… Third Quarter Results Presentation. I’m CEO Oystein Kalleklev, and I will be joined later in the presentation as usual by our CFO, Knut Traaholt, who will walk you through the financials. Before we begin, just want to remind you that we will be providing some forward-looking statements, some non-GAAP measures and of course there are limits to the completeness of detail. Before we kickoff the presentation, just remind you that you can send in questions for the Q&A session either by using the chat function or send an email to ir@flexlng.com. And as usual, we have a gift for the best question. This time we do actually have two gifts. We have our FLEX LNG perfume. We have the two versions, His and Her Money. So it's a perfume with the scent of dividends, which I believe everybody likes. So let's try it out. Yes, that's a good start. So send in a question to who will be the lucky winner of this perfume. So let's kick off with the highlights. No big surprises on the revenue numbers. Adjusted EBITDA revenues came in at $90.5 million in line with guidance of approximately $90 million. This resulted in net income and adjusted net income of $17.4 and $28.7 million, respectively. Just to remind you, adjusted net income numbers, we only take in the realized gain and losses on derivatives. During this quarter, interest rate fell a lot until early September when Fed cut 50 basis points, and we utilized that opportunity to increase our hedging portfolio significantly. So the $10.7 million we had in unrealized losses in Q3. We gained more than that just in October month alone. This gave an adjusted earnings per share of $0.53 for the quarter. Recent events, we announced last Thursday that we are already…

Thank you, Oystein. And as already mentioned, revenues for the quarter were $90.5 million. From an operational point it was a strong quarter with 100% technical utilization of the fleet. And if we look at the 9 months the revenues of $265 million. That translates into a time charter equivalent for the quarter of 75,400, or for the 9 months close to $75,000. If we look at the OpEx, we are at budget at $14,900 per day, and slightly improvement from last quarter. For the 9 months, we are below budget at $14,700, and today we guide that OpEx is around $15,000 for the full year. And that's where we expect scheduled maintenance of some of our engines during the period and also we have experienced higher crew change cost basically since we have less vessels going to Europe, so more of the crew changes I've done in Asia which is more expensive. Adjusted EBITDA of $70 million for the quarter and $204 million for the 9 months. And as Oystein mentioned, in the adjusted numbers, we take out non-cash items, and primarily these are unrealized gains and losses from a derivative portfolio. So in this quarter, we have adjusted out $10.7 million and also about $600,000, which is right of debt issuance cost in connection with our refinancings. Our cash position, as already mentioned, pro forma balance of $450 million. That came from $48 million from operations, $27 million from scheduled amortizations. And then we have completed the two financings. First, the $270 million facility that was closed in September that refinanced all three vessels out of the old $375 million facility. And that was then leaving the FLEX ENDEAVOR debt free at the quarter end. Thus far we don’t have $63 million as repayment within the quarter. And…

Okay. Thank you, Knut. Let's look at the market. So, as you can see on this slide, it's not really growing quickly. 1% growth historically. LNG export volumes have been growing 6% to 8% area. Last time we actually saw 1% growth in the market was COVID 2020 because the demand was low because of the shutdowns. Now actually it's a bit different. We have 1% growth, but it's not really demand. Demand is strong as evidenced from the LNG prices, but it's really the supply, which is the bottleneck with projects coming on stream, some of them later this year and then into '25 and '26. So we see a wave of LNG coming next year with much higher growth factor for the export next year. We estimate around 6% growth next year. So this is also one of the explanations why the spot market is trading poorly. U.S., Australia, Qatar are the big exporters, pretty flat. We still see Russia, despite the conflict in Ukraine now. They are still managing to grow their exports. On the import side, Europe came out of the winter season with high storage levels, have been able to source less LNG this year, which has opened up the market for other players, like China, growing healthy 10%, and then India at 18% growth. So volumes have been shifting from out of the Atlantic from U.S to Europe from -- to rather U.S to Asia, which is generally good for ton mileage, especially when the volumes are not utilizing the Panama Canal and not the Suez Canal, but still the number of shifts being delivered is outpacing ton mileage demand. Looking at Europe in a bit more detail. As you can see here, import levels are below last year because storage levels have gone…

Good. We have a number of questions and maybe we can start off with the last topic on the U.S elections and Trump being President. You mentioned lifting of the permitting moratorium and shipping demand in 2028. For these projects, when do you expect they will start ordering for long-term contracts?

Of course, there's still -- today there is already a lot of U.S projects that are getting close to export, so these are Plaquemines, Golden Pass, et cetera. So these people who have started those projects, they have of course secured shipping for their volumes coming, but they're typically not all contracted ships for the next wave of projects, some of these project being expansion projects of existing infrastructure. So there we will see -- if it's 90 million tons of new volumes coming to the market, probably from '28 to 2030, that means a lot of shipping requirements. Yards are pretty packed with orders today, so we do expect some of these new projects will just go into the market for existing tonnage, given the sticker price on new builds, and source ships, which will then be supportive of the shipping balance from, let's call it, '28 and onwards.

And then we have a number of questions on the contracts, the one we have just announced for the Courageous and Resolute. The charter is fixing those ships pretty far in advance. So the question is: one, is this a project, specific project related, but what are the motivation for the charterer to fix these ships now?

Yes, it's fall in the future. It's not project specific, it's for a portfolio, it's a super major. So a super major typically have a lot of different projects and they can allocate the ships to do various projects they are involved in. Why we are fixing this far into the future? It's a bit related to the fact that we have the ships on charters with the existing charter. They are very happy and satisfied with the service they are receiving. It's not only about having the right ships, but there's also the service, the full quality around it from the operations of the ships. On the ships, the technical support, the operation support. So I think they've been a satisfied customer and we have evidenced this several times in the past. We have existing charters that are extending ships with us. So that's one factor. The other factor is also there are a lot of new environmental regulations. So when we started this company or started contracting ships for this company a while back, I've been doing now, I think it's my 29th quarterly presentation. But then it was like we contracted the ships because of the technology change, the low prices and the ships came into the market where we had U.S suddenly becoming the biggest exporter. At that time we had what we called the mega premium where we said these ships are more fuel efficient and have a bigger parcel size and that should command a premium in the market of, let's say, $10,000, $15,000 compared to the previous generation of ships. What has happened since then is we have had EU implementing carbon pricing. EU ETS, from 1st of January this year, which means that you have to pay for the CO2 emissions you have when trading into EU. They have also communicated that this will also happen for methane emissions. And the price of methane emissions is still unclear. What is clear is the megaships. Both these ships being extended from 2029 are megaships, and megaships have by far the lowest methane emissions, which means that this tax will be the lowest you can get when trading these ships. Then 1st of January next year we will have fuel EU maritime, which is another system. EU loves to make rules. So if they can make more, they prefer that than doing -- making simple easy rules. So all this spaghetti of rules means that also here we have ships, they are more than efficient, well run. You have less CO2 tax, but you will also get the most, call it, fuel EU maritime subsidies on these ships, because these ships will be generating surplus under the fuel EU maritime system for at least 10 years to come. Which means that these are ships you want to keep in your portfolio if you are satisfied charters.

And then moving on to CONSTELLATION and Niels Thomassen [ph] is asking what's the ideal strategy for her? Short-term pain until the market tightens or longer term charter at the current market rates?

Yes, it's a good question. We've been -- in 2020 when market was pretty tough. The last time we had 1% export growth. We had all our ships in the spot market, so we are perfectly able to handle that, especially now when we have such a strong balance sheet and liquidity position. So we will just do what is best for shareholders and look at, okay, can we fix this on our long-term charter? We do think that the market will improve as we've shown in the graph. Get the ship back in March '25. We do expect 2 years in the future the market would look quite different. So then it's a question how much can we make then trading the ship for 2 years in the spot and then try to fix the ship term. This is of course also a bit more dynamic, so it's not like the spot market will be poor [ph] for 2 years and then it will be good and then term rates will go. People will see that the market is tightening, so you could see that maybe next year spot market will be -- maybe not that attractive, but that we will see that improvement in the term rates as we are getting closer to that inflection point in the market supply balance. So it's too early to say, we just got a notification that the option was not declared, and the option was not declared because it was out of the money, because rates have gone down, and the low spot rates are also pushing down, let's say, the 12-month term rates. So this option was for 12 months. So, once I get back here in February next year, maybe we have a better idea what we will be doing. We're fine trading each spot, we're not going to give it away on a term rate, just to take it out of the spot market. So, let's see. Too early to tell.

And the two next vessels in line is the options for Aurora and Ranger. What's your view on those options?

It's Aurora and Volunteer. Ranger is fixed until March '27. Aurora and Volunteer are fixed until Q1 '26. We will have -- we will be notified in end of next year whether those options will be declared. We have already announced this is a one plus one year option. So if the charters elect not to extend them, they will also lose the last option. And that option is from '27 then into '28. And as we have illustrated here on this supply balance, we think the market will start to get really tight in '21, by '27. So if they don't declare it, they also lose that last option. So that is way too early to tell whether those options will be declared or not. In any case, then we will get the ships back in 2026 and we do think that the term market will firm up in '26 in anticipation of a tighter market from '27 onwards. So I'm not losing sleep on that.

You mentioned a bit on MEGI and XTF technology and one of our bankers in ABN AMRO asked more your view on from a sustainability and cost efficiency there is the MEGI, the XTF which is the low pressure and then you have the MEGI, the high pressure. And if you look at the order book, they're slightly more for the low pressures. So anything to say around?

Yes, I can maybe I can take a short recap of the history here, because we started at off with the MEGI ships. The first MEGI ship was end of 2015. And they came full blast from 2016 onwards. MEGI ships are fantastic ships. You take the boil off pressure, you put them into the boil-off and you put them into a high-pressure compressor and you push that pressurized boil-off gas into the combustion chamber of the two engines and you get almost perfect combustion. So it's both efficient in terms of the efficiency ratio or the thermal efficiency, but also in terms of the combustion efficiency in terms of methane slip. So, MEGI's today have a guaranteed methane slip of 0.2 gram per kilowatt hours, which is almost nothing. However, it's a bit complicated. You have high pressure in the engine room, and these compressors are huge and very costly. And some of the ships, we actually have two of these compressors. We have altogether nine megaships, two without relic [ph] system, four ships with partial relic system where we have a big compressor, and then three ships with a full relic system where we also have two compressors. It's a huge investment, these compressors. So some of the charters said, okay, couldn't we have just a simpler system? So rather than having 300 bar pressure on the boil-off gas, let's try to make a system with more cappuccino pressure, 15 bar. Which was the XDFs, produced by WinGD. And a lot of people went for that system, because you don't need these pricey compressors, and it's less complicated. So, what happened then is that we had to switch to XDF, and of course, there's really two engine manufacturers for these ships. It's MAN, which have the MEGI and…

Then we have some questions on capital allocation, dividend sustainability and share buybacks.

Yes, okay. Yes, let's start with the dividend sustainability. We had a bit softer this quarter were $0.52 adjusted EPS were $0.56, I believe last quarter. So we are not 100% at the $0.75 level. However, we have $450 million of cash. We don't need any cash to run this business. We are being prepaid every first day of the month we get the charter hire, we pay our bills later in the month. So you could actually run this business without any money. The only reason you need money is that you have some banks and they like to see you are having some money on the account. So in terms if there are some weaker markets, you can burn some of that cash. That doesn't really apply to us because we make money every quarter, given our kind of charter backlog. So in terms of the financial covenants today, we need to have around $70 million of cash. So just like simple mathematics then. So $400 million surplus cash. We are paying $40 million quarter -- every quarter. So even if we had made no money, which is unrealistic given the charter backlog, we could sustain that dividend for 10 quarters. So 10 quarters, then we are well into 2027, where we think the market also will improve. So we will be eating a bit of that cash surplus now to take us or bridge us to 2027, '28 where we do think that we can get better rates on some of the ships. And also we have already seen some improvements in terms of interest costs, which is actually our biggest cost element is interest costs. We have now been able to push up our hedging ratio at a very favorable time in September. And then also,…

Then we'll round it off with two more market questions. It's about the Panama Canal, which has been mentioned, but also, do you sleep -- do you -- are you losing sleep from possible peace in the Middle East and normalization in the Panama Canal?

I'm not losing sleep because of peace in the Middle East. That would be great. I don't think it's going to happen any day soon. In any case the conflict in Middle East, it's not really impacting this market a lot. There is some geopolitical risk premium maybe in the oil price and gas prices. But remember, it's really about the Qatari volumes not being able to go via Suez to Europe. They have to go through Cape of Good Hope. Those volumes are not that huge. So it's not like if Suez Canal opens up, it's going to change everything because it's not really that big effect. Panama Canal, we see it. Panama Canal is back to normal operations today. So it's really the inflexible booking system and the cheap shipping freight that means that people are avoiding it. So now I think it would be nice to have some peace in the Middle East.

Okay. That concludes the Q&A.

Yes.

So from the questions list and also from a frequent participant.

We have two gifts. So it was a [indiscernible], wasn't it?

Yes.

So let's make this quiz a bit better. So let's give him the Her Money perfume so he can give it to his wife and become very popular. Maybe she gets a taste of dividend smell and he becomes a shareholder as well. And this His Money perfume we give to …

Thomas Novotny [ph].

Okay. That's good. He has the UP LNG index. So you should check that out as well. So thank you everybody. We will be back in February with Q4 numbers. I hope you will tune in then as well. Thank you.