms of inflation. Usually, there is the strong correlation between interest rates and inflation. So if inflation goes up, interest rates tend to go up as we have seen very much so the last couple of years. So, we -- as Knut has shown, we hedged a lot of our interest rates, so we have covered the inflation risk in that sense. And actually, our cost of interest rates, interest rate per day is higher than OpEx per day. So it's actually a more important risk to cover.

Yeah. Then we have some questions around the contract portfolio. We today announced 54-year of firm backlog and 80 years including the options and then we talk about open vessels in 2027 and '28. So the question is, what's the likelihood of the options to be declared?

Yeah, I would say, right now, given where term rates are for ships, ships have become a lot more expensive. I showed now the ships have been cost -- newbuilding price has gone up 30% in two years, but keep in mind, we auto ships back in '17 and '18. So they've gone up from 180 to 65. So -- and rates for newbuild, $100,000 or rates are lower. Although most of the options we have are typically at a higher rate than we have on the firm period. So, I think the likelihood of options being extended is very high. Whether all the options will be exercised, it's hard to say, but I think most of the options will probably be called by the charters and all kind of backlog is then most probably longer than the 54 years, we have firm.

Okay. Then moving on to drydock. We have a question from Haakon Lunder, who works in the offshore drilling industry. And they have a concept in the drilling industry about continuous class, there they do maintenance in class renewal, while in operation in order to reduce time at the yard and off-hire. Is that the concept that could work in the LNG for -- and for FLEX when doing drydocks?

I think it's a bit different if you are on a semi-submersible drilling rig. And you can spend $50 million-$100 million doing the special survey on the ship. We -- of course, we do have continued -- continuous maintenance all the time. We do have cash inspections regularly and of course, prior to us going into our dock, we want to minimize the stay at dock. So what we are doing is to prepare everything in advance. So once we are doing the discharge, we use the ballast leg to prepare all the maintenance, starting to take down equipment, so they are ready to being maintained. And I think we evidenced that now, we guided 80 to 90 days docks day for those four ships we had planned this year. We managed to spend only 77 days on those four dockings, average 19 days. And I think if you compare that with most all other LNG owners, we are comparing very favorable, on time and also on cost, because staying in a dock is costly.

And he follows up with another question on the new buildings. It's been mentioned that there have some new gadgets slightly different from our vessels. So while we are in drydock, do you plan to do any upgrades of the vessels?

It's not major upgrades. Of course, we always do software upgrades, might be some new energy saving devices. So we are putting in some more sensors, but not major upgrades. We have the most efficient engines. That's a two-stock. People oiling ships today is still the two stocks. Actually very few people are ordering the mega-ships, which we have nine out of 13 in our fleet is mega-ships, because they are quite expensive. Usually, they have one or two high pressure compressors running at 300 bar. People today are maybe often opting for cheaper engines with lower pressure, which resulting not as good combustion and more meet and slip. There are some other gadgets. You have the air lubrication system, but so far there are some mixed results on these systems. I think if you are to order new ships today, of course, shaft generator is quite popular. It's basically if you have a bicycle and you have a dynamo on the bicycle in order to make lights, so rather than running the auxiliary engines, you can use the dynamo. But of course, if you use the dynamo, you also create fiction. So it's not like you get free electricity. You have to build more on the engine, but you can use less of the auxiliary engines. So, that's a roundabout way of saying that we plan no big upgrades because the ships are state of the art, and we order them because we could get state of the ships at the right time, at the right price, compared to what it is today.

Then we have questions on -- for finance and basically the recurring question on our cash piles. Why we are not repaying debt in order to reduce interest rate cost? It's a recurring question and it's something that we get and it's related to the RCF, the revolving credit facility we have. Basically, we use the RCF for cash management. In between quarters we repay with available cash to bring down the interest cost, which is actually the question here. And that makes -- we have cash available and funds available when we need it. And it follows up on the classical principles of raising capital when you can and have it available. So for this RCF, when we don't utilize it, we pay 70 basis points in a commitment fee and that's a pretty cheap way of having capital available. Following up on the market, a couple of questions there. We have Charles from Namohan (ph), short question, is the winter coming?

Short answer is, yes. We are in August. Once we are getting into October, the winter will be coming. So what I think, he will be referring to maybe stick off when I show on the European storage levels of gas, of course, they are very high today, reflecting the fact the muted demand over the some -- muted demand over last winter when we had a total La Nina (ph) and a Pidi warm or mild winter in Europe. What will happen this year? Let's see. This year is different from the last three years. In the last three years, we have had La Nina. This year we have El Nino. El Nino typically means colder winters in North of Europe, wetter winters in South of Europe, usually warm winters in Asia. So even though inventory levels look high today, you have to also take into account that all the Russian gas that used to be there to support gas consumption in Europe is more or less gone. So the storage is becoming much more important and the drawdown of the storage levels will probably be much quicker, especially in a cold winter, because you don't have the same kind of base load of gas into the market. So, the winter will be coming. It will be interesting to see. We need to have as much LNG to the market as possible in order to not create this kind of wild price swings we have seen in the past.

Yeah. So that brings us to another question from Sherif Al-Magaby. We have in the presentation deck and there is also in the news now about a potential strike in Australia. So what's the impact on the ton-mile and there is a risk of a seaborne volume will drop and where will then the importers pick up the slack?

Of course, this is so much volume. It's unprecedented, the 10%, certainly of our volumes going away. We saw people to going away, it's 3.5%. So if that is, volumes are curtailed, prices will skyrocket. It will not be enough LNG in the market for sure, and hopefully, you can only hope it will not be long-lasting. We have seen similar situation here in Norway where oil and gas workers have been contemplating striking. And actually, the government have intervened and said this -- the consequences are too big. We are the biggest gas exports to Europe. We have a public arbitrator and just setting the term by Fiat (ph). I think, Australia so should certainly consider something similar. If it happens, of course, you will free up a lot of ships in Australia, which are usually doing that kind of transportation from Australia to Japan, Korea, China, Taiwan. So [indiscernible] to see, all those ships will be available. 40 ships, if you multiply maybe 1.3, 1.4, it's a sizable number of ships, maybe 60 ships will be available to market. Probably not will be available immediately, because people will be holding them back because they don't know how long the strike will be. They cannot fix the ship on a three months or two months charter and suddenly the strike is over and they are left out of the ships. So, you will create inefficiencies and you will have ships going to longer routes to US, to Asia. And, I think actually shipping market will also be tight because the uncertainty about when will volumes come back. Of course, when Freeport shut down, they had like a timeline when the volumes would be starting up and people could re-let the ships. When you have a strike, there's more uncertainty. And in uncertainty, people will holding those ships. So I think LNG's product market will be immensely tight and then the shipping market will also benefit. But there will not be a good situation and actually, I hope it not happen because we need LNG to stay at a cheaper level, if we are going to attract new consumers.

And on top of that, we have the problems with the Panama Canal. So how is that affecting Flex and the LNG industry, in general?

We had the worst drought in Panama since the canal opened in 1914. Water levels are very low. Remember, this is a big canal. And when you're putting ships through it, you need -- you are losing water from the canal into the sea. So you have to refill these water balances from reservoirs and these reservoirs are at a low level. Typically one transit, you are losing 50 million gallon of water which is 190 million liters. So Panama have had to reduce the number of transit to keep the water level. So this has created a super tight market in the Panama Canal. Waiting times today, if you don't have a slot, it's almost 20 days. And that's August. Last November, we saw them going up to 26 days. But that's winter season. Winter season is always more busy. You have the high season for container ships going for the shopping season. You have more export of LNG and LPG and typically more routes to Asia. So Panama clogging is a problem that's not going away. Even though the drought is going away, Panama is jammed. And the reason is, Panama Canal was built for container traffic, increased container traffic, the Neo-Panamax container ships and this was decided before the shale revolution in America where certainly US became the biggest LNG exporter and the biggest LPG exporter and the canal has not been scaled to suddenly also take all that traffic. So that will be on inefficiency. We see it more on the LPG side in Avance Gas where we have routing ships away from Panama because it's too much waiting time and it's too difficult to fix a ship when you don't know the schedule.

So, then there is a bit of a crystal ball question, what's your view on the LNG commodity prices in the short and longer?

Right now of course it's a -- I believe, forward rates are not always a good predictor of prices. But I think it's pretty accurate in the near term. Probably prices will stay tight for the medium-term or the short-term. There will be a lot of demand for the winter market. So prices will go up. Does not coming a lot of new LNG to the market near term, which means the market will stay tight. Europe will not get access to Russian pipeline gas. So there will be tight market. From '25 onwards, there coming a lot more liquefaction plants and hopefully that can bring down prices because otherwise we are pricing out consumers and actually we would like to get prices down to $10 and less because then we can finally do something with coal, because LNG should be utilized, not only to replace Russian pipeline gas but also coal. And if you are to do that, which is immensely important in terms of pollution, greenhouse gas emissions, then you need to get price which is affordable for developing countries, and not only European consumers.

So that rounds up the questions. But we'll include one more. It's Lucy Hine from TradeWinds. What's your guidance for your time to complete the Oslo Marathon?

Guidance. Giving guidance on that as well now. To that, I've been too -- so accurate on the guidance for our financials. Number one, we are attending Oslo Marathon. The Flex -- the whole Flex team in actually -- exactly one month, but we are not running the Full Marathon. We are running the Half Marathon. We don't want to have too much wear (ph) on these guys. Let's see. My goal is, I challenge my guys to beat me. Hopefully, I can beat one or two of them. Last time I -- since I run my last Half Marathon, I've been doing 24 of these quarterly presentations. So that hasn't helped my weight. Deadweight has gone up. So probably 15 minutes longer time than last time. So, below 150 run.

Good.

Yeah.

That rounds up to questions. Thanks a lot for the questions.

And Lucy, if you are there, if you are going to Gastech early September for the big Gas Conference, I know you like to run marathons. So, then of course, I will bring you, I had one of these Just Flex It T-shirts so you can run that -- use that next time you run Marathon, not the Half Marathon, like lazy guys like Knut and me, but the Full Marathon. Okay.

Then we need to round off with the winner of the Flex kits for the questions.

Yeah. I guess we -- Hawken Nunda (ph). We ended up at. I wonder if this is Hawken Nunda which I knew from my childhood. Let's see. Okay. We will reach out to him and give him the T-shirts. So he also can run a Half Marathon or Full Marathon. Of course the Flex glasses and the boiler suits, but if he walks spot drilling, I'm pretty sure, we all get -- have a boiler suit. Okay.

Congratulations and thank you for all of your questions.

Okay. Thank you, guys. And we'll see you in November. Thank you.