Good day, and thank you for standing by. Welcome to the Q2 2024 DHT Holdings, Inc Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laila Halvorsen, CFO. Please go ahead.

Thank you. Good morning, and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' second quarter 2024 earnings call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. As usual, we will go through financials and some highlights, before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available on our website, dhtankers.com, until August 20. In addition, our earnings press release will be available on our website and on the SEC EDGAR system, as an exhibit to our Form 6-K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events as detailed in our financial report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports available on our website and on the SEC EDGAR system, including the risk factors in these reports. For more information regarding risks that we face. As usual we will start the presentation with some financial highlights. We maintain a very strong balance sheet represented by low leverage and significant liquidity. At quarter end, financial leverage was 18.6% based on market values for the ships and net debt was $14.2 million per vessel. The second quarter ended with total liquidity of $263 million, consisting of $73 million in cash and $191 million available under our evolving credit facilities. Now over to the P&L. We are pleased with the results for the quarter. We achieved revenues on a TCE basis of $103.7 million and EBITDA of $80 million. Net income came in at $44.5 million, equal to $0.27 per share. Vessel operating expenses for the quarter were $20.4 million, which included some one-offs in addition to timing of purchases of spares and consumables. G&A for the quarter was $4.5 million. The vessels in the spot market achieved robust earnings with $52,700 per day and the vessels on time charters made $36,400 per day. The average TCE achieved for the quarter was $49,100 per day. For the first half of 2024, our spot vessels achieved $53,400 per day, while the average combined time charter equivalent earnings came in at $50,000 per day. Net income for the first half of 2024 came in at $91.6 million, equal to $0.57 per share. And then over to the cash flow highlights. The cash flow for the second quarter of 2024 was stable and we started the quarter with $73 million in cash. We generated $80 million in EBITDA. Ordinary debt repayment and cash interest amounted to $16 million and $46.8 million was allocated to shareholders through a cash dividend, while $0.8 million was used for maintenance CapEx. We paid first installments for all four new buildings amounting to $51.5 million and we drew $25 million on the ING revolving credit facility to partly fund the installments together with our discretionary cash flow. Further, $8.8 million was related to changes in working capital and the quarter ended with $73 million in cash. Switching to capital allocation. DHT has a defined and predictable capital allocation policy and in line with our policy we will pay $0.27 per share as a quarterly cash dividend, which is equal to 100% of ordinary net income. The dividend will be payable on August 30 to shareholders of record as of August 23. This marks the 58th consecutive quarterly cash dividend and the shares will trade ex-dividend from August 23. On the left side of this slide, we present an update on estimated P&L and cash breakeven rates for 2024. P&L breakeven for the full year is estimated at $27,700 per day for the fleet, while cash breakeven is estimated at $18,500 per day, resulting in $9,200 per day per ship in discretionary cash flow after dividends. So, assuming the vessels earned at P&L breakeven, this means about $79 million in discretionary cash flow for the year. On the right side of the slide we illustrate the quarterly cash dividend we have returned to shareholders since we updated the dividend policy in the second half of '22. This amounts to a total of $1.97 per share. And with that I will turn the call over to Svein.

Thank you, Laila. Here is the updated outlook for the third quarter for the company. We have 552 time charter days covered for the third quarter at $37,700. This rate assumes only the base rate for the two time charter contracts that have profit-sharing features. The forecast includes the time charter for DHT Europe built in 2007 at $49,500 per day that commenced at the end of June. We expect to have 1,630 spot days in this quarter, of which 75% have been booked at an average rate of $42,100. The current spot market is below this level, hence there is a risk that the average for the quarter will come down from this number. The spot P&L breakeven for the quarter is estimated to be $23,600, a number that should assist you in estimating the net income contribution from our spot lease. Here we present you with an update for our Newbuilding program. We have achieved meaningful improvements in the delivery schedules for all four ships. The delivery schedule is now February, April, May, and July in '26. This results in a significant increase in revenue days for the year. When compared to the schedules at the time of entry into the contract, we now expect the increase in revenue days to be in the range of 550 to 600 days for the year. As you will note, the ships and the construction have all been allocated names. As indicated during our previous earnings call, the options for additional ships were not declared and have as such expired. The advanced schedule was made possible as certain projects for other ship types have been revised at the shipyards. We are very pleased with this outcome and that our relationship with the yards results in us being afforded this priority. The spot market is currently in a seasonal weak period. As many analysts and research reports are suggesting, we are now in a waiting game for refinery maintenance to complete and for runs to increase. On the graph to the left, you will see that seaborne transportation of crude oil hit about 41.7 million barrels per day in February and March this year. In the past two months, this has come down to about 40.3 million barrels per day, showing a decrease of approximately 1.5 million barrels per day. As you will see in the graph to the right, this development resulted in inventory builds largely in April, especially in China. This reversed in June and July as refiners started to draw on inventories, which has been the key culprit behind the reduced demand for transportation. We believe the prior slide aligns well with this illustration. On the left, you can note that refining margins softened during the second quarter. In the graph on the right, you can see that refiners have built inventories of diesel and gasoline during the same period. The forward curve suggests that refining margins could improve and would offer an opportunity to reduce these inventories. We think it is logical to assume that this will play out and that it will generate increased demand for crude oil feedstock and our services to rebuild crude oil inventories. In general, our markets offer attractive fundamentals and prospects with continued oil demand growth, longer transportation distances, and a limited supply of new ships in combination with a rapidly aging fleet. Our strategic pillars remain with disciplined execution. We believe we are well-structured for the markets we operate in, focusing on solid customer relations, offering safe and reliable services, supported by a solid balance sheet, strong liquidity, robust breakeven levels, all matched up to the defined and shareholder-friendly dividend policy. With that, operator, over to you.

Our first question comes from Jon Chappell from Evercore ISI. Please go ahead. Your line is open.

Thank you. Good afternoon. A bit of a housekeeping one first. With the new accelerated schedule on the new buildings, what's the payment schedule look like between now and delivery? Any more payments this year, and the cadence for next year? And then also, is this all going to be cash-funded, or do you plan on drawing down debt at delivery for the floor?

Yes. So in our press release, I think under Note 5, we've included a table with future expected payments. So you see there that within the next 12 months, we expect payments of $89.9 million, and then the rest after that. We've looked into different financing projects, and we are very pleased with the suggestions that we have, but nothing is decided yet. So we will get back to you with that once we have finalized.

Okay. And then…

Maybe if I could just add to that, Jon, there are, of course, some timing differences when we generate the cash flow that we'll use for the equity component of these ships. So, the loan is sort of drawn from time-to-time, and then we generate cash flow and move it back and forth on that. So that's why this happened during this past quarter.

Have you had any interest at this point with delivery now within the next 24 months on time charters, or do you just assume that those would be implemented in the spot market upon delivery?

There is some initial interest, but I would say it's not at the level that provides for negotiations. We have the intention and interest in seeing if we can develop this. I think it will take a bit of time, and it's probably a next year event if we decide to pursue that. So, it is our ambition to build more long-term and fixed income for the company in general. These ships will offer some very interesting opportunities for a couple of clients, in particular, that have shown interest.

Okay. And then finally trying, the seasonality makes sense. I've seen it several years, third quarter's weakest. Maybe this time, though, there's some concerns about China as being the biggest end market for crude long-haul deliveries, and some potential weakness there. Have you seen any signs that maybe China is weakening and it's a bit more beyond seasonality? There's some cyclical component to it, or do you think it's just a function of refinery shutdowns at this time of year?

I think there's a bit of both. We've seen some development in that heavy trucking is starting to implement LNG as fuel, and LNG or heavy transportation in general in Asia has been a meaningful contributor to global demand growth in general. So, this is something to watch. On the positive side, there is meaningful growth in the petro-chemical industry, which is, I guess, a reflection of policy in China that they want to focus more on the consuming industry. The new refining capacity coming on in China has about 80% of petro-chemical output, of which the predominant part is crude oil-based. But this is not happening right now. This is something you will see developing now over the next, I would say, 12 to 24 months. So, there is some change in where the oil is going or how it's being used. And I guess the negative components have come earlier than when the positive components will arrive in the market. So, that's probably amplified a bit the seasonality this summer.

Okay. Thanks for the time.

Thank you. We'll now move on to our next question. Our next question comes from the line of Frode Mørkedal from Clarkson Securities. Please go ahead. Your line is open.

Thank you.

Hi, Frode.

Regarding the new deductions, is the decision to not exercise them due to the fact that it could impact the ability to pay 100% of earnings in dividends? Or is it a view on the new build prices themselves?

Well, if we had declared, Frode, it would be a meaningful increase in CapEx, of course. And that would also change the structure of our balance sheet considerably. We had no desire to do that. So, the core plan was all along to do the four ships, with a caveat that if we had some early interest to develop true long-term charters, say, seven, eight years or longer. If that had happened earlier, we could have developed some particular financing for that. That's something we might have considered for one, two, or all four ships, but that did not materialize. So, we felt it prudent to do the four ships and we were happy with that. So, yes, that's the short story, I guess.

My next question is about the market. I guess there's been some talk about the VLCC cleaning up to do CPP cargoes. What's the magnitude of that activity? And is that something you've also considered?

It's mostly Suezmaxes. We think maybe around 20 that have done that. There have been some VLCC cargoes. We think about a handful. Ideally, it should coincide with having a relatively modern ship that is then going through drydock. When that happens, you also clean up the ship - beyond the conventional drydock work, it will take quite a few extra days, probably around 20, I would say. It will have some cost, a few hundred thousand dollars, depending on the ship and that ship's prior cargo history, and things like that. There was an opportunity with the arbitrage pricing on products as well as the lower cost of ships. We have done this in the past. At this point, we did not have any ships that were suited for this business opportunity, but it's not an unknown territory for DHT. So, we guess probably five ships, maybe six and that's about it.

Okay. That's interesting. Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Omar Nokta from Jefferies. Please go ahead. Your line is open.

Thank you. It's fine. I just want to follow-up really quickly on the last question from Frode about the VLCC and the potential for carrying the clean cargoes. You mentioned that it's typically done before the vessel is going into drydock. Is that basically one cargo that they're able to do, and then go to drydock or can it do a series of cargoes?

It's done in connection with the drydock so that you clean up. Then, when you load the refined product, these cargoes are typically going to the Atlantic basin and quite a lot of them have gone to Africa. You tend to be lying or storing the cargo for a while before you're able to unload. That's not a positive, because you are a freshly painted vessel and you tend to get some hull growth after this. Of course, the charter rates are at a premium to the general market, so I guess that compensates for some of that. There are also detailed nuances on risk with contamination and decolorization and things like that, to the extent you can transfer some of that risk to the counterparty. But it is really for one cargo unless you, after discharge, decide to balance back to try to do a second cargo. That is normally not done and ships view this as a sort of repositioning of the drydock into the Atlantic basin and then trade the cargoes loaded in USGO or Brazil, West Africa.

Okay. Got it. Thanks for that. And then just wanted to ask, maybe you were discussing earlier the seasonality aspect, and it comes every year. You have the chart that shows that the pickup. I guess I wanted to ask maybe a bigger picture. It feels like we're in this pattern of OPEC constantly needing to revisit its production levels. Maybe we're looking at a situation where flat production from OPEC is the best case, and they're constantly perhaps having to cut. That's not necessarily because of demand, but it's the fact that you have so much non-OPEC production growth. I guess, how do you think the VLCCs will continue to fare in this type of market? If we were to think about the dynamic here over the next, say six to 18 months where OPEC is flat to down, but then you've got the Atlantic that's growing. How do you think VLCCs fare in this type of market?

I think that would be a positive. So, the Atlantic barrels out to Asia is truly a VLCC business. It's impossible for Suezmax to compete in freight terms on that. I would say that's a positive. If OPEC at some point now decides to release barrels to the market, it's because there is true evidence of demand growth as well. So, those barrels can come to the market without necessarily rocking the oil price. So, I always thought that OPEC or Saudi Arabia in particular has a clear objective of managing price more than anything, and that is precious to them.

Okay. Yes. And then just the final ones, Svein. The TMX has been ramping up and it looks like we're almost at a - not necessarily a run rate, but it looks like a good number of Aframaxes are loading, perhaps somewhat consistently out of the Vancouver region. Has there been any settling of how these cargos are being directed? Obviously, it's the Aframaxes that are loading at the port, but is reverse lightening onto VLCCs becoming a standard thing? And is that also something that maybe will move the needle on VLCCs? Just perhaps not visible now, because of summer?

Yes. There are already a number of cargoes where the Aframaxes have been heading South, to California or even further South. There's also been then reverse lightening onto these for those ships that go predominantly to China. There has also been, I believe, one cargo to India. The freight cost of that is meaningfully cheaper than sending an Aframax directly from the Vancouver area over to China, because those Aframaxes will not be fully loaded due to drought restrictions. We think that this is a new trade that will evolve for these, on top of what else is going on.

Okay. All right. Thank you. That's it from me.

Thank you.

There are no further audio questions at this time, so I'll hand the call back to Svein Moxnes Harfjeld for any closing remarks.

Thank you to all for staying interested and tuned in for DHT. We wish you all a good day ahead. Have a good one.

This concludes today's conference call. Thank you for participating. You may now disconnect.