Welcome to Hafnia’s First Quarter 2024 Financial Results Presentation. We will begin shortly. You will be brought to the presentation by Hafnia CEO, Mikael Skov; CFO, Perry Van Echtelt; EVP, Commercial, Jens Christophersen; and EVP, Head of Investor Relations, Thomas Andersen. They will be pleased to address any questions after the presentation. Should you have any questions, you can submit them via the chat function or use the raise hand function to be unmuted or to ask your question verbally. Questions will be answered at the end of the presentation. You will receive further instructions as required. Certain statements in this conference call may constitute forward-looking statements based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which Hafnia is unable to predict or control that may cause Hafnia’s actual results, performance, or plans to differ materially from any future results, performance, or plans expressed or implied by such forward-looking statements. In addition, nothing in this conference call constitutes an offer to buy or sell or a solicitation of an offer to buy or sell any securities. With that, I’m pleased to turn the call over to Hafnia CEO, Mikael Skov.

Thank you very much. Hello, everyone. My name is Mikael Skov and I’m the CEO of Hafnia. Thank you for joining Hafnia’s first quarter 2024 conference call. With me here today, our CFO, Perry Van Echtelt; our EVP, Commercial, Jens Christophersen; and EVP, Head of Investor Relations, Thomas Andersen. We will present Hafnia ‘s performance for the first quarter 2024 together. Today’s presentation agenda will cover four key areas. First, I will provide an overview of Hafnia and key highlights during the quarter. Then we will present the first quarter financial performance. Subsequently, we will provide commercial updates and an outlook on the product and the market. And finally conclude the presentation with an overview of our ESG projects. Let’s move to Slide #2. Before proceeding, you should all be aware and take note of the mandatory disclaimer. Some statements in this call may be forward-looking and carry inherent risks. This call does not constitute an offer to buy or sell securities. Thank you for your attention and let’s start the presentation. So let’s start with an overview of Hafnia and the key highlights in the first quarter of 2024. Moving to Slide #4. Hafnia is one of the world’s leading tanker owners and operators. We primarily transport refined oil products and chemicals as shown in the simplified tanker market overview. As owners and operators of more than 200 modern vessels across eight commercial pools, we offer a fully integrated shipping platform encompassing in-house technical management and chartering teams spanning Asia, Europe, the Middle East and the USA. We also have a bunker procurement desk that serviced over 1400 vessels within our pool platform and for external ship owners. At the end of the quarter, we owned and chartered a diversified portfolio of 131 vessels with the own fleet having…

Thanks, Mikael. In the first quarter of 2024, we’ve seen another continuation of very strong markets, mainly driven by additional ton miles arising from the ongoing issues around the Red Sea. This has led to spikes in spot rates across all segments, reaching higher average TCE rates than those during the fourth quarter of last year. As a result, we’ve achieved a net income of $219.6 million in Q1. During the quarter, we further optimized our balance sheet by reducing leverage. Our net LTV ratio has further decreased to 24.2% due to accelerated debt repayment and higher asset prices. Our net LTV has been on a steady downward trajectory, reducing by more than 7% if you compare it to the first quarter of last year. This deleveraging has gone in parallel with increased shareholder distributions in the form of cash dividends. In line with our recently updated dividend policy that Mikael has just outlined, I’m pleased to announce that a dividend payout ratio of 80% of net income for the quarter will be distributed. This means we will distribute a total of $175.7 million for the quarter, which corresponds to $0.3443 per share or approximately NOK3.7 for the quarter. This is Hafnia’s highest quarterly dividend payout ratio and amount to-date and will continue to have further upside potential as we continue to further reduce our leverage in these strong markets. We move to the next page, for the first quarter, we generated a TCE income of $378.8 million, which is similar to levels we generated last year. For this quarter, the IFRS 15 load-to-discharge adjustment has resulted in a negative TCE adjustment of $7.2 million. Including this, we ended the quarter with an adjusted EBITDA of $287.1 million, and as I said, a net profit of $219.6 million. Also, our…

Thank you, Perry. Hafnia primarily operates within the cyclical and volatile product-tanker segment. Charter rates and tanker capacities depend on several factors, and over the next few pages, we will provide current market updates and our expectations. Since the beginning of 2024, the product tanker market has been positively impacted by ongoing safety issues in the Red Sea, which caused shifts in trade routes, so vessels are now sailing south of Africa. In addition to the usual northern hemisphere winter seasonality, droughts in the Panama Canal and low diesel inventories in Europe have contributed to a strong first quarter. Consequently, CPP on water, which usually is a proxy for transportation demand, has also surpassed all-time highs. The growth in oil and water is driven by longer voyages, not only from the Middle East to the West, but also across the Pacific, where the West Coast Americas are, to a greater extent, being supplied from the Far East. This represents a positive outlook, as periods of high CPP on water and ton days have historically corresponded with periods of strong earnings. Looking at the volume over the past five years, we’re witnessing a steady rise in daily CPP and chemical loadings and longer transportation distances compared to previous years. This more-than-proportionate increase in ton miles can be attributed primarily to eastern refineries supplying many Atlantic consumers. Dirty petroleum products and crude oil, on the other hand, have seen a slight decline in cargo volumes, as they’ve been struggling due to OPEC production cuts. We can expect these high ton-mile levels to continue accommodating the dislocation between refining capacity and the end-users of refined products. Slide 16. While the impact of sanctions on Russia’s products has been fully felt, with market inefficiencies and new trading lanes being calibrated and eventually settled upon,…

Thank you. We’re now on Slide 21. So moving on, I would like to touch upon Hafnia’s ESG strategy and targets. As we navigate through the evolving maritime landscape, Hafnia remains very committed to minimizing our environmental footprint, promoting diversity and inclusion, and upholding high standards of corporate governance. By setting ambitious targets, we strive for outstanding performance in all aspects of our operations. Moreover, we actively engage and partner with various industry peers, international organizations and other key stakeholders to collaboratively address challenges our sector faces. By aligning our intentions with our actions, we aim to demonstrate that excellent commercial performance and sustainability are not mutually exclusive, but rather mutually reinforcing part. Slide 22. Next, let me share a few highlights of Hafnia’s ESG projects. In 2023, we took a first step into the methanol landscape through our joint venture with Socatra of four chemical IMO II MR dual-fuel methanol vessels. This is in line with Hafnia’s sustainability values and ambitions to transition towards a greener future and a greener maritime sector. Furthermore, we’re looking into a joint venture with Big Hill on the development of hydrocarbon fuel plants to produce low-CI blue methanol and sustainable aviation fuel at a later stage. Still subject to FID, this project will develop new sustainable shipping opportunities within the CO2 and methanol and sustainable fuel sector. ESG remains a focal point on our agenda and believe we will further demonstrate great progress over the coming years toward our net zero ambition. Slide 23. To conclude, I hold a positive outlook on Hafnia’s ongoing commitment to fostering a greener maritime sector and leveraging our strategically positioned modern fleet. I also look forward to the new chapter following our dual listing in the U.S. We will continue to build on this strong momentum to produce even greater results. This will allow us to pursue our objectives, invest in a greener future and to also allow for greater shareholder returns. This comes to the end of our presentation and I would like to open up the call for questions.

[Operator Instructions] We will start with Omar. Please can you unmute yourself to ask your question?

Yeah. Hey, guys. Good afternoon. Thank you for the update. Obviously things are going very nicely here. And I just wanted to ask, you mentioned the eight in the money in charters that you have purchase options on that are worth $120 million. Just maybe if you could give us a sense of the terms of those options. When are those exercisable and what would you do if you thought of it or not, whether you would retain the ships if you exercised them or would you sell them outright?

I can take that. Generally, the purchase options can be exercised quite regularly, some within quarter-by-quarter and some within year-by-year and all -- for us we see them it’s cheaper to keep them as chartered in vessels than buying them as of now.

Okay. Interesting. Thank you. Then maybe just in terms of the Red Sea rerouting, you’ve been highlighting how it’s been -- it has had a tightening effect across the product market. Could you maybe give a sense of how has that affected, say, the different segments, because there’s been a lot of discussion where -- maybe a lot of the focus on the Red Sea has been more on the LR2s, but can you maybe just give a sense or a bit of an overview of how it’s affected the LR1s, which is where obviously you have a big footprint and then also the MRs?

Yeah. Hi. It’s Jens here. The rerouting has had a higher effect on the LR2s than it’s had on the LRs, and it’s had a higher effect on LR1s than it’s had on MRs, generally speaking. So, it’s kind of top-down and I think naturally it follows the size of the ship. Bigger ships, they do longer voyages. I mean, that’s the simple answer.

Okay. Simple answer. Maybe just one final one. The LR2s obviously had a very strong 1Q. The rates so far in the second quarter are a bit softer, a bit lower than what we would have thought just given some of the spot indexes. Are those ships on contract or maybe I’m just misreading the indexes? Any sense you can give on LR2 sequential easing in the realized rate?

When we look at our LR2 segment and the numbers we’re reporting, we have a fairly high degree of contract coverage in that segment. We have dual-fuel LR2s that have recently been delivered, which are a long-term charter and we’ve had some of our existing LR2s on longer term charters that are expiring in the more near-term. So, our numbers does not reflect a pure 100% presence to the spot market here. Right now, the spot market looks incredibly tight on the LR2s.

Yeah. Okay. That’s what I figured. Thank you.

Yeah.

I’ll pass it over.

Okay. Great. Thank you. Frode, may I ask you to unmute yourself? Frode Mørkedal: Yes. Thank you. Hi, guys, and congrats on the dual listing in New York. What’s the feedback, what have you learned so far and what’s your expectation of this dual listing? That’s the first question.

Yeah. Thanks for that question. And no, I think, at least for the time being, we’ve experienced quite a good interest from the investors in the U.S. We’ve seen increased liquidity of our shares and one of the backgrounds for doing it was really to try to capture into both sides of the investor pockets in Oslo, Scandinavia and in New York, and so far, it looks like we are seeing traction. I think there’s a positive view on our dividend policy and where shipping is in general. So far, at least with no interest, there’s still some time to go on this, we feel. I mean, obviously, it takes time to build up more liquidity. But for sure, yeah, so far, it’s only been a positive response. Frode Mørkedal: It’s good to hear. And thanks for the details on the pool business you provided. That’s clearly a valuable business, right? So just one question I had was, what’s the -- what’s a fair earnings multiple on this type of business in your view?

Hi, Frode. Hi. It’s Perry here. Thanks. Frode Mørkedal: Yeah.

I think that’s an interesting question. We see the pool business really is adding to the shipping business as well, because it gives us wider scope commercially, et cetera. If we look at an EBITDA multiple, it’s difficult to find really peers, right? There’s been some M&A in the market. I think if we look at overall implied multiples, some of the analysts have taken an approach of that, I think, last we’ve seen was in the range of $100 million in total value. Frode Mørkedal: Okay. That’s good. My last question was more on the market. You mentioned Dangote in Nigeria. Interesting to hear you think that could be positive in terms of exports. Maybe you could elaborate on that and what’s your overall view on this refinery changes? Yeah, first off, you have the seasonal effect of a big ramp up and then there’s new capacity coming online. So what’s your thoughts there? Thanks.

Yeah. Hi, Frode. It’s Jens. The Dangote refinery and the upstart of it is incredibly exciting. We’ve all been waiting to hear what’s going to happen. And our experience so far is that most of the cargoes that have been produced at Dangote so far have been exported, either locally to West Africa, but also longer haul to other destinations. And our expectation is that once the refinery is up and running and has a stable production on specification, it’s designed to produce Euro specs. So our expectation is that a fair number or a fair bit of their exports will actually be directed towards Europe or other markets where premium customers can be found for this product. There’s a disparity between the specification of what the refinery can produce and what the Nigerian market requires. So we’re overall positive about the refinery. Frode Mørkedal: Okay. Thank you.

You’re welcome.

Thank you, Frode. Greg Lewis, may I ask you to unmute yourself?

Okay. Hi. Good afternoon, everybody, and thanks for taking my question. I’m a little nervous there. Sometimes I have trouble unmuting. I guess, my first question is, Perry was kind of going through the chartering portfolio, and I guess, one of the things that we’ve seen to notice is that the rates have kind of -- the curve is kind of in a position where there’s starting to be opportunities to go long duration, i.e., time charter coverage. And obviously, on the LR2 side, that’s kind of in the strategy. As we think about the LR1 portfolio, over the next few quarters, should we think that there’s going to be opportunities to maybe go a little bit longer on the LR1 side?

Yeah. Hi, Greg. It’s Jens. Great question there. On the LR1 side, we’ve been sitting on our hands for the past couple of years. So our coverage is more or less zero right now. So, it would be natural for us to start building on some of that as some of these longer term deals are starting to look increasingly attractive. Looking into the next half year, we think we could be in an incredibly tight spot market and there’ll be opportunities where we’re looking to capture value further out the curve. Good point. Thank you.

Okay. Perfect. And then just another one for me. Like -- we hear a lot about ton-miles, not as much around congestion, and really, my question is around, the MR market and kind of, I realize the Panama Canal isn’t really a major choke point for the product sector. Just kind of curious what you are hearing, what you’re seeing. That’s still a positive. I mean, I guess, it sounds like congestion at the Panama Canal is starting to reduce. Is that something that is already happening as it happened? Any kind of sense for where we are in the process of that?

Yes. And the delays at the Panama Canal has already eased significantly from the position that it was in at the back end of last year and beginning of this year. So, today, we don’t see significant delays. The cost of going through the canal in terms of auction fees have come off dramatically from its very highs down to significantly smaller amounts. So, in our opinion, the Panama Canal right now is not, let’s say, a major choke point in international trade. But we still feel an impact in the market in the sense that there’s still a number of customers who have decided to reroute and we see more Pacific trade today than we did half a year ago. But perhaps that Pacific trade to some extent also is down to increased volume of cargo coming out of China. So, perhaps, it’s a little bit of everything that’s in play here.

Super helpful. Thank you.

You’re welcome.

Thank you, Greg. I don’t see any more requests in the raise hand function. So, I’m just moving now onto the chat and the Q&A function where I also don’t see anything. So, then I think that will bring us to the end of today’s presentation. So, thank you for attending Hafnia’s first quarter 2024 financial results. You can find more information available on our website after this call. Good-bye.