Q4 2025 Scorpio Tankers Inc Earnings Call

February 12, 2026

Operator 2: Hello, and welcome to the Scorpio Tankers Q4 2025 conference call. I would now like to turn the call over to James Doyle, Head of Corporate Development and IR. Please go ahead, sir.

Speaker #2: Please go ahead, sir. Thank you for joining us today. Welcome to the Scorpio Tankers 4th Quarter 2025 earnings call. On the call with me today are Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; Chris Avella, Chief Financial Officer; Lars Denker Nielsen, Chief Commercial Officer; earlier today we issued our 4th Quarter earnings press release, which is available on our website, ScorpioTankers.com.

James Doyle: Thank you for joining us today. Welcome to the Scorpio Tankers Q4 2025 earnings call. On the call with me today are Emanuele Lauro, Chief Executive Officer, Robert Bugbee, President, Cameron Mackey, Chief Operating Officer, Chris Avella, Chief Financial Officer, Lars Dencker Nielsen, Chief Commercial Officer. Earlier today, we issued our Q4 earnings press release, which is available on our website, scorpiotankers.com. The information discussed on this call is based on information as of today, 12 February 2026, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release, as well as Scorpio Tankers' SEC filings, which are available at scorpiotankers.com and sec.gov.

Speaker #2: The information discussed on this call is based on information as of today, February 12, 2026, and may contain forward-looking statements that involve risk and uncertainty.

Speaker #2: Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release, as well as Scorpio Tankers' SEC filings, which are available at ScorpioTankers.com and SEC.gov.

Speaker #2: Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes.

James Doyle: Call participants are advised that the audio of this conference call is being broadcasted live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at scorpiotankers.com on the Investor Relations page under Reports and Presentations. The slides will also be available on the webcast... After the presentation, we will go to Q&A. For those asking questions, please limit them to the number 2. If you have an additional question, please rejoin the queue. Now, I'd like to introduce our Chief Executive Officer, Emanuele Lauro.

James Doyle: Call participants are advised that the audio of this conference call is being broadcasted live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at scorpiotankers.com on the Investor Relations page under Reports and Presentations. The slides will also be available on the webcast. After the presentation, we will go to Q&A. For those asking questions, please limit them to the number 2. If you have an additional question, please rejoin the queue. Now, I'd like to introduce our Chief Executive Officer, Emanuele Lauro.

Speaker #2: An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days. We will be giving a short presentation today.

Speaker #2: The presentation is available at ScorpioTankers.com on the Investor Relations page under Reports and Presentations. The slides will also be available on the webcast. After the presentation, we will go to Q&A.

Speaker #2: For those asking questions, please limit them to the number 2. If you have an additional question, please rejoin the queue. Now I'd like to introduce our Chief Executive Officer, Emanuele Lauro.

Speaker #3: Thank you, James. Good morning, everybody, and thank you for being with us today. Scorpio Tankers delivered another strong quarter and a transformative year. In Q4, we generated $152 million of adjusted EBITDA, and for the full year, adjusted EBITDA reached $568 million.

Emanuele Lauro: Thank you, James. Good morning, everybody, and thank you for being with us today. Scorpio Tankers delivered another strong quarter and a transformative year. In Q4, we generated $152 million of adjusted EBITDA, and for the full year, adjusted EBITDA reached $568 million. But the real story is not just earnings, the real story is, structural strength. Since 2021, we have reduced net debt from $3.1 billion to a net cash position of $309 million today. This net cash position is increasing by the day and has accelerated sharply in Q1. We have fundamentally reset the company. Today, we hold approximately $1.7 billion of liquidity and growing. Our daily cash breakeven is $11,000 per day per vessel.

Speaker #3: But the real story is not just earnings. The real story is structural strength. Since 2021, we have reduced net debt from $3.1 billion to a net cash position of $309 million, today.

Speaker #3: This net cash position is increasing by the day and has accelerated sharply in Q1. We have fundamentally reset the company. Today, we hold approximately $1.7 billion of liquidity and growing.

Speaker #3: Our daily cash break-even is $11,000 per day per vessel. In the current rate environment, this translates into powerful free cash flow generation. Even under stress conditions similar to the COVID levels, we remain around cash break-even.

Emanuele Lauro: In the current rate environment, this translates into powerful free cash flow generation. Even under stress conditions similar to the COVID levels, we remain around cash breakeven. We are structurally resilient with significant operating leverage. We have upgraded the fleet with discipline. We've sold 10 older vessels at a strong valuation, and we've been reinvesting in 10 modern new buildings. The fleet is younger, more efficient, and positioned for higher earnings power. At the same time, we are increasing the quarterly dividend to $0.45 per share, up 12.5% year over year. We're growing the dividend because we can, because we have the balance sheet, because the payout is supported by structural cash generation, not temporary conditions. Turning to fundamentals, rates have improved for 5 consecutive quarters, with momentum continuing into Q1 2026. Refinery closures are lengthening trade routes.

Speaker #3: We are structurally resilient, with significant operating leverage. We have upgraded the fleet with discipline, with sold 10 older vessels and a strong valuation, and we've been reinvesting in 10 modern new buildings.

Speaker #3: The fleet is younger, more efficient, and positioned for higher earnings power. At the same time, we are increasing the quarterly dividend to $45 per share.

Speaker #3: Up 12.5% year over year. We're growing the dividend because we can, because we have the balance sheet, because the payout is supported by structural cash generation, not temporary conditions.

Speaker #3: Turning to fundamentals, rates have improved for five consecutive quarters with momentum continuing into Q1 2026. Refinery closures are lengthening trade routes. Ton mile demand is expanding, and precedented strength in the crude market is tightening effective vessel supply, in the product tanker space.

Emanuele Lauro: Ton mile demand is expanding. Unprecedented strength in the crude market is tightening effective vessel supply in the product tanker space. These are structural drivers and not cyclical noise. We cannot control the market cycle, but we can control our preparedness. Today, we operate a modern fleet. We have substantial liquidity. We have structurally low breakevens. We have a net cash balance sheet. This combination creates downside protection and upside torque. Scorpio Tankers is positioned to generate significant free cash flow and deliver durable shareholder returns across the cycle. We're stronger than we've ever been, and we're positioned to capitalize on what comes our way. With that, I'd like to turn the call to Robert.

Speaker #3: These are structural drivers and not cyclical noise. We cannot control the market cycle, but we can control our preparedness. Today, we operate a modern fleet, we have substantial liquidity, we have structurally low break-evens, we have a net cash balance sheet.

Speaker #3: This combination creates downside protection and upside torque. Scorpio Tankers is positioned to generate significant free cash flow and deliver durable shareholder returns across the cycle.

Speaker #3: We're stronger than we've ever been, and we're positioned to capitalize on what comes our way. With that, I'd like to turn the call to Robert.

Speaker #2: Thank you very much, Emanuele. Let me first begin with a broader context of the industry. Especially for those new to the company, we operate in a cyclical capital-intensive industry during a period of elevated inflation, constrained supply, and shifting global trade patterns.

Robert Bugbee: Thank you very much, Emanuele. Let me first begin with the broader context of the industry, especially for those new to the company. We operate in a cyclical, capital-intensive industry during a period of elevated inflation, constrained supply, and shifting global trade patterns. In that environment, asset quality, balance sheet strength, and disciplined capital allocation matter more than ever. We also operate the youngest fleet in our peer group. That really matters. Younger vessels are more efficient, more commercially flexible, and increasingly advantaged as regulatory standards evolve. Shipping will always be volatile. That is not new, and it is not avoidable. What can be controlled is financial structure. Today, we have done that by materially de-risking the company. Today, we operate with a net cash position and low cash breakevens. That provides resilience in weaker markets and meaningful operating leverage in stronger ones.

Speaker #2: In that environment, asset quality, balance sheet strength, and disciplined capital allocation matter more than ever. We also operate the youngest fleet in our peer group.

Speaker #2: That really matters. Younger vessels are more efficient, more commercially flexible, and increasingly advantaged as regulatory standards evolve. Shipping will always be volatile. That is not new.

Speaker #2: And it is not avoidable. What can be controlled is financial structure. Today, we have done that by materially de-risking the company. Today, we operate with a net cash position and low cash break-evens.

Speaker #2: That provides resilience and weaker markets and meaningful operating leverage and stronger ones. For investors, the case is straightforward: hard asset-backed conservative financial structure and a platform capable of generating substantial cash flow across the cycle.

Robert Bugbee: For investors, the case is straightforward: hard, asset-backed, conservative financial structure and a platform capable of generating substantial cash flow across the cycle. In uncertain environments, preparation and discipline create opportunity. We believe we are well prepared for both the good and the bad. Just one thing, just to sort of be very clear on, as Emanuele pointed out, our new buildings and disposal of older assets for renewal is being done in a very measured and conservative way. We will continue to ensure that if and when we order vessels, that we are generating more cash through operations and sale of older vessels than that, the total outlay of the vessel that we are buying.

Speaker #2: In uncertain environments, preparation and discipline create opportunity. We believe we are well prepared—for both the good and the bad. Just one thing, just to sort of be very clear on.

Speaker #2: As Emanuele pointed out, our new buildings and disposal of older assets for renewal have been done in a very measured and conservative way. We will continue to ensure that if and when we order vessels, that we are generating more cash through operations and sale of older vessels than that with the total outlay of the vessel that we are buying.

Robert Bugbee: For those of you concerned about the high amount in building amount of cash on the balance sheet that we expect to continue to happen, you should not worry that we have no absolutely zero acquisition thoughts of, other companies or competitors or large fleets at all. And we are, you're not gonna wake up one day, one day in the morning and find that we've made a 10-ship order. This is a very disciplined approach, balancing the arbitrage of selling the older vessels at steep prices and ordering newer vessels when we see an advantage price to the arbitrage. And with that, I'd like to pass it over to James. Thank you.

Speaker #2: For those of you concerned about the high amount in building amount of cash on the balance sheet that we expect to continue to happen, you should not worry that we have no absolutely zero acquisition thoughts of other companies or competitors or large fleets at all.

Speaker #2: And you're not going to wake up one day in the morning and find that we've made a 10-ship order. This is a very disciplined approach balancing the arbitrage of selling the older vessels at steep prices and ordering newer vessels when we see an advantage price to the arbitrage.

Speaker #2: And with that, I'd like to pass it over to James. Thank you.

Speaker #3: Thanks, Robert. If we could go to slide 7, please. The past 12 months have brought no shortage of headlines, and yet quietly, the product tanker market has strengthened for five consecutive quarters.

James Doyle: Thanks, Robert. If we could go to slide 7, please. The past 12 months have brought no shortage of headlines, and yet quietly, the product tanker market has strengthened for 5 consecutive quarters... Today, spot rates for LR2s and MRs are approximately $46,000 and $38,000 per day, respectively, rates at which the company generates meaningful free cash flow. And the near-term setup is positive. With a lighter refinery maintenance schedule, refinery runs should increase, supporting continued growth in export volumes. For the first time in several years, the crude market is also providing tailwinds. Elevated crude rates are pulling product tankers into crude trades, tightening effective clean supply. When we step back, three structural forces are driving this market: First, demand remains strong and refining capacity has shifted farther away from end consumers. Second, effective supply growth is constrained.

Speaker #3: Today, spot rates for LR2s and MRs are approximately 46 and 38 thousand dollars per day, respectively. Rates at which the company generates meaningful free cash flow.

Speaker #3: In the near term, the setup is positive. With a lighter refinery maintenance schedule, refinery runs should increase, supporting continued growth and export volumes. For the first time in several years, the crude market is also providing tailwinds.

Speaker #3: Elevated crude rates are pulling product tankers into crude trades tightening effective clean supply. When we step back, three structural forces are driving this market.

Speaker #3: First, demand remains strong and refining capacity has shifted farther away from end consumers. Second, effective supply growth is constrained. The fleet is aging faster than it's being replaced.

James Doyle: The fleet is aging faster than it's being replaced, and in a capital-intensive industry, that matters. Third, sanctions and geopolitics are reinforcing both dynamics, reshaping trade flows and tightening supply. Taken together, these forces support a constructive outlook, both near term and longer. Slide 8, please. Global refined product demand is expected to increase by nearly 1 million barrels per day this year, and that growth is translating directly into seaborne exports. In January, seaborne refined product exports averaged 22.1 million barrels per day, up roughly 1 million barrels per day year-over-year. Not only have volumes increased, distances have increased as well. Slide 9, please. Over the last 5 years, export-oriented refineries in the Middle East have added capacity, while closures in the US, Europe, and parts of Asia have removed it.

Speaker #3: And in a capital-intensive industry, that matters. Third, sanctions and geopolitics are reinforcing both dynamics, reshaping trade flows and tightening supply. Taken together, these forces support a constructive outlook, both near-term and longer.

Speaker #3: Slide 8, please. Global refined product demand is expected to increase by nearly 1 million barrels per day this year. And that growth is translating directly into seaborne exports.

Speaker #3: In January, seaborne refined product exports averaged 22.1 million barrels per day, up roughly 1 million barrels per day year-over-year. Not only have volumes increased, but distances have increased as well.

Speaker #3: Slide 9, please. Over the last five years, export-oriented refineries in the Middle East have added capacity while closures in the US, Europe, and parts of Asia have removed it.

Speaker #3: When refining moves farther away from the consumer, products must travel farther. That increases ton-mile demand. This is not cyclical demand growth.

James Doyle: When refining moves farther away from the consumer, products must travel farther. That increases ton mile demand. This is not cyclical demand growth; this is structural. Since 2019, product tanker ton miles have increased roughly 20%. Slide 10, please. Aframax and LR2 demand in the Atlantic Basin has strengthened meaningfully, with volumes from the US to Europe nearly doubling over the last year. That alone has tightened vessel availability across the region. At the same time, developments in Venezuela present additional upside. Last year, Venezuelan crude exports averaged roughly 800,000 barrels per day, much of it directed towards China on sanctioned tonnage. Any redirection of those barrels toward the US or increases in production would further increase loading activity in the Atlantic Basin. Importantly, this comes at a time when the Aframax LR2 market is already operating from a position of strength.

Speaker #3: This is structural. Since 2019, product tanker ton-miles have increased roughly 20%. Slide 10, please. Aftermax and LR2 demand in the Atlantic Basin has strengthened meaningfully, with volumes from the US to Europe nearly doubling over the last year.

Speaker #3: That alone has tightened vessel availability across the region. At the same time, developments in Venezuela present additional upside. Last year, Venezuelan crude exports averaged roughly 800,000 barrels per day, much of it directed towards China on sanctioned tonnage.

Speaker #3: Any redirection of those barrels toward the US or increases in production would further increase loading activity in the Atlantic Basin. Importantly, this comes at a time when the Aftermax LR2 market is already operating from a position of strength.

Speaker #3: Slide 11, please. Today, approximately 54% of the LR2 fleet is trading crude oil. Part of the increase is due to soaring crude rates and the other part is structural.

James Doyle: Slide eleven, please. Today, approximately 54% of the LR2 fleet is trading crude oil. Part of the increase is due to soaring crude rates, and the other part is structural. The Aframax LR2 crude market is roughly 14 million barrels per day, compared to about 3 million barrels per day for clean products. The crude market is simply much larger. The decision to build LR2s instead of Aframaxes is structurally changing the fleet. By 2028, nearly half of the Aframax LR2 fleet will be LR2s. Given that crude accounts for roughly 80% of cargo volumes in this segment, LR2 crossover into dirty trades will persist. Slide twelve, please. Since the EU ban on diesel refined with Russian crude took effect in early January, European imports from Türkiye and India have already declined 300,000 barrels per day.

Speaker #3: The Aftermax LR2 crude market is roughly 14 million barrels per day, compared to about 3 million barrels per day for clean products. The crude market is simply much larger.

Speaker #3: The decision to build LR2s instead of Aftermaxes is structurally changing the fleet. By 2028, nearly half of the Aftermax LR2 fleet will be LR2s.

Speaker #3: Given that crude accounts for roughly 80% of cargo volumes in this segment, LR2 crossover into dirty trades will persist. Slide 12, please. Since the EU ban on diesel refined with Russian crude took effect in early January, European imports from Turkey and India have already declined by 300,000 barrels per day.

Speaker #3: Russian refined product exports are still moving but are traveling farther to find buyers. Before the invasion, roughly 10% of Russian exports went to Africa, South America, the Middle East, and Turkey.

James Doyle: Russian refined product exports are still moving, but are traveling farther to find buyers. Before the invasion, roughly 10% of Russian exports went to Africa, South America, the Middle East, and Turkey. Today, that figure exceeds 70%. Russian crude has had a more difficult time finding buyers, especially with recent sanctions and retaliatory tariffs. Since July, Russian crude on water has increased from 121 million barrels to 164 million barrels in January. Much of the Russian trade has shifted towards older vessels. As you can see on the bottom right, nearly 50% of Russian crude and product exports now move on ships older than 19 years old, tonnage that is unlikely to reenter the mainstream market. Slide 13.

Speaker #3: Today, that figure exceeds 70%. Russian crude has had a more difficult time finding buyers, especially with recent sanctions and retaliatory tariffs. Since July, Russian crude on water has increased from 121 million barrels to 164 million barrels in January.

Speaker #3: Much of the Russian trade has shifted towards older vessels. As you can see on the bottom right, nearly 50% of Russian crude and product exports now move on ships older than 19 years old.

Speaker #3: Tonnage that is unlikely to re-enter the mainstream market. Slide 13. Today, the product tanker order book is almost 19% of the existing fleet, which may seem high, but context matters.

James Doyle: Today, the product tanker order book is almost 19% of the existing fleet, which may seem high, but context matters. As you can see on the left, 21% of the product tanker fleet is already over 20 years old. By 2028, it will be 30%. Sanctions also further tighten effective supply. Roughly 26% of the Aframax LR2 fleet and 9% of the MR Handymax fleet are sanctioned, with an average age of 20 to 21 years old. In a normal market, much of this tonnage would have likely already exited. Slide 14. When you adjust for aging vessels, sanctioned capacity, and LR2 crossover, effective clean product supply growth is materially lower than the headline order book implies. We expect fleet growth to average roughly 3% over the next 3 years and potentially lower.

Speaker #3: As you can see on the left, 21% of the product tanker fleet is already over 20 years old. By 2028, it will be 30%.

Speaker #3: Sanctions also further tighten effective supply. Roughly 26% of the Aftermax LR2 fleet and 9% of the MR Handy fleet are sanctioned, with an average age of 20 to 21 years old.

Speaker #3: In a normal market, much of this tonnage would have likely already exited. Slide 14. When you adjust for aging vessels, sanctioned capacity, and LR2 crossover, effective clean product supply growth is materially lower than the headline order book implies.

Speaker #3: We expect fleet growth to average roughly 3% over the next three years, and potentially lower. Putting this together, demand remains strong and refinery shifts are structurally lengthening trade routes.

James Doyle: Putting this together, demand remains strong and refinery shifts are structurally lengthening trade routes. Supply growth is constrained as the fleet ages at a faster rate than it's replaced, and sanctions and geopolitics are tightening both points one and two. In both the near term and long term, the market's fundamentals remain supportive. With that, I would like to turn it over to Chris.

Speaker #3: Supply growth is constrained, as the fleet ages at a faster rate than its replaced. And sanctions and geopolitics are tightening both points one and two.

Speaker #3: And both the near-term and long-term, the market's fundamentals remain supportive. With that, I would like to turn it over to Chris.

Speaker #2: Thank you, James. Good morning. Good afternoon, everyone. Slide 16, please. This past year, we generated 568 million dollars in adjusted EBITDA, and 344 million dollars in net income on an IFRS basis.

Chris Avella: Thank you, James. Good morning. Good afternoon, everyone. Slide 16, please.... This past year, we generated $568 million in adjusted EBITDA and $344 million in net income on an IFRS basis. We've also made $450 million in debt repayments this year, culminating with the Q4 prepayment of $154.6 million of secured debt across four different credit facilities. This prepaid all of the scheduled principal amortization on our existing bank debt for 2026 and 2027. The principal and interest savings resulting from this prepayment have further reduced our cash breakeven levels, which include vessel operating costs, cash G&A, interest payments, and commitment fees, and regularly scheduled loan amortization to approximately $11,000 per day over this period.

Speaker #2: We've also made 450 million dollars in debt repayments this year, culminating with the fourth quarter prepayment of 154.6 million dollars of secured debt across four different credit facilities.

Speaker #2: This prepaid all of the scheduled principal amortization on our existing bank debt for 2026 and 2027. The principal and interest savings resulting from this prepayment have further reduced our cash break-even levels, which include vessel operating costs, cash G&A, interest payments and commitment fees, and regularly scheduled loan amortization to approximately 11,000 dollars per day over this period.

Speaker #2: We also entered into contracts to sell 10 vessels at substantial gains and exited our position in DHT. The cash gain on our investment in DHT was almost 30 million dollars, or a 24% return on investment when factoring in dividends received.

Chris Avella: We also entered into contracts to sell 10 vessels at substantial gains and exited our position in DHT. The cash gain on our investment in DHT was almost $30 million, or a 24% return on investment when factoring in dividends received. The chart on the right shows the progression of our net debt since 31 December 2021, which declined $3 billion to a net cash position of $124 million by the end of 2025. As of today, the net cash position is $308 million, and we are still pending the closing of the sales of two LR2 vessels for $109.8 million in aggregate. As Emanuele emphasized, achieving this milestone has given us the confidence to raise our quarterly dividend to $0.45 per share. Slide 17, please.

Speaker #2: The chart on the right shows the progression of our net debt since December 31, 2021, which declined $3 billion to a net cash position of $124 million by the end of 2025.

Speaker #2: As of today, the net cash position is 308 million dollars, and we are still pending the closing of the sales of two LR2 vessels for 109.8 million dollars in aggregate.

Speaker #2: As Emanuele emphasized, achieving this milestone has given us the confidence to raise our quarterly dividend to 45 cents per share. Slide 17, please. The chart on the left breaks down our expanding debt by type.

Chris Avella: The chart on the left breaks down our outstanding debt by type. Starting at the bottom is our last remaining lease financing obligation on one vessel with Ocean Yield. This obligation is expected to be repaid before the end of this month, thereby leaving us with a debt stack consisting of secured bank debt with a lending group dominated by experienced European shipping lenders and our $200 million five-year senior unsecured notes, which were issued in the Nordic bond market in January 2025 and are currently trading at around 103 to par. Further to this, $240 million of our $428 million of secured borrowings is drawn revolving debt, an important tool that we can use if we want to repay the debt but maintain access to the liquidity in the future.

Speaker #2: Starting at the bottom is our last remaining lease financing obligation on one vessel with Ocean Yield. This obligation is expected to be repaid before the end of this month, thereby leaving us with a debt stack consisting of secured bank debt with a lending group dominated by experienced European shipping lenders, and our 200 million dollar five-year senior unsecured notes, which were issued in the Nordic bond market in January of 2025, and are currently trading at around 103 to par.

Speaker #2: Further to this, $240 million of our $428 million of secured borrowings is drawn revolving debt. An important tool that we can use if we want to repay the debt but maintain access to the liquidity in the future.

Speaker #2: The chart on the right is our debt repayment profile. With the exception of the final settlement of our last remaining lease obligation, we have no principal repayment obligations on our existing debt until 2028.

Chris Avella: The chart on the right is our debt repayment profile. With the exception of the final settlement of our last remaining lease obligation, we have no principal repayment obligations on our existing debt until 2028. Slide 18, please. As of today, we have $937 million in cash and an additional $767 million in availability under revolving credit facilities for a total of $1.7 billion in available liquidity. Since November of last year, we have signed contracts to purchase 10 newbuilding vessels. The charts on the right reflect our forward payment obligations on these contracts, along with our estimated dry dock schedule through the end of 2027. Note that the timing of the installment payments on our newbuilding vessels and the timing of our dry dock are estimates only and subject to change.

Speaker #2: Slide 18, please. As of today, we have 937 million dollars in cash, and an additional 767 million dollars in available under revolving credit facilities for a total of 1.7 billion dollars in available liquidity.

Speaker #2: Since November of last year, we have signed contracts to purchase 10 new building vessels. The charts on the right reflect our forward payment obligations on these contracts, along with our estimated dry dock schedule through the end of 2027.

Speaker #2: Note that the timing of the installment payments on our newbuilding vessels and the timing of our dry docks are estimates only and subject to change.

Speaker #2: Our capital allocation decisions over the past three years have afforded us the financial flexibility to meet the obligations under our new building contracts, which total slightly over 700 million dollars.

Chris Avella: Our capital allocation decisions over the past 3 years have afforded us the financial flexibility to meet the obligations under our newbuilding contracts, which total slightly over $700 million. Hypothetically speaking, we could pay for all of these vessels today in cash without incurring any new debt. But nevertheless, 70% of these installment payments are not due until the years 2027, 2028, and 2029. With a cash breakeven rate of $11,000 per day, we are in a position to continue to build cash over the construction period. Moreover, the age and specifications of these vessels make them attractive financing candidates, which has the potential to open up opportunities for us to further optimize our capital structure and lower our cost of capital.

Speaker #2: Hypothetically speaking, we could pay for all of these vessels today in cash without incurring any new debt. But nevertheless, 70% of these installment payments are not due until the year's 2027, 2028, and 2029.

Speaker #2: With a cash break-even rate of 11,000 dollars per day, we are in a position to continue to build cash over the construction period. Moreover, the age and specifications of these vessels make them attractive financing candidates, which has the potential to open up opportunities for us to further optimize our capital structure and lower our cost of capital.

Speaker #2: On top of this, our forward dry dock schedule is light, having undergone the special surveys on over 70% of our fleet in the past two years.

Chris Avella: On top of this, our forward dry dock schedule is light, having undergone the special surveys on over 70% of our fleet in the past 2 years. Slide 19, please. Our cash breakeven rates are at the lowest levels in the company's history. The chart on the left shows that these expected cash breakeven rates are lower than the company's achieved daily TCE rates dating all the way back to 2013, with the closest point being the aftermath of the COVID-19 pandemic, when global oil consumption was at lows not seen in decades. To illustrate our cash generation potential at these breakeven levels, at $20,000 per day, the company can generate up to $292 million in cash flow per year.

Speaker #2: Slide 19, please. Our cash break-even rates are at the lowest levels in the company's history. The chart on the left shows that these expected cash break-even rates are lower than the company's achieved daily PCE rates dating all the way back to 2013.

Speaker #2: With the closest point being the aftermath of the COVID-19 pandemic when global oil consumption was at lows, not seen in decades. To illustrate our cash generation potential at these break-even levels, at 20,000 dollars per day, the company can generate up to 292 million dollars in cash flow per year.

Speaker #2: At 30,000 dollars per day, the company can generate up to 617 million dollars in cash flow per year. And at 40,000 dollars per day, the company can generate up to 942 million dollars in cash flow per year.

Chris Avella: At $30,000 per day, the company can generate up to $617 million in cash flow per year, and at $40,000 per day, the company can generate up to $942 million in cash flow per year. This concludes our presentation for today. Thank you everyone for your time and attention. And now I'd like to turn the call over to Q&A.

Speaker #2: This concludes our presentation for today. Thank you, everyone, for your time and attention, and now I'd like to turn the call over to Q&A.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star and one on your telephone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator 2: We will now begin the question-and-answer session. To ask a question, you may press star and one on your telephone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Omar Nokta with Clarksons Plateau Securities. Please go ahead.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star and one on your telephone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Omar Nokta with Clarksons Plateau Securities. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: Our first question comes from Omar Nokta with Clarkson's Plateau Securities. Please go ahead.

Speaker #3: Thank you. Hi, guys. Good morning. Good afternoon. Congratulations on officially reaching the net cash milestone. I wanted to ask about the dividend. You bumped it here.

Omar Nokta: Thank you. Hi, guys. Good morning, good afternoon. Congratulations on officially reaching the net cash milestone. I wanted to ask about the dividend. You know, you've bumped it here after having bumped it also last quarter. Understanding your aim is really to keep the payout sustainable through the cycles. You've got plenty of free cash flow in today's market, got a fortress balance sheet. How are you thinking about the dividend in the future? Is the aim to do a bump regularly, as in maybe once to, you know, once every couple quarters, or maybe revisit on an annual basis? Any color you're willing to share?

Speaker #3: After having bumped it also last quarter, understanding your aim is really to keep the payout sustainable through the cycles. You've got plenty of free cash flow in today's market.

Speaker #3: You've got a fortress balance sheet. How are you thinking about the dividend in the future? Is the aim to do a bump regularly as in maybe one to once every couple of quarters or maybe revisit on an annual basis?

Speaker #3: Any color you're willing to share?

Speaker #4: Yes. Thank you very much, Omar. So the dividend, first of all, the main premise is to see if we can what we'd like to do is to grow the dividend through the cycle, pay the dividend through the cycle.

Robert Bugbee: Yes, thank you very much, Omar. So the dividend, first of all, the main premise is to see if we can. What we'd like to do is to grow the dividend through the cycle, pay the dividend, you know, through the cycle. That is, you know, the actual momentum of that is dependent on a lot of things. I think you've seen our, let's say, goodwill, in the sense that, you know, immediately following the implementation of an increased dividend after the third quarter results, we immediately stepped up now. That is a, as Emanuele point out, it really is a reward for all of us for the strength and finish of the fourth quarter. So apart from that, I'd, you know, like to keep that undetailed.

Speaker #4: That is the actual momentum of that is dependent on a lot of things. I think you've seen our let's say goodwill in the sense that we're immediately following the implementation of an increased dividend in the after the third quarter results.

Speaker #4: We immediately stepped up now. That's as a manual point out a really as a reward for all of us for the strength and finish of the fourth quarter.

Speaker #4: So apart from that, I'd like to keep that undetailed. We're in a we will review everything regularly.

Robert Bugbee: We will, you know, review everything regularly.

Speaker #3: All right. No, that's fair, Robert. Thank you. And maybe just to follow up, you exercise the option on the LR2s. I wanted to ask about the VLCCs.

Omar Nokta: All right. That, yeah, that's fair, Robert. Thank you. And maybe just to follow up, you know, you exercised the option on the LR2s. Wanted to ask about the VLCCs. There's definitely been a lot of interest, you know, lately in that segment, whether it's from the equity markets, charters themselves or, or, you know, owners placing orders. You sort of got ahead of it a bit last year with those two orders you put in. I think it was back in October, November. Wanted to ask, how are you thinking about those right now, and whether you have options that came with those, that you could potentially add to your tally?

Speaker #3: There's definitely been a lot of interest lately in that segment, whether it's from the equity markets, charters themselves, or owners placing orders. You sort of got ahead of it a bit last year.

Speaker #3: With those two orders you put in—I think it was back in October or November—I wanted to ask, how are you thinking about those right now, and whether you have options that came with those that you could potentially add to your tally?

Speaker #4: Sure. We had options. The VLCC market was as we all know, was a very hot commodity. Those options were very short-lived. They were options that were valued only until the end of December.

Robert Bugbee: Sure. We had options. You know, the VLCC market was, you know, as we all know, was a, you know, like a very, very hot commodity. Those options were very short-lived. They were options that were valid only until the end of December. At that time, in December, we were in the middle of the holidays, not complete. We didn't have complete visibility of how we felt the cash flows were moving in the market at the time, and we didn't have a strong visibility because of the holidays as well, related to, you know, potential sale of our own assets, et cetera. So we felt on balance that we could pass that, remain disciplined, especially as we had the LR2 options still, you know, let's say, up our sleeve. So those VLCC options have gone. They've expired. That's the answer, Omar.

Speaker #4: At that time, in December, we were in the middle of the holidays, not complete we didn't have complete visibility of how we felt the cash flows were moving and in the market at the time.

Speaker #4: And we didn't have a strong visibility because of the holidays as well related to potential sale of our own assets, etc. So what we felt on balance that we could pass that remained disciplined.

Speaker #4: Especially as we had the LR2 options still, let's say, up our sleeve. So those VLCC options have gone. They've expired. That's the answer, Omar.

Speaker #3: Okay. No, thanks, Robert. That's very good. I'll pass it back.

Omar Nokta: Okay. No, thanks, Robert. That's very good. I'll pass it back.

Speaker #4: I think as a statement, I think that's a point of proof that we're not hell-bent on spending money because we have to we feel any urge to do that or as fast as we can.

Robert Bugbee: I, I think as a statement, I think that's, you know, that's a point of, you know, proof that we're not hell-bent on, you know, spending money because we have to, we feel any urge to do that or as fast as we can. We're just, as we pointed out at the beginning, we're just going to do this in a very measured way.

Speaker #4: As we pointed out at the beginning, we're just going to do this in a very measured way.

Speaker #1: Our next question comes from Greg Lewis with BTIG. Please go ahead.

Operator 2: Our next question comes from Greg Lewis with BTIG. Please go ahead.

Operator: Our next question comes from Greg Lewis with BTIG. Please go ahead.

Greg Lewis: Hey, thank you, and good morning, good afternoon, and thanks for taking my questions. Robert, a lot of cash. Not gonna ask you about that. You know, I did wanna talk a little bit about the crude market, though, as it relates to LR2s. You know, Scorpio, since its founding, has been pretty steadfast that the LR2s are gonna primarily focus on the product side. You know, I guess it seems like the market is kind of merging as older crude Afras are getting retired and, you know, everyone's order. If you're ordering an Aframax, you're gonna code it.

Speaker #5: Hey, thank you. And good morning. Good afternoon. And thanks for taking my questions. Robert, a lot of cash knocking at ask you about that.

Speaker #5: I did want to talk a little bit about the crude market, though, as it relates to LR2s. Scorpio, since its founding, has been pretty steadfast that the LR2s are going to primarily focus on the product side.

Speaker #5: I guess it seems like the market is kind of merging as older crude offers are getting retired, and so everyone’s—if you're ordering an Aftermax, you're going to code it.

Greg Lewis: Does that at all change how maybe Scorpio would think about its LR2 fleet, i.e., do we see a path or could we see opportunities for STNG to potentially, you know, bounce those LR2s back and forth between the crude market, or should we just assume they're gonna stay in the products?

Speaker #5: Does that at all change how maybe Scorpio would think about its LR2 fleet, i.e., do we see a path or could we see opportunities for Sting to potentially bounce those LR2s back and forth between the crude market or should we just assume they're going to stay in the products?

Robert Bugbee: Lars?

Speaker #4: Lost. Yeah. Hi. Yeah. Hi, Greg. I think it's fair to say that the Scorpio approach in terms of LR2 clean or dirty switching has always remained opportunistic.

Lars Dencker Nielsen: Yeah. Hi. Yeah, hi, Greg. I think it's fair to say that the Scorpio approach in terms of LR2 clean or dirty switching has always remained opportunistic. I mean, we have a number of our ships in crude already. I think it's important that considering that the global approach that we have is to remain disciplined on these things, so we don't just dirty up ships unless the economics clearly justify it on a sustained basis. There has been, you know, the recent dirty outperformance, particularly in the Atlantic basin, which of course we follow. We trade that element as well, and we can also see that the ability to kind of cross trade has increased between the LR2s and the Aframaxes.

Speaker #4: I mean, we have a number of our ships in crude already. I think it's important that considering that the global approach that we have is to remain disciplined on these things.

Speaker #4: So we don't just dirty up ships unless the economics clearly justify it on a sustained basis. There has been the recent dirty outperformance, particularly in the Atlantic basin, which, of course, we follow.

Speaker #4: We trade that element as well. And we can also see that the ability to kind of cross-trade has increased between the LR2s and the Aftermaxes.

Speaker #4: The case in point is, I think there's about 515 LR2s trading globally in the world today, and you've only got 220-odd trading clean today.

Lars Dencker Nielsen: You know, the case in point is, you know, I think there's about 515 LR2s trading globally in the world today, and you only got 220-odd trading clean today, which is, you know, probably the lowest we've seen since 2020 or 2021. Now, that can then give you kind of a thing, you know, do you go dirty or not dirty? Is always a tactical question, and we obviously follow all these markets. And if you normalize the periods, it has a little bit of a different picture than if you just look at one quarter. But the short answer to your question really is that of course, we look at it, and we trade it as well.

Speaker #4: Which is probably the lowest we've seen since 2020 or 2021. Now, back then to give you kind of a thing, do you go dirty or not dirty is always a tactical question.

Speaker #4: And we obviously follow all these markets. And if you normalize the periods, it has a little bit of a different picture than if you just look at one quarter.

Speaker #4: But the short answer to your question really is that, of course, we look at it and we trade it as well.

Speaker #5: Okay. Great. Thank you for that. And then just as man, I just that's funny. I forgot what I was going to ask you. Just I feel like I asked you it all the time.

Greg Lewis: Okay, great. Thank you for that. And then, and then just as-- That's funny, I forgot what I was gonna ask you. Just, I feel like I ask you all the time. I feel like I, every time I talk to you, I talk about this, but I guess I'll word it this way. You know, rates continue to be strong. The winter market looks like it has legs. Is there any kind of expectations, you know, in the summer? You fixed a couple of multi-year time charters. Has the appetite from customers increased for multi-year term, i.e., are we seeing more opportunities over the last month or two?

Speaker #5: I feel like every time I talk to you, I talk about this. But I guess I'll word it this way. Rates continue to be strong.

Speaker #5: The winter market looks like it has legs. Is there any kind of expectations? In December, you fixed a couple of multi-year time charters. Has the appetite from customers increased for multi-year term?

Speaker #5: I.e., are we seeing more opportunities over the last month or two? Or is that something where really just thinking about previous cycles or previous periods of time?

Greg Lewis: Or is that something where really, you know, just thinking about previous cycles or previous periods of time, you know, summer is coming. Does that have any impact on the opportunity for term charters to pick up, i.e., hey, if this strengthened market continues, I imagine customers will be more amped to fix multi-year deals because they know next winter is already around the corner.

Speaker #5: Summer is coming. Does that have any impact on the opportunity for term charters to pick up, i.e., hey, if this strengthened market continues, I imagine customers will be more amped to fix multi-year deals because they know next winter is already around the corner?

Lars Dencker Nielsen: I'll take that as well. I mean, we're certainly seeing improving time charter rates. The liquidity in time charters overall is improving as well. It's very strong. There's depth in it, and particularly on the LR2 Aframax market. We see also markets increasing on MRs, but there's for sure an increased demand for longer term periods. So, you know, it's for sure that the momentum is there for multi-year charter rates, and it's very interesting at the moment with that demand.

Speaker #4: I'll take that as well. I mean, we're certainly seeing improving time charter rates. The liquidity in time charters overall is improving as well. It's very strong.

Speaker #4: There's depth in it, and particularly on the LR2 Aftermax market. We see also markets increasing on MRs. But there's for sure an increased demand for longer-term periods.

Speaker #4: So it's for sure that the momentum is there for multi-year charter rates. And it's very interesting at the moment with that demand.

Speaker #5: Okay. Super helpful. Thank you very much.

Greg Lewis: Okay. Super helpful. Thank you very much.

Speaker #1: The next question comes from Ken Hoekster with Bank of America. Please go ahead.

Operator 1: The next question comes from Ken Hokster with Bank of America. Please go ahead.

Operator: The next question comes from Ken Hokster with Bank of America. Please go ahead.

Speaker #6: Hi. This is Tim Chang on for Ken Hexter. Thanks for taking my question. A lot of momentum for Sting and NetCash. Congrats, guys, with break-evens coming down, raising a dividend.

Tim Chiang: Hi, this is Tim Chang on for Ken Hokster. Thanks for taking my question. A lot of momentum for staying in that cash. Congrats, guys, with breakevens coming down, raising the dividend. But perhaps a question for Lars: How do you see rates progressing over the next few months or 40 to 60 days? Been a very firm start to the year. Do you perhaps see counterseasonal increases continuing into Q2, pushing you further over level book to date with all the tailwinds from ton-mile demand, some of the geopolitical uncertainty, and just your view there would be great. Thanks.

Speaker #6: But perhaps a question for Lars. How do you see rates progressing over the next few months or 40 to 60 days? It's been a very firm start to the year.

Speaker #6: Do you perhaps see counter-seasonal increases continuing into 2Q, pushing you further over levels booked to date with all the tailwinds from 10-mile demand? Some of the geopolitical uncertainty and just your view there would be great.

Speaker #6: Thanks.

Lars Dencker Nielsen: Yeah, I think you-

Speaker #3: Yeah. I think you. Sorry.

Lars Dencker Nielsen: Yeah, I think you-

Robert Bugbee: Yeah, I mean...

Speaker #4: Oh. Go ahead.

Lars Dencker Nielsen: Oh, go ahead.

Speaker #3: I was just going to start off, Lars, just saying since you got in. Look, I think you've very well summarized all of the factors that are almost certainly going to lead to a relatively strong second quarter.

Robert Bugbee: I was just gonna start off, Lars, just saying, thanks, Tim. Look, I think you very well summarized all of the factors that are, you know, almost certainly gonna lead to, you know, a relatively strong second quarter. Lars, if you'd like to add on onto that.

Speaker #3: Lars, if you'd like to add on to that.

Lars Dencker Nielsen: Yeah, absolutely. I mean, you know, first of all, you know, the clean market, if we look at that first, right, is operating with very little slack at the moment. So, you know, you could say, well, it's, you know, you've got some headlines on geopolitical stuff, you've got headlines around ton miles, you've got headlines around all these things. But structurally, I think, we've got a very positive product market in front of us. You've got some things around some turnarounds taking place, but, you know, that's already started in the Atlantic Basin and so on. And still, you've got a lot of product moving, and you've got open arms from the west to the east, perpetually on the light end. You've got the ton miles we talked about.

Speaker #4: Yeah. Absolutely. I mean, first of all, the clean market, if we look at that first, right, is operating with very little slack at the moment.

Speaker #4: So you could say, well, you've got some headlines on geopolitical stuff. You've got headlines around 10 miles. You've got headlines around all these things.

Speaker #4: But structurally, I think we've got a very positive product market in front of us. You've got some things around some turnarounds taking place. But that's already started in the Atlantic basin and so on.

Speaker #4: And still, you've got a lot of product moving. And you've got open ARBs from the west to the east, perpetually on the light end.

Speaker #4: You've got the 10 miles we talked about. So it's not just a cyclical spike, in my view. I think we've got a refining system that is operating at a very high level.

Lars Dencker Nielsen: So it's not just a cyclical spike, in my view. I think, you know, we've got a refining system that is operating at a very high level, and we can see that in terms of the structural support that lends itself to LR2s and to MRs in multiple regions. So, you know, you've had very strong Asian markets. You've had, of course, the Atlantic Basin, and you know, that's been highly reported widely in terms of, you know, we've seen multi-year highs in TD14 or TC14, et cetera, over the last couple of weeks. So, you know, today it's not really about short-term spikes, in my view.

Speaker #4: And we can see that, in terms of the structural support, that lends itself to LRs and to MRs in multiple regions. So, you've had very strong Asian markets.

Speaker #4: You've had, of course, the Atlantic basin and that's been highly reported, widely in terms of we've seen multi-year highs in TD14 or TC14, etc.

Speaker #4: over the last couple of weeks. So today, it's not really about short-term spikes in my view. I think we're seeing a kind of a longer wavelength coming in.

Lars Dencker Nielsen: I think we're seeing a kind of a longer wavelength coming in, and the market, for sure, has proven itself a lot more resilient than probably one initially had anticipated as we moved into 2026.

Speaker #4: And the market, for sure, has proven itself a lot more resilient than probably one initially had anticipated as we moved into 2026.

Speaker #6: Got it. That's very helpful. And just another quick follow-up, and then I'll pass it on. But more of an opportunity longer term, nevertheless, seeing any incremental uplift yet.

Tim Chiang: Got it. That's very helpful. And just another quick follow-up, and then I'll pass it on. But more of an opportunity longer term, nevertheless, seeing any incremental uplift yet in Aframax LR2 demand from Venezuelan exports. I know you've spoken in the past to some just kind of illustrative numbers, like an additional million barrels per day, equating to roughly 23 incremental vessels, but any update there would be great.

Speaker #6: And after our LR2 demand from Venezuela exports, you've spoken in the past to some just kind of illustrative numbers like an additional million barrels per day equating to roughly 23 incremental vessels.

Speaker #6: But any update there would be great.

Speaker #4: I mean, I think yeah, why don't you go forward, and then I can follow up afterwards. Yeah.

Lars Dencker Nielsen: ... I mean, you know, I think that's what. Yeah, why don't you go for it, then I can follow up afterwards. Yeah.

Speaker #5: Yep. Tim. Yeah. As you highlight that, that's the math. I think so far, we've seen about 300,000 barrels a day go to the US.

James Doyle: Yep, Tim, yeah, as you highlight, that, that's the math. I think so far we've seen about 300,000 barrels a day go to the US. The US Gulf refining system is well designed for Venezuelan crude. We have the coking capacity that can turn this heavy stuff into distillate, which is good for margins and for exports. It's unclear whether all of this volume will go to the US and how long production will take to increase in Venezuela. It varies, but I'd say on the margin, it's very positive. Lars?

Speaker #5: The US Gulf refining system is well-designed for Venezuelan crude. We have the coking capacity that can turn this heavy stuff into distillate, which is good for margins.

Speaker #5: And for exports, it's unclear whether all of this volume will go to the US and how long production will take to increase in Venezuela.

Speaker #5: It varies. But I'd say on the margin, it's very positive. Lars?

Speaker #6: No, that's exactly what I would say as well. I mean, at the margin, it's going to be very positive. With the ships that would have need to move, that are not in the sanction fleet.

Lars Dencker Nielsen: Well, that's exactly what I would say as well. I mean, you know, at the margin, it's going to be very positive, with the ships that would have need to move, that are not in the sanctioned fleet.

Speaker #5: Appreciate it. Thanks, guys.

Chris Robertson: Appreciate it. Thanks, guys.

Tim Chiang: Appreciate it. Thanks, guys.

Speaker #1: The next question comes from Chris Robertson with Deutsche Bank. Please go ahead.

Operator 1: The next question comes from Chris Robertson with Deutsche Bank. Please go ahead.

Operator: The next question comes from Chris Robertson with Deutsche Bank. Please go ahead.

Speaker #7: Hey, good morning, everyone. Thank you for taking my questions. Just as a follow-up on the topic of Venezuela, we talked a bit about exports here.

Chris Robertson: Hey, good morning, everyone. Thank you for taking my questions. Just as a follow-up on the topic of Venezuela, what have you-- We talked a bit about exports here, but what's the view around naphtha imports in terms of it being a diluent for the crude? Is that market picking up? Kind of how does that look right now with increased use of the MR fleet? And what did it look like beforehand in terms of those deliveries into the country? Was that on sanctioned vessels or what's the dynamic there now?

Speaker #7: But what's the view around naphtha imports in terms of it being a diluent for the crude? Is that market picking up? Kind of, how does that look right now with increased use of the mainstream fleet?

Speaker #7: And what did it look like beforehand in terms of those deliveries into the country? Was that on sanctioned vessels, or what's the dynamic there now?

Lars Dencker Nielsen: To be honest, I think at the margin, it is not the thing that really is going to change the Atlantic Basin product market on MRs in particular, which, of course, is the way that you would normally transport your naphtha into Venezuela. I think there's other things in the Atlantic Basin that has a lot greater kind of impact in terms of why the market is also strong. It just adds to the fire in the sense that it just is an additional positive.

Speaker #4: To be honest, I think at the margin, it is not the thing that really is going to change the Atlantic basin product market on MRs in particular, which, of course, is the way that you would normally transport your NAFTA into Venezuela.

Speaker #4: I think there's other things in the Atlantic basin that have a much greater kind of impact in terms of why the market is not so strong.

Speaker #4: It just adds to the fire in the sense that it just is an additional positive.

Speaker #7: Got it. Okay. Thank you, Lars. Turning towards just global inventory levels at the moment on the product side, James, I think you've talked about this in the past.

Chris Robertson: Got it. Okay. Thank you, Lars. Turning towards just global inventory levels at the moment on the product side, James, I think you talked about this in the past. Any update around? Are inventories kind of remaining low and flat? Are they starting to pick up here and grow in OECD? What's the current status there?

Speaker #7: Any update around our inventories kind of remaining low and flat? Are they starting to pick up here and grow in OECD? What's the current status there?

Speaker #6: Sure. Thanks, Chris. Look, you always have a buildup of inventories ahead of maintenance. So we've seen that in the most up-to-date numbers we have are the US.

James Doyle: Sure. Thanks, Chris. Look, you know, you always have a buildup of inventories ahead of maintenance. So we, we've seen that, and the most up-to-date numbers we have are the US distillate's still below the five-year average. It's been declining the last few weeks. You know, we've had cold weather, right? More heating oil demand and maintenance in the US Gulf is just picking up. So we expect inventories to come in. OECD looks to be relatively in line. So I think from a product perspective, we haven't seen huge builds, which is great as you go into maintenance, so we think things are going to be tight. And so I think that's constructive. And then on the crude side, we were anticipating kind of large builds in the overall market that haven't happened.

Speaker #6: Distillate's still below the five-year average. It's been declining the last few weeks. We've had cold weather, right? More heating oil demand. And maintenance in the US Gulf has just picked up.

Speaker #6: So we expect inventories to come in. OCD looks to be relatively in line. So I think from a product perspective, we haven't seen huge builds, which is great, as you go into maintenance.

Speaker #6: So we think things are going to be tight. And so I think that's constructive. And then on the crude side, we were anticipating kind of large builds in the overall market that haven't happened.

James Doyle: A lot of that is due to a lot of the crude on water that's built up is really sanctioned. And if you recall, there's been these forecasts of up to 4 million barrels of crude oversupply. We haven't seen that yet. There have been disruptions in Kazakhstan, but overall, we think that, you know, the crude oversupply is going to be less than anticipated, and I think that's very constructive because it speaks to how strong demand is in the global system.

Speaker #6: A lot of that is due to a lot of the crude on water that's built up is really sanctioned. And if you recall, there's been these forecasts of up to 4 million barrels of crude oversupply.

Speaker #6: We haven't seen that yet. There have been disruptions in Kazakhstan, but overall, we think that the crude oversupply is going to be less than anticipated.

Speaker #6: And I think that's very constructive because it speaks to how strong demand is in the global system.

Speaker #7: Thanks for that color, James. Really helpful. I'll turn it over. Thank you, guys. I appreciate the time.

Chris Robertson: Thanks for that color, James. Really helpful. I'll turn it over. Thank you, guys. I appreciate the time.

Speaker #1: The next question comes from Leah Burke with Relay Securities. Please go ahead.

Operator 1: The next question comes from Liam Burke with Riley Securities. Please go ahead.

Operator: The next question comes from Liam Burke with Riley Securities. Please go ahead.

Speaker #8: Yes, thank you. One of the macro lifts in the product tanker side has been the redistribution of global refinery capacity, and it's been a multi-year lift.

Liam Burke: Yes, thank you. One of the macro lifts in the product tanker side has been the redistribution of global refinery capacity, and it's been a multi-year lift. Do you anticipate that continuing, or is that sort of bottomed out now?

Speaker #8: Do you anticipate that continuing, or has that sort of bottomed out now?

Speaker #5: Thanks, Liam. Well, look, we anticipated it to continue in the sense that there's about 300,000 barrels that are closing or part of that has closed in the West Coast, United States, for example.

James Doyle: Thanks, Liam. Well, look, it we, we anticipate it to continue in the sense that there's about 300,000 barrels that are closing or part of that has closed in the West Coast United States, for example, a Valero refinery and a Phillips 66 refinery. And as those refineries wind down in the next few months, that's 300,000 barrels, for example, that the California market needs. And if you speak to those oil and refining companies, they've highlighted to... They're gonna import it from foreign markets. So in many ways, we haven't seen the benefit of those flows largely coming from Asia, and we still think there's gonna be more closures in developed markets as well, replacing that lost production. So this is gonna continue to go on for the foreseeable future.

Speaker #5: A Valero refinery and a Phillips 66 refinery. And as those refineries wind down in the next few months, that's 300,000 barrels, for example, that the California market needs.

Speaker #5: And if you speak to those oil and refining companies, they've highlighted they're going to import it from foreign markets. So in many ways, we haven't seen the benefit of those flows, largely coming from Asia.

Speaker #5: And we still think there's going to be more closures in developed markets as well, replacing that lost production. So this is going to continue.

Speaker #5: To go on for the foreseeable future. And then at the same time, as you kind of highlight with your question, emerging markets are not building much refining capacity.

James Doyle: And then at the same time, as you kind of highlight with your question, emerging markets are not building much refining capacity. It takes, you know, a minimum of 5, but probably 7 years to build a refinery, and that hasn't started yet. So I think going forward, that's very constructive from a ton mile demand perspective for us as well.

Speaker #5: It takes a minimum of five, but probably seven years to build a refinery. And that hasn't started yet. So I think, going forward, that's very constructive from a ton-mile demand perspective for us as well.

Speaker #8: Great. Thanks, James. And on the fleet management, you've had a lot of activity in 2025, both on new builds and divestitures, you've got a billion-dollar liquidity position.

Liam Burke: Great. Thanks, James. And, on the fleet management, you've had a lot of activity in 2025, both on new builds and divestitures. You've got a billion-dollar liquidity position. Is there any... And rates seem to be in a good place here. Is there any additional more tweaking you need to do with the fleet, or you're happy with the assets in place and your new build and your liquidity?

Speaker #8: Is there any and rates seem to be in the in a good place here. Is there any additional tweaking you need to do with the fleet, or you're happy with the assets in place?

Speaker #8: And your new build and your liquidity?

Lars Dencker Nielsen: ... We will, we are at present engaged in the secondhand market, and you should fully expect that we would, you know, sell assets, singular or plural, over, you know, a reasonably short time. And, you know, that sale and purchase market is super strong. I mean, perhaps, Emanuele, you might like to talk a little bit about that.

Speaker #5: So, we are at present engaged in the second-hand market. And you should fully expect that we would sell assets, singular or plural.

Speaker #5: Over a reasonably short time. And that sale-and-purchase market is super strong. I mean, perhaps Emmanuel, you might like to talk a little bit about that.

Emanuele Lauro: Sure. As you said, we continue to engage opportunistically on inbound inquiry on the existing fleet we have. And, as we've done in 2025, and, before that, we positively reply to inbound requests, and, engage in potentially selling further assets opportunistically. We are not working at anything specifically on the buy side, at present, but, you know, we don't exclude substituting and renewing in a conservative way as we have done in the past quarters as you have seen. The S&P market is very, very hot. There is a lot of interest for tankers.

Speaker #4: Sure. As you said, we continue to engage opportunistically on inbounds inquiry on the existing fleet we have. And as we've done in 2025 and before that, we positively reply to inbounds requests.

Speaker #4: And further assets, opportunistically. We are not working at anything specifically on the buy side. At present, but we don't exclude substituting and renewing in a conservative way as we have done in the past quarters as you have seen.

Speaker #4: The S&P market is very, very hot. There is a lot of interest for tankers. What has happened in the last six to eight weeks in the crude tanker space has definitely attracted a lot of interest into the LR2s as well as trickle-down to the smaller-sized vessels, up to MRs, I would say.

Emanuele Lauro: What has happened in the last 6 to 8 weeks in the crude tanker space has definitely attracted a lot of interest into the LR2s, as well as trickled down to the smaller size vessels up to MR, I would say. And, you know, this is proven by the fact, as Lars has mentioned, I think, in his remarks earlier, there are about 220 LR2s trading clean today, which, you know, in order to see that little vessels number of vessels trading in the clean markets, we have to go back 5, at least 5 years, right? To 2021.

Speaker #4: And this is proven by the fact there's Lars, as mentioned, I think, in his remarks earlier there are about 220 LR2s trading clean today, which in order to see that little vessel's number of vessels trading in the clean markets, we have to go back at least five years, right, to 2021.

Speaker #4: So this shows the level of interest and the hype that the crude market has the long-awaited crude market momentum has captured in the last eight weeks and continues to do so.

Emanuele Lauro: So, this shows the level of interest and the hype that the longer-awaited crude market momentum has captured in the last 8 weeks, and continues to do so. I mean, it's the level of interest is super high.

Speaker #4: I mean, it's the level of interest is super high.

Speaker #8: Great. Thank you very much.

Liam Burke: Great. Thank you very much.

Speaker #4: Sure.

Emanuele Lauro: Sure.

Speaker #1: Our last question comes from Christopher Saya with Arctic Securities. Please go ahead.

Operator 2: Our last question comes from Christopher Saya with Arctic Securities. Please go ahead.

Operator: Our last question comes from Christopher Saya with Arctic Securities. Please go ahead.

Speaker #7: Hey, guys. Good morning. Good afternoon. Thank you for taking my question. Just for us with regards to Q1 bookings, can you elaborate a bit more on how your LR2 fleet is trading dirty versus clean?

Christopher Saya: Hey, guys. Good morning. Good afternoon. Thank you for taking my question. Just, first with regards to Q1 bookings, can you elaborate a bit more on how your LR2 is trading, dirty versus clean? And how would you think about bookings on open days there? I mean, there's a $40,000 difference now on LR2s and Aframax, so how do you think about that spread?

Speaker #7: And how would you think about bookings on open days there? I mean, there's a 40K difference now on LR2s and Afro. So how do you think about that spread?

Lars Dencker Nielsen: Well, I think I'll go back to what I said initially, is that, you know, we look at these things opportunistically on every single day. But to look at it in a very kind of short backdrop is probably not the right thing to do. I think when we look at these things, considering the size and the number of ships that we have, we have to look at the how we want to deploy these things, and one of the things we like to see is that as many owners have moved into dirty, and we were talking about the number of clean ships back, I think constructively, that volatility will be an opportunity that we would want to control and take advantage of.

Speaker #4: Well, I think I'll go back to what I said initially, is that we look at these things opportunistically on a every single day. But to look at it in a very kind of short backdrop is probably not the right thing to do.

Speaker #4: I think what we look at these things, considering the size, and the number of ships that we have, we have to look at how we want to deploy these things.

Speaker #4: And one of the things we like to see is that as many owners have moved into dirty and we were talking about the number of clean ships back, I think constructively, that volatility will be an opportunity that we would want to control and take advantage of.

Lars Dencker Nielsen: And when you say that there's a 40,000 difference, I think that 40,000 difference is in a very kind of insular market on a particular week. We do not see 40,000 being the case over time. So, you know, if we look at it on a more normalized period, I think that if you look over the quarter, it's been around maybe $10,000 a day, which does not necessarily justify large-scale switching quarter-over-quarter. So that outperformance that you refer to is probably something we should look at on a longer perspective.

Speaker #4: And when you say that there's a 40,000 difference, I think that 40,000 difference is in a very kind of insular market on a particular week.

Speaker #4: We do not see 40,000 being the case over time. So if we look at it on what normalized period, I think that if you look over the quarter, it's been around maybe 10,000 a day where it does not necessarily justify large-scale switching quarter on quarter.

Speaker #4: So that outperformance that you referred to is probably something we should look at on a longer perspective. So I'll just say that our approach is always opportunistic.

Lars Dencker Nielsen: So I'll just say that our approach is always opportunistic when it comes to this, but considering the ships that we have, the contracts that we have as well, with some of our key clients, we have to remain disciplined in terms of this. So, you know, I guess the key point is we dirty up when the economics clearly justify it.

Speaker #4: But when it comes to this, but considering the ships that we have, the contracts that we have as well, with some of our key clients, we have to remain disciplined in terms of this.

Speaker #4: So I guess the key point is we dirty up when the conanks clearly justify it.

Speaker #8: Okay. I understand. And just on term rates, we see now BLCCs, modern BLCCs being done for one year at 90,000 a day. And it seems like LR2s are more or less flat recent months.

Christopher Saya: Okay, understand. And just on term rates, we're seeing now VLCCs, modern VLCCs being done for one year at $90,000 a day. And it seems like LR2s are more or less flat, recent months. But if VLCC rates stay at 90, what would you say is a fair level that LR2s should be at? Do you see any upside potential here?

Speaker #8: But if BLCC rates stay at 90, what would you say is a fair level that LR2s should be at? Do you see any upside potential here?

Emanuele Lauro: If I may, and then Lars, please, jump in.

Speaker #4: If I may, and then Lars, please jump in. But I think that LR2s have not, or Aframaxes for that matter, have not remained flat.

Emanuele Lauro: If I may, and then Lars, please, jump in.

Lars Dencker Nielsen: Sure.

Emanuele Lauro: But I think that LR2s have not, or Aframaxes for the matter, have not remained flat. I think that today you can fix an Aframax/LR2 for one year in the high 40s. And there are the rates for 3 and 5 years, and the demand for 3 and 5-year deals, which has come in strong and has been reconfirmed, which we've fixed a couple of ships for 5 years in Q4 last year. And today, those rates would be starting with a 3 for a 5-year deal or comfortably with a 3 for a 5-year deal. So, definitely the interest is there, and the rates have increased for our classes of vessels as well.

Speaker #4: I think that today, you can fix an Aframax/LR2 for one year in the high 40s. And there are the rates for three and five years and the demand for three and five-year deals, which has come in strong and has been reconfirmed, which we've fixed a couple of ships for five years in Q4 last year.

Speaker #4: And today, those rates would be starting with a three for a five-year deal or comfortably with a three for a five-year deal. So definitely the interest is there, and the rates have increased for our classes of vessels as well.

Speaker #8: I'll just add that the market on LR2 Aframax has kind of relatively outperformed VLCCs. It's taken a while for the VLCCs to come. So we're very happy to see that the VLCC market finally is coming really to its own.

Lars Dencker Nielsen: I would just add that, you know, the market on LR2 Aframax has kind of relatively outperformed VLCCs. It's taken a while for the VLCCs to come, so it's, you know, we're very happy to see that the VLCC market finally is coming, really, to its own. And good for that, and it's gonna be great for the overall market. So, you know, we're happy to see that, you know, we're firing on all cylinders now.

Speaker #8: And good for that. And it's going to be great for the overall market. So we're happy to see that we're firing on all cylinders now.

Speaker #8: Perfect. Thank you. That's it for me.

Christopher Saya: Perfect. Thank you. That's it from me.

Robert Bugbee: Yeah, I would also do. It's quite interesting. If you did a cash-on-cash return valuation between either, you know, the, where the product stocks are valuing the vessels or even where the vessels are valued, their return on equity at the moment is, you know, every bit as strong as the VLCCs and a few in physical side. And in terms of stock side, obviously, you know, the returns for the product tankers are higher, as their stocks are selling at less of a premiums to NEV than the crude is.

Speaker #4: Yeah. I would also do it's quite interesting if you did a cash-on-cash return valuation. Between either where the product stocks are valuing, the vessels, or even where the vessels are valued, their return on equity at the moment is every bit as strong as the VLCCs.

Speaker #4: And if you in physical side, and in terms of stock side, obviously, the returns for the product tankers are higher as their stocks are selling at less of a premium as to NEVs and the crude is.

Operator 2: Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Mr. Lauro for any closing remarks.

Operator: Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Mr. Lauro for any closing remarks.

Speaker #1: Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Lauro for any closing remarks.

Speaker #8: Thank you very much, Operator. No closing remarks other than thanking everybody for your time and attention today. And look forward to being in touch going forward.

Emanuele Lauro: Thank you very much, operator. No closing remarks, other than thanking everybody for your time and attention today, and look forward to being in touch going forward. Thank you.

Speaker #8: Thank you.

Operator 2: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.

Operator: Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.

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