Thank you for standing by, ladies and gentlemen. Welcome to the Navigator Holdings Conference Calls on the Fourth Quarter 2016 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; Mr. Oeyvind Lindeman, Chief Commercial Officer. At this time all participants in a listen-only mode. [Operator Instructions]. I must advice you that this conference is being recorded today, and I now pass the floor to one of your speakers, Mr. Butters. Please go ahead, sir.

Thank you and good morning everyone and welcome to Navigator's fourth quarter and yearend earnings conference call. As usual, we have today with us Niall Nolan who will cover the financial aspects of the quarters as well as Oeyvind Lindeman who will cover the operational aspects. Last night we reported our fourth quarter and full year results. While the $0.14 per share reported was marginally better than $0.12 reported in the third quarter, it was dismally behind the $0.48 per share we achieved in the fourth quarter of 2015. For the full year Navigator earned $0.81, somewhat less than half of the $1.76 per share we achieved in 2015. 2016 was especially disappointing, in that it broke a long continuous stream of increased earnings. When we began the year, we fully expected to continue that trend. We have determined to get back on track, although 2017 maybe another challenging year especially in the first half. If we look to point to one single compass, so the softness in the LPG market and recognizing they are always more than one cause for an abrupt market change. We would have to point to oil and the price collapse experienced in last year's first quarter. Our business was fine until late in the first quarter, when oil dropped a low $40 a barrel. With low oil prices, the price arbitrage of U.S. propane disappeared hurting the very large gas carrier segment, which was already suffering from a growing oversupply of new tonnage. The result in rate collapse for the very large gas carriers had a knock-on effect on the fully refrigerated mid-sized vessels and then in-turn aid in to our own business. We experienced lower than normal utilization throughout the summer, but we believe we've reached the low point this past October. Since…

Thank you, David and good morning. The revenue for the three months ended December 31, 2016 was $75 million, which was an increase from the third quarter 2016 with a $3.2 million or 4.1% reduction relative to the fourth quarter of 2015. Net revenue, arguably, the more important measure being revenue less voyage expenses, was $61.5 million, an increase of 6.3% from last quarter, but 14.9% or a $10.8 million reduction, and the $72.3 million generated in the fourth quarter of 2015. This decrease in net revenue was primarily as a result of reduction in average daily charter rates. Charter rates for the three months ended December 31, 2016 were similar to those for the third quarter at $22,800 per day or $690,000 per month, compared to an average over just over $30,000 per day or 920,000 per month for the fourth quarter of 2015. This had the effect of reducing net revenue for this quarter by $21.1 million compared to the same period of 2015. Vessel utilization was 89.5% for the fourth quarter. As David mentioned a slight improvement from the third quarter, which was 88.1%, a reduction from the 92.8% achieved during the fourth quarter of 2015, and this had the effect of reducing net revenues for the fourth quarter of 2016 compared to the fourth quarter 2015 by $2.2 million. As David again mentioned, we do however see utilization continuing to nose-up in recent months. During the fourth quarter, we had an average of 31.6 vessels in operation compared to an average of 28.8 vessels during the fourth quarter of 2015. This increase in Vessel numbers contributed $12.5 million to net revenue for the quarter. At the end of December, our fleet stood at 33 vessels on the water, following the delivery of four vessels during 2016.…

Thank you, Niall and good morning everyone. Navigator Gas has proactively changed our employment portfolio during 2016 by migrating away from the traditional sole-dependency of propane and butane, to a much more dynamic mix of deep sea petrochemical trade combined with short sea LPG movement. In other words, we are increasingly utilizing the flexibility inherent in our asset. I'll give you a few data points to illustrate this transformation. One-half of our revenues during fourth quarter 2016 stem from petrochemical trade compared to 20% during the fourth quarter of the same year. More than 40% of our total fleet earning days came from petrochemical contracts during fourth quarter compared to 18% only during the first quarter of 2016. 85% of our total earning days during the fourth quarter of 2016 came from petrochemical contract compared to 53% during the third quarter. Even the petrochemical proportion of our $600 million U.S. dollar forward look is more than a third, which is something quite new to us. Interestingly, however, our time charter earning days for the full year for 2016 was split 87% for LPG, 11% for ammonia, and only 2% for petrochemicals. This is a complete opposite of what is happening on the stock charter arena. Structural handy-sized petrochemical term contract have historically been non-existent. This is something we've been working on to change. Over the last year, we've been cooperating closely with petrochemical producers, traders and end-users to see how we could unlock structural flows of petrochemical gasses, against term contracts. And I think that for the first time in the handy-size segment, Navigator Gas has a total of three term contracts or contract of affreightment for petrochemical gases going into 2017, with additional ones in the pipeline. The main reason why we have been successful in making this shift in the supply chain is that of size and strategic focus. It is impossible to service such contract with only a handful of shifts. Our large and versatile fleet can more easily accommodate the very high degree of flexibility uncertainty required to support these emerging trades. The contract covered a full spectrum of petrochemical gases including ethylene, propylene and butadiene that will be shipped from U.S. Gulf from South America and from Europe with the main outlets being located in Southeast and Far East, Asia. However, we do not anticipate that all of our vessels are to trade with petrochemical gasses and we will be influenced by LPG supply and demand dynamics. At least in the near-term, the LPG shipping market will continue to be challenged across all five segments, mainly due to the tonnage supply side of things. It is also worth noting that petrochemical markets are fragile and finely tuned, and it does not take much for the rate environment to react against any changes to the tonnage supply situation.\ With that, we'll open the floor.

Operator, we'll open the floor now for any questions that the group may have.

[Operator Instructions]. Your first question comes from the line of Mike Webber of Wells Fargo. Please go ahead.

This Donald Borgner stepping in for Mike. Thanks for taking my question. We saw some improvements in the handy-size carrier utilization in Q4 on the back of stronger U.S. petchem volumes. Can you talk a bit to what was driving those permanent volumes and whether that momentum has persisted to-date in Q1?

I think fourth quarter, nudging on 90%, so we are getting back to above 90% where we would like to be compared to historical. And if we can't beat the 90%, we will be disappointed here. So, the early signs of 2017 under pins that process.

Interesting, thank you and has that firmer utilization begun to translate to firmer rates yet, or rates still sort of flat from call it yearend 2016 levels?

It's more or less of sideways movement. Of course we are encouraged by slightly higher utilization, but time will tell whether that will translate into higher earnings. But at the minute is of sideways move.

Then just one follow-up on the charter market, I certainly think the prospect of long-term structural petchem charters are interesting, can you talk to any fundamental changes in the bid for charters across your segment relative to say the bottom of the market in October, is that market more liquid and have durations begun to stretch.

As I alluded to, Rome isn't built in a day. And we've been working very hard and along with many of these carriers to structurally place some of these, supply of the trade-length on a contract to abate this. So, it's been a long journey, but finally we see some fruits on that from our labor. So, look, I think – for 2017, we see more of the petchem trade locked up on contractual basis which is which we encourage, participate in that. As I meant you need a viable fleet to serve with all those uncertainties relating to the petrochemical cargos and trade lanes. I mean it is very different than running LPG contract. So, but anyways, we are working on that to add additional string to the bow.

Great. Well, thank you for that market color and congrats on what's definitely a stronger quarter.

Thank you.

Thank you, your next question comes from line of Ben Nolan with Stifel. Please go ahead.

Good morning, David, Niall and Oeyvind. The first question that I have is if you might be able to give a little bit more color around those Braskem contracts. When exactly do they start, any color around the day rates at all, or duration of those?

Ben, for competitive reasons, we have agreed with Braskem not to disclose detail of that kind. So, unfortunately, we are unable to disclose.

But the timing is geared to the commencement of the purchase and supply contract that Braskem has with Enterprise which is pretty much the end of this year, give or take a couple of months.

Okay. And maybe another way to think about that is obviously you guys have been pretty active in the petchem side, but there is a much more limited fleet of ethylene capable vessels obviously, these would fit into that category. Is there a meaningful delta in the day rates that you can earn on an ethylene capable vessel today relative to you know just a traditional similar graded ship?

There are certainly rate differentials between the bulk and the truly refrigerated LPG movement, regional movement versus deep sea petrochemical, particularly ethylene, but that delta there is a lot from trade-to-trade from week to week, so it's difficult to put a number on it Ben, unfortunately. But there are – I mean the LPG is generally struggling today which you can see from all the various ship sizes, so it doesn't take much to beat that, to be honest with you.

And then, I guess lastly just to follow-up a little bit on the petchem conversation that obviously you guys have – it's been a substantial shift and your product mix over the course of the last year, I was curious where – obviously, it's been a little growth, but I don't think it's been that much relative to your growth. Where have you captured share from and ultimately, I think it's really interesting that you are doing these contracts of affreightment, is that something that you might consider even chartering in other ships, in order to have a larger fleet to be able to be more competitive and wining those types of contract.

I think, I mean we have best largest fleet, so we are able to service them, but of course if there are time and needs to do something, then perhaps, but I don't see that being very likely anytime soon. I mean we have fleet of by, as you know by next summer – this summer, fleet of 38 ships and of course they are different complexity of each one, but I think we're confortable in servicing what we have and adding some more ships. But, the market share you are talking about, the absolutely supply growth and so forth clearly something is happening in the U.S. which we've been talking about for a while, whereby they are moving from exporting raw feedstock to processed gasses, but that takes time, but the real increase is duration of the voyages. So the dislocation between the producer and user, and I mentioned that some of these contracts that we have looked down and are working on, main outlet are in Far East and Southeast Asia, and of course is a long duration to ship that from was West to East, versus, what we have historically seeing from the Middle East to Far East. You can just imagine that, those cubic per mile increasing and that's what we have seen the growth for the contracts we do.

And fundamentally Ben, the concept of exports of petrochemicals is fundamental to development of raw materials. Goodwill trade is moving raw materials, propane or whatever to producing nations, producing markets. The United States has discovered this enormous amount of hydrocarbon through hydrofracking and other methods of technology creating the wealth of petrochemicals here that are cheaper than anywhere else. The further stage of all of that is the export of those raw materials, but that's a very crude way of creating value. What is happening is petrochemical companies, oil companies are converting those raw materials into upper grade product, propane, propylene and ethylene and butadiene, and further petrochemicals. And those are the things that in the future will be exported at the expense of the raw material. Now if we look around the world, that happens in other places, it happened in Iran in the late 1970s, early 1980s where they built up a massive complex of petrochemicals, because they had enormous amount of natural gas in Pars field and the best way to exploit that was not to export that natural gas in the form of LNG, but to upgrade it into various petrochemicals. That's been in a hiatus since the war with Iraq and sanctions and so on, but that's coming back now in a significant way, and we hope that some point we will be in a position to participate in that. It's also happening in the Mid-East. If you look at Saudi Arabia, they are drilling more natural gas and more use of drilling equipment to drill natural gas than they are for oil. Why is it natural gas? Because it's feeding their growing petrochemical complex in that country. They clearly are building that massive base of petrochemicals to be exploited and exported out of that country. The United States was the wealth of natural gas is doing the same thing. We're building an enormous base of capacity that's been going on now for the last four years. The amount of ethylene for example, new capacity is approximately 50% more than what we have right now. So, it's a trend we anticipated, the movement of petrochemical gasses in a variety of form at the expense of the raw material. So, we're in that trend which is slow, but inevitable, and we've tried to build our fleet and our capabilities anticipating that in the future, that's the business to be in, where we got the dominant position today. We got the complex group of vessels and different sizes, we got a team of engineers and operational people, we feel very comfortable as that business develops, we're going to right square in the mainstream of this. So, its' a slow process, it's inevitable, it's happening and if you doubt it, just take a look at what Enterprise is doing with their propylene plant in the Houston Ship Channel. They are shipping and anticipating that is where we're going.

I think, I totally agree that. I guess, what I was asking is was, was that what was driving 2016, or so is it really the beginning of that fundamental structural change, or were you capturing share from say that 15,000 cubic meter vessels and it sounds like it really is the beginning of that structure of change rather than a market share shift?

I think it is a structural change, but look, petrochemicals is a complex, and they ship they trade, and it's very difficult to lay out a simple story of what happening. Part of what was happening, for example in the case of Brazil, we're doing a fair amount of petrochemical exports for them, a number of ships moving propylene and ethylene out of Brazil to the Far East, and part of the reason is the slowdown in the economy of Brazil. Okay, so they have surplus, it's available, we got the vessels, we'll move it, and this locations in the Far East where there are shortages of certain types of petrochemicals we're moving, where people have surplus. So, it's a very – it's not an easy definable business that's so neat that we can explain such as crude oil coming out of the Mid East is a very simple story, or propane coming out of the U.S. So, we like that complexity, because it gives us a niche. I guess we're right in the middle of it with the biggest fleet of that type of vessel that can carry and we have communications with all the producers and the consumers. So, that gives us a huge advantage and we want to keep it and inflate it and not lose any share.

Okay, very helpful. And I apologize, I have one more. With this ethane contract, you think we're pretty much done with new ethane export contracts for the moment or are there still some conversations ongoing?

Well, let me just – it's interesting. The Mariner East, okay. Really, I'm just really surprised that people haven't picked up the significance of that line. In that line, that huge amount of product going to be coming through by the end of this year, there is a lot of potential ethane to be shipped on that. In Marcus Hook, they have the chiller and the facilities and the turret to export it. So my guess and it's just a guess, because we're not – we don't have anything specific to talk about, but availability is there now with this line coming through, and I would be pretty surprised if the Sunoco and the producers in the Marcellus and Utica are in serious discussions with potential consumers of ethane down the road here and in relatively short order because, if you believe Sunoco's estimate, this line will be operational at the end of the third quarter of this year.

Okay. Sounds good. I'll turn it over, thanks a lot guys.

Thank you. Your next question comes from the line of Fotis Giannakoulis of Morgan Stanley. Please go ahead.

Good morning, this Ben stepping in for Fotis. So, can you just provide a little bit more color on U.S. LPG export economics? It seems like the propane spread has recently narrowed to Asia and Europe on the back of falling U.S. prices. But propane price is still appear at relatively high levels relative to naphtha. I'm just curious on how you see this progressing moving forward and what needs to happen for the LPG trade to come back meaningfully and drive rates higher from here?

Of course that is a question that you should be asking the owners and operators of the very large gas carriers, because they are the most sensitive to that business. We are far less sensitive and don't really focus on those economics. We just responds and we've been responding with the petrochemical side as you know. Is that helpful?

Okay. But it does impact your business to some extent, so do you think just in terms of the general trade, you know when used prices are at this high level relative to naphtha, is that the primary driver? Is the crude oil environment something that you guys are watching closely?

No, it is not.

Okay.

So Ben, no matter what the arm is, we will never be able to compete with very large carrier owners from loading from anywhere in the U.S. at least Gulf and East Coast to Far East. Now where we do play and we have played the traditional role, it's for these smaller ports in the Caribbean and ship-to-ship discharge, and also to West Coast, Africa, small ports, shallow ports and to Europe. So, if we look at 2016, yes, we were doing a lot of that and during the first quarter and then the arbitrage went away, but we have seen in the later in the year, we've seen a pick, so in the third quarter almost nothing from us from Navigator Gas for LPG from U.S. But there was a uptick during fourth quarter and we're seeing that continue a little bit into the first quarter. So, I mean Navigator and handy-size, there is enrollment with U.S. exports today, but less than it used to be. It's interesting to see what happens with Mariner East II and IIX an what impact that will have, but of course the majority of the volume will go on big ships cross-Pacific and that is not our business.

Sure. I guess on something a little bit more relevant to your business today, so you spoke earlier about the potential for an ethylene export facility, you come online, I'm just curious on, you know the potential here, what sort of impact it could have and maybe not sure on this, because there is lot of uncertainty, but you know what timing surrounds a project like this? Is this a 2019 or 2020 development or something?

The reality is, that it would take at least two years to build probably two years, maybe just under that to build the, say a 50,000 barrel a day ethylene terminal and it's also about refrigeration and power. That's it, but it's a two year project to have a specialized purpose built ethylene camp. Now, right now out of the United States, there is only one terminal capable of moving ethylene out and that's Taga. It's underpowered and it takes two weeks to load one of our handy-size vessels. The purpose built vessel, if it – purpose built terminal at a 50,000 level and I'm not sure what size the potential builders will create, but if you assume a 50,000 that would require something on the order of 14 of our 35,000 if it all went to the Far East, but that could happen. Now, recognizing too, that most of the propylene in the United States that gets manufactured will stay in the United States to create propylene oxide and propylene glycols, polyethylene, but 50,000 is a not a big number, but it has a profound significant impact on our business particularly since we have the largest fleet of uncommitted ethylene carrier. So, for us, it could be significant. The timing of any one committing, I'm not sure. These things take study, they are certainly well aware of a lot of interest in the part of buyers of the ethylene and there are suppliers of the ethylene and the missing ingredient is the terminal, and sooner or later, in my opinion that gets done.

Thank you so much. I'll turn it back.

Thank you. [Operator Instructions] The next question comes from line of James Jang of Maxim Group. Please go ahead.

Hi James.

James your line is open, are you muted?

Good morning guys. Sorry about that. So most of my questions have been answered, but in terms of the LPG trade with, it seems like the U.S. production, especially on the crude side is going to increase in 2017. Do you see that becoming more of a factor for you guys in 2017 especially with trades to China?

For any crude that goes through refineries, the buy product will be 6% to 8% LPG, or if you have wet crudes at the wet plays, the more fracking and so forth, you will have more NGLs will translate into more ethane and propane and butane. So, the more production in the U.S., on one dimension will have a positive effect on supply potentially than water-borne. But yeah, not so much.

Not so much, alright. Have you seen a lot of cargos being shipped I guess in China in Q4, or any inquiries for more cargoes to China.

Cargos, but what change?

Propane?

Yes. The very large gas carriers are the principle carrier of that product and the volumes there have been pretty hefty, so it still is flowing to China to be consumed principally by petrochemical companies in their PDH plans. And that is expected to continue. The interesting thing is, we believe that they will be some of the Far East consumers of ethylene searching for U.S. supplies of ethylene not of propane, and they will be looking for propylene as well as propane. I mean we just did as I mentioned the largest cargo of propylene in the long while going to the Far East. I think that's the trend in three or four years that will be significant.

Alright, thank you and thanks for that. That's all I have. Thanks.

Thank you, James

There are no further questions at this time sir.

Terrific. Thank you all for joining us. I look forward to our next conference call in a few months' time.