Thank you for standing by ladies and gentlemen, and welcome to the Navigator Holdings Conference Call on the Fourth Quarter 2015 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; and Mr. Oeyvind Lindeman, Chief Commercial Officer. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. And now I pass the floor on to your speakers, Mr. Butters. Please go ahead sir.

Thank you, Joe. Good morning everybody, happy Super Tuesday. And welcome to Navigator’s year-end earnings conference call. With us this morning as mentioned is Niall Nolan, our Chief Financial Officer who’ll speak to us later; Oeyvind Lindeman, Chief Commercial Officer, who’ll give us an idea of what’s going on in the current market and myself. Now, if I look back a year or so ago, when we were in the early stages of what turned out to be a prolonged decline in the price of oil, voices were heard protesting [ph] that oil’s demise would be a killer for our business along with others in the LPG transport trade. While the commodity price has indeed come down sharper and deeper than many had expected and yet today are reporting record revenues and record earnings for 2015. As you can imagine, I and the whole Navigator team are immensely proud of that accomplishment. Now, it seems peculiar if not a bit irritating that the first items I would like to address in this morning’s conference call at two accounting adjustments that we are including with our 20-F filing. In the past, we have taken what we consider the conservative approach to reporting what is a growing asset on our balance sheet namely construction and progress, our specials under construction. As you know, progress payments to shipyards are recorded on the balance sheet as an asset typically offset by a reduction in the cash position. Once on our balance sheet we may note further adjustments other than to add to the asset classes further payments were made. We did not assume any borrowings on the advances and therefore did not capitalize a theoretical interest expense. All of our borrowing costs were expensed. Excuse me, I was and remain comfortable with that approach…

Hey good morning. Thank you, David. The fourth quarter’s financial performance represents a strong end to the year, with net income of $23.8 million for the three months ended December 31, 2015, giving earnings per share of $0.43 for the quarter. As David mentioned, there were a number – couple of accounting issues to note although neither had any impact, any cash impact nor do they effect the main business drivers and indicators. Operating revenue for the fourth quarter was $78.7 million, which represents the slight increase from the $78.4 million generated during the fourth quarter of 2014. Net revenue arguably the more important measure, which is revenue after deducting voyage costs was $72.3 million for the fourth quarter compared to $69.2 million for the equivalent three months of 2014. This $3.1 million increase in net revenue was as a result of the increased number of vessels in our fleet to an average of just under 29 vessels during the fourth quarter of 2015 against 26 vessels operated during the fourth quarter of 2014. Charger rates slipped slightly to an average of $30,281 per day or $8,921 – $921,000 per month for this fourth quarter against $30,650 per day or $932,000 per month for the fourth quarter of 2014, a decrease of $369 per day. Fleet utilization which of course was effected by the Navigator Aries collision was 92.7% for the fourth quarter, resulting in utilization for the full year of 2015 of 94.3%. We estimate that the Navigator Aries collision had the effect of reducing utilization by 3.6% for the fourth quarter and by just under 2% for the full year. As David mentioned, I'm also pleased that the repairs have now been completed, the Navigator Aries has finally left the yard and we will expect that she that…

Thank you Nolan. Just short from me. During 2015 our handysized fleet had a record breaking 1,300 ports of coal safely carrying 6.3 million metric tons of LPG, ammonia, and petrochemical gases across the globe. Approximately one-third of the vessels were employed east of Suez, one-third employed in the European and Mediterranean area, and one-third in North and South America. 39% of the voyages were performed on spot basis and the remaining 61% on term contracts. Whilst the majority of our employment is in the transportation of LPG, we see as mentioned during previous earnings calls the manifestation of a structural change in the petrochemical sector taking shape. New trade routes are emerging and the behavior from the chemical demand side is evolving. One of the key catalysts for this is to competitively price American liquid feedstocks. The U.S. chemical industry, as David mentioned, embarked on an incredible buildout of plants over the last few years with six worst scale ethylene crackers set to complete between 2017 and 2020. The impact of this development is twofold. Firstly, the plants are increasing, the consumption of life of feedstock such as ethane and profane against [indiscernible] and those producing a higher amount of ethylene. The pricing differentials enabled U.S. produced ethylene to be attractive on the global stage and we shipped the first ever ethylene cargo from U.S. all the way to Far East in March last year. And since last summer loaded and shipped ethylene from the U.S. gulf to Asia on a monthly basis. Secondly, the far eastern chemical produces who are mainly reliant on [indiscernible] for their ethylene plants, realizing it is cost-effective to source and import U.S. produced ethylene as an alternative or add on to the current production, effectively skipping a step in the traditional manufacturing process.…

Okay, well. Joe, you can open up the conference to questions and we will be prepared.

Thank you. [Operator Instructions] Our first question comes from Doug Mavrinac from Jefferies. Please go ahead.

Thank you, operator. Good morning, guys and congratulations on another great quarter. My first question has to do with the fourth, but then also 1Q in terms of the LPG market itself. David at the top you mentioned how people have been worried about oil prices that affecting the LPG shipping market, but another thing that people have talked about is how the VLGC order book was going to infringe on the handies. So my question is can you guys discuss kind of the divergence between those two markets during 4Q thus far and 1Q and some of the reasons or some examples of why we've seen such a divergence between the performance of the VLGCs and your handies?

So, it’s a – that business in the carriage of very large amounts of fully refrigerated basically propane and what we completely different and have been completely different, there are different markets, different equipments, different trades. We really don't compete at all with the very large gas carries that's a mundane – well, I don't want to call it mundane, it’s a trade that’s relatively simple. It’s a trade that involves basically two designations: Far East and basically from the U.S. to the Far East. But Oeyvind you’ve had the experience with this in the chattering against the VLGCs, maybe you could get some color to that. I would just remark one point, Doug, that if you look back in history, you’ll find a very little correlation between the rates of the VLGCs and the rates of the handy indeed during the – the period rates or handy-sized LPG carriers exceeded those of very large gas carriers. That’s evidence alone that we really aren't in the same markets, but Oeyvind do you have any color on this?

Well, Doug, the last – I mean, you can follow the Baltic earnings measurement for the VGLCs and as you can – as you’ve seen over the last 12 months, we’ve been very higher and dropped lately [indiscernible] rates touching upon what David said is more stable and in the $900 per month mark. But to your question regarding, do we feel any pressure from the VLGCs, the cargo has been quoted and the opportunities we seek rarely, the competition is very rarely from VLGCs because of the things we talked about of the last few years about the size of the ships that the products, the temperatures and so forth. So, we are rarely meet them at the door.

Right. So the fact that their rates are down 30%, 40% and you guys are within 5% to 10% as an all-time high. Some of the reasons that you're describing are what's behind that big divergence between the two?

Absolutely, and…

Gotcha.

And the huge – the flexibility of a semi-refrigerated and particularly you’re ethylene capable. We can change grades and change products, mixed products can carry different cargoes and different tanks. So…

Right.

It’s dramatically different far more complex business in a very large gas carrier.

Right, and actually that’s a great transition to my second question. And it has to do with the fact that you know you guys mentioned and Oeyvind in some of your comments about all of the ethylene exports that are coming out of the U.S. and now we’re seeing markets starting to export some ethane. And my question pertains to some of your ethane new builds that are coming out in terms of deliveries relatively soon. How is that demand source that demand driver impacting your thinking in terms of are we still comfortable putting these ships in the spot market, will our returns in the spot market be kind of what we’re looking for. So how is the – how are the ethylene exports and how ethane exports impacting your thinking in terms of what you’re going to do with some of those ethane new builds that are going to be delivered relatively soon?

Fine. I can give you my thoughts and…

Yes.

And my desired approach to this. My view ethane, because it’s a raw material and anybody importing ethane will be looking at securing long-term feedstock for a manufacturing process, we’ll look to secure ethane on a long-term basis, securing the source, the product itself. If that is the case, it will also try to seek and secure long-term transportation for that.

Right, right.

Very likely that ethane projects whether they’d be substituting for naphtha or being hedged in addition using ethane as a replacement for propane or whatever in European projects, that will come and when it does the ethane comes it would be secured by long-term contracts. It’s a business I’d like to be in more or so than what we are right now. Why because I like the fleet nights and locking [indiscernible] gives you that ability to do it and we have certainly got the equipment in the water now and under construction. And we are continue to talk about ethane trade, which will as I say is long-term. On the other hand, ethylene is very likely to be a spot business. It is likely because they will – the buyers of it will look to take advantage of arbitrage positions and differential in pricing, supplement and so on. I see a growing demand in the spot business, now I could be wrong that some may feel particularly in the Far East as they want to abandon the manufacturing and secure a long-term supplies of ethylene directly. And we know that that we are in conversations with people, who’d like to do that.

Right.

But – and as it will be more likely in the spot business certainly in the early stages. Spot market give us a better return, but it comes with a bit of uncertainty. So the fact that we have this enormous flexibility in our capabilities gives us wonderful optionality to be either secured or – and long-term good business are working the spot market. So we are very volatile. All of those are just delicious opportunities for us and I can't really wait until it all develops into profit.

Right, now that’s excellent, David. And then just for perspective, when you guys are talking about the differential with ethylene pricing, are we still talking about a 400 bucks a ton here versus say a 1000 bucks a ton in Asia. Is that’s still kind of the range of the differential that we're seeing?

That's right. And if you add all your costs, your own – you're going to leave a substantial margin for the – okay, so…

Right.

And that is on handy-sized. Our handy-sized vessels carry approximately 143,000, 145,000 barrels. The trade – if we trade that, move that on 35,000 cubic meter ethane carrier, ethylene carrier, we can carry 240,000 barrels-ish. That’s cost per ton is driven down pretty dramatically by use of that. So, those who are concerned about our rest – the 35 or the coming due later this year or next year, I just point out those economics.

Right, right, exactly, very helpful. And then final question for me David, when we look at the order book, I mean obviously the headline number shrinking with all the VLGCs having delivered and we know that that hasn't affected the handy market. But my question is could the order book be even more attractive than it appears even though it's shrinking from this perspective? Are there any shifts in the handy-sized asset class that you think are at risk of not delivering?

But it's a question – first of all let me just say that I believe that the order book, which is roughly 32 vessels now [indiscernible] 2017 handies. I believe that the market should be able to absorb that because of the growing business, particularly the growing in petrochemicals. However, there is a feeling that some shipyards, which have had operational and financial difficulty that are under contract to build a sizable amount of these handies will not be able to deliver and may not be able to complete their contracts. Now I don't want to make any judgments about that. As I say I'm comfortable in dealing with what is on the name plate right now. And I suspect it could be a material reduction in the amount of new builds coming.

Got you.

Oeyvind you have any better field from that than I do?

It’s a bit unclear what the situations are at the various yards.

There is one, I’d of course sign of Pacific that has been in the newspaper having difficulties. They acknowledge the difficulties, they acknowledge whatever they’re building is likely to be delayed. The ship owning companies that those ought is for the most part have guarantees from the China banks that during a period if those vessels are delayed significantly they can call to get their money back and walk and go home fully compensated for what they have put up in advance. We will see over the next six months whether they exercise that option.

All right.

But I don't want to make judgments here because it's a dangerous thing to do. I'm only saying that I'm comfortable with what we have on the plate right now. But it's more likely to be down than not.

That’s perfect. That's all very helpful. And once again congratulations on a great quarter and a great year, David.

Thank you Doug.

Your next question comes from Ben Nolan from Stifel. Please go ahead.

Thanks. Hey, David. One of the things that is always a little bit perplexing to me is that you have – you guys are able to do this really long ethylene trade. And it is probably not the most efficient means of transporting to say the least and yet it’s still obviously, pretty profitable for the trader who is making it. It would seem to me as though there could be an awful lot more infrastructure put into place around the Gulf Coast to be able to export more ethylene particularly to some of these new ethylene crackers come online. I’m curious, if you heard of any progress being made in that front, is or very least what’s the disconnect, why isn't it happening more than it is?

Okay, firstly I’ll try to phrase and put a little color on your question. The infrastructure for the export of ethylene out of the United States is very immature at the moment. It’s immature simply because the United States has never been an exporter of ethylene. It is a developing, expanding business and therefore that infrastructure was never necessary. It is now becoming necessary. The accumulation of capacity to manufacture ethylene of the amounts building up for export is growing. At the moment there is only one terminal capable of exporting or handling ethylene and that is in the Targa terminal in Houston, Texas. But it is an undersized, under powered facility to give you an idea to load one of our vessels at that terminal, approximately two weeks to load 145,000 barrels of ethylene. That’s an enormous amount of time, should be one, maybe two days. But now as this trade and opportunity exists and the fact that we have a 12-month contract of affreightment suggest that this is just not a short-term phenomenon. It will be in my opinion additional terminals being built and we hear rumors to that effect for ethylene exports. That has to be because the ethylene has to go somewhere and this is strong demand in Europe at the moment. Are we? So we are at the very early stages of this infrastructure, it is the like the propane business six years, five years ago when we really didn't have the terminals capable of exporting large amounts of propane. That infrastructure has been built out that trade is developing nicely. We are in that early stages of petrochemical gas build out. Terminals such as ethylene will be built, more of them will be built. Who builds them? I don't know. Where will they be…

Okay. So building on that, and I'm not sure of the exact percentages but I think it's approximately 5% of your business, 5% to 10% of your business is currently petrochemicals. Five years from now how big of a portion of your total cargoes do you think that might end up being?

Oeyvind, do you have guess? It will be a…

I mean, I think our [indiscernible] volume, it wouldn’t move as much but in earnings daysthe proportional will drastic – increase somewhat just because of voyage is so much longer than the LPG and ammonia. So I think on the earnings that will increase proportionally. Absolute volume won’t move that much a little bit.

Okay. So my next question is, kind of in keeping with the sort of things, one of the things that you guys have been pretty adamant about is retaining all of your cash flow rather than whatever you’re paying a dividend or buying back shares, because you have a large suite of potential projects which I appreciate. But could – I was hoping that you might be able to frame that in a little bit obviously nothing specific, but how many – how much capital are we thinking about there, I mean, what would you envision as sort of the best case scenario or at least base case scenario of what might develop in the next couple of years that would require the use of that capital.

Okay. So I think 2000 – in my opinion 2015 was a period that was almost a limbo period for new projects. It was limbo because of the volatility and direction of oil. Now, that wasn’t effecting our normal trade as I said before it was always going to happen because it’s [indiscernible] driven the infrastructure was there. But what it did do is create a lot of uncertainty in the board rooms across the world in major companies, petrochemicals, utilities, and so on, who were hesitant to make commitments on new projects, even though those projects may have appeared on the paper to be attractive. That uncertainty and volatility should – as soon as that settles down I think we will see a resurgence of new opportunities in new projects. Everything from power generation to ethane, as a feed and projects such as ethylene as a permanent trade, long-term trade and we have, I think the team, the ability, the balance sheet and the capabilities, the talent to be right in the center of all of those structural changes and I don’t want to hurt or diminish any of our ability to move quickly. So it’s an ambiguous answer that I have just given you I recognize that. But this is what I am convinced of where 2015 was an unusual year because of the great uncertainties and volatilities. Soon as this is settled down, there’s going to be a re-emergence of a product grade opportunities and Navigator is going to be in the forefront. Right now we’re probably the most capable one of being able to move on any new projects as we have the balance sheet and the cash to do it. It’s got to be that way. I’m not going to sacrifice that to have a shot term appeasement of a return of some capital. When all is said and done and there’s nothing exciting out there to do, I will be starting to pay money. But I don't see that in any time soon. Ben, I’m sorry being so blunt and ambiguous but that’s my answer.

Yes, so, the way I should think of it is that there is being building a big backlog of projects that people have just sort of been slow playing and as soon as – and hopefully it’s 2016 as soon as that confidence begins to come to the market all of this big backlog that has been growing could come to fruition quickly, is that a fair characterization?

Yes, that’s my basic view. I could – timing was I can’t – I know what I had seen in 2015. Management have been frozen. They’ve been shocked, and they’ve been confused, things changed. And stability in the price of oil and certainly a rise in the price of oil will bring back all of those discussions in an intense way. In the meantime, we continue to build and we have a good – I want to be there when they come back.

Sure.

And right now we will do very well. And I just think depleting our balance sheet by return of capital to shareholders when we have these opportunities emerging is a mistake.

Okay. So, last thing for me is…

Anytime soon there…

What’s that?

Bottom line is I don’t anticipate to pay as a dividend anytime soon.

Right, right, and you in the past made it pretty clear, I was just trying to sort out how soon you think that capital might be ready to go. But the last question for me is I think one of the things that hopefully will help drive business for you guys is that Occidental terminal without the chilling plant in Texas. Any updates on when that might begin to add demand for your handysize vessels?

Sure, Oeyvind, maybe you can bring us up to date on the single side project.

I think, Ben, I think was it you maybe, you asked the same question three months ago?

Maybe.

And you can go back and read the transcript, so it’s the same. The Occidental and NuStar they have a fast order [ph] pipeline that had a leak. So, once the lower [ph] agree or not agree, I suppose, once they fix the issue, the volume would flow.

Okay.

But there is no firm date on that from either Oaks [ph] or NuStar, so yes.

Okay, it’s not an infrastructure issue, it’s a legal problem?

And they have that leak on the pipe and that obviously needs the repair, be repaired. I think if you perhaps listen to the earnings calls of Occidental and NuStar, I think they talk about it.

Okay. All right. Great. That’s it for me. Thanks a lot guys.

Thank you, Ben.

Your next question comes from Michael Webber from Wells Fargo. Please go ahead.

Hey, good morning guys. How are you?

Great.

So again sort of follow-up that have been a long call. But I wanted to go back David to your commentary I guess around Doug’s question earlier just around the relative divergence between kind of small and midsized LPG carriers relative to kind of long-haul propane trade. And I'm just trying to [indiscernible] that in some kind of relative context if I think about kind of re-entry multiples now implied right now by asset values and whether you’re properly getting – whether you're getting decent value, I guess stepping into assets that have less volatility relative to say being a cheaper multiple there’s something on the long-haul side, it looks to us just when we kind of look at some of the generic broker debt the multiples are more or less at parity. So I guess my question is, presuming you would your assets to get a bit of a premium which we’ve seen across other shipping segments with smaller, more protected trades. Do you think you'll see a bump in LPG asset value or is the – be more kind of rationale conclusion that we'll see more downside around the VLGC prices to kind of bring that relationship into parity?

Yes, I'm not quite sure I fully appreciate the question. I'll say this, that comparing a Navigator against BW LPG, Adorian is apples to orange it's just complete isn’t it? That's a business that I deliberately stayed out of. I stayed out of it because it's too simple one product, one temperature, one tray, it’s a good business but it’s relatively easy of entry and relatively simple to build and operate. It's not my kind of business.

I mean, I guess if I kind of comment it from a different angle maybe what kind of multiple – we’re going to a premium on a multiple basis, do you think is justifiable for one of your assets relative to stay at VLGC. And where is that relationship today or do you see better value in your space relative to the long-haul carriers. There maybe – just trying to get the kind of the relative value aspects of the business right now comped against kind of your – just from your larger more with the peers.

So I hate to tell you but that's a question is folks like in New South [ph] are probably better prepared to answer than myself. I can because – I got a self-internet and you guys do this all. As I look at it, a Navigator is in the midst of playing and building structural change within the hydrocarbon space. By that I mean both in natural gas, the emergence of petrochemicals, emergence of petrochemicals where it is a new source and the developing and the transporting them to older areas and that is a whole emerging business. And I consider a structural change that has long-term sustainability. It has the ability to grow continuously over the years as opposed to playing a cyclical surge of a raw material such as propane [indiscernible].

Sure.

If you look at our five-year record you’ll see a continued growth in revenue, earnings and cash flow. I fully expect that if you look back five years from now, you will see that continuation because we are in the midst of all of these, have the complex equipment that has the ability to move and be flexible about where things are being built and where they are needed. And that’s a unique business. We have very unique business. So I see great sustainability not a lot of volatility but a steady growth it that. Typically Michael, that means you would get premium because of that record and that kind of space.

Right.

[Indiscernible] And we dominate we have the largest market share in that space. All of those would suggest looking at it as investors I would be more comfortable being there and be more willing to pay a higher price for that business than I would be in the commodity trade such as VLGC. That’s my view. That is why I'm in it, by the way.

Yes.

I mean I speak with my activities. We are there.

Fair enough. Just a couple more and I will turn it over. You know, we already spent a fair amount of time around ethane and forgive me if you mentioned this and I didn't hear it. But either you Oeyvind can kind of quantify the current tender activity obviously we’ve even Orient back in the market and [indiscernible]. But how many different tenders are out there right now for ethane carriers and are they multivessel tenders or single vessel senders?

Talking about Oriental and Navi Gas [ph] is always a challenge because they announced so many things that [indiscernible].

That’s true.

I’ll let Oeyvind see if he can answer that.

Two three years ago everybody will talk about ethane for feedstock and then last year ethane was being discussed for power generation. This end of 2015 it was the ethylene. So the whole ethane, ethylene is evolving as you’ve heard us talking about the last six months. But generally the ethane is not on a tender basis. The only kind live tender out right now is an Indian company, called GAIL you might have seen that for commencement 2022, I believe. But the rest are kind of being discussed privately in partnerships and so forth. So, and

Maybe we just call it opportunities as both the tenders are they multivessel tenders or single-vessel tenders and if we could put a number around it, it would helpful?

We are working on one small one, Michael. You know, this may develop here very – within the next couple of months, that certainly is a tangible one that it feels right. But I think, as I mentioned Ben’s question that 2015 saw us being put in the hiatus of activity as people were frozen.

Sure, okay.

I believe that those things will be back on the front table. I fully expect that. The timing I can't be sure of. It needs to have some stable activity and stable pricing. I committing on long-term projects. But I don’t think it’s by no means is said, ethylene for power generation, ethylene for feedstock for ethylene, that’s not it. Ethylene trans – ethylene exports in the U.S. that’s coming because of the plants are being built proportionately. Did we lose everyone?

Sure.

Your next question comes from [indiscernible] from Morgan Stanley. Please go ahead.

Hi, guys, thanks for taking my question. Just one question backing off the ethane tenders. What kind of contract duration are you seeing from charters for ethane carriers? Is it more short terms, is it monthly shifts like you just said or you seeing, you’re still seeing interests for kind of ten years. And is it of course that 10, 15 quite a bit on freeze on the market, but…

As I said ethane, typically ethane will be done as a feedstock. And ethane supply we’re looking to secure long term sales contracts for the manufacturers for long-term. As a result you will need long-term transportation. So the contracts for ethane clearly will be as they have in the past, all will be done on the long-term. So, the one that we are particularly talking about that hopefully comes to fruition soon is it would be a ten-year contract. Borealis is a ten-year contract, SABIC is ten-year contract. So almost all of it is done on long-term back-to-back with the supply contracts of the ethane. Ethylene is different. Ethylene will be taking advantage of arbitrage pricing and the differential between naphtha based producers particularly in the far east or in Europe with naphtha as dominant feed ethylene taking advantage of those trades and as a consequence most of that will be spot. Okay.

There appears to be no further questions at this time.

Well, it is almost 10 o’clock. So we appreciate your attention and interest in Navigator, look forward to talking with you in a few months time. Thank you.

Thank you, Joe.