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

Thank you very much. Hello, everyone. My name is Mikael Skov and I’m the CEO of Hafnia. Thank you for joining Hafnia’s first quarter 2024 conference call. With me here today, our CFO, Perry Van Echtelt; our EVP, Commercial, Jens Christophersen; and EVP, Head of Investor Relations, Thomas Andersen. We will present Hafnia ‘s performance for the first quarter 2024 together. Today’s presentation agenda will cover four key areas. First, I will provide an overview of Hafnia and key highlights during the quarter. Then we will present the first quarter financial performance. Subsequently, we will provide commercial updates and an outlook on the product and the market. And finally conclude the presentation with an overview of our ESG projects. Let’s move to Slide #2. Before proceeding, you should all be aware and take note of the mandatory disclaimer. Some statements in this call may be forward-looking and carry inherent risks. This call does not constitute an offer to buy or sell securities. Thank you for your attention and let’s start the presentation. So let’s start with an overview of Hafnia and the key highlights in the first quarter of 2024. Moving to Slide #4. Hafnia is one of the world’s leading tanker owners and operators. We primarily transport refined oil products and chemicals as shown in the simplified tanker market overview. As owners and operators of more than 200 modern vessels across eight commercial pools, we offer a fully integrated shipping platform encompassing in-house technical management and chartering teams spanning Asia, Europe, the Middle East and the USA. We also have a bunker procurement desk that serviced over 1400 vessels within our pool platform and for external ship owners. At the end of the quarter, we owned and chartered a diversified portfolio of 131 vessels with the own fleet having an average broker valuation of approximately $5 billion giving us a net asset value of around $4.3 billion. Following our dual listing in April, we are now listed on the Oslo Stock Exchange under the ticker code HAFNI and HAFN on the New York Stock Exchange. Let’s move on to the next slide. Hafnia’s value proposition today runs deeper than ever. This has been achieved through our active management approach including a good understanding of market dynamics. Since our merger with BW Tankers in 2019, our growth trajectory has been significant and we are now one of the world’s leading product and chemical tanker companies. Our approach to market assessment is to continually seek advantageous opportunities as part of our active management strategy. Over the past five years, we have executed numerous strategic acquisitions and joint ventures seamlessly aligning with our overall goals. Most recently in 2023, we formed a joint venture with Socatra securing orders for four dual fuel methanol MR newbuilds. We remain focused on pursuing strategic acquisitions and joint ventures that drive sustainable growth and position us for long-term success. Apart from that, we’re also committed to delivering strong and sustainable shareholder value. We last updated our dividend policy at the end of 2022 to align our dividend payout strategy with our overall financial performance by allowing for an increase in dividend payout ratios should we reach certain leverage ratio targets. Since then, the strong markets in 2023 resulted in very high earnings and upon careful consideration, we decided early in April to increase the dividend payout ratio further. This update includes increasing the payout ratio from 70% to 80% when the net loan to value is above 20% but equal to or below 30%. Additionally, as the net loan to value equals or below 20%, we will increase the ratio even further to 90% from the previous 80%. This decision highlights our commitment to strong shareholder value while safeguarding financial stability. Additionally, our vessels' continuous upward valuation is contributing to our net leverage ratios' downward movement. To illustrate within our time chartered-in vessels portfolio, we hold eight purchase options. With this strong asset price environment, the value of these purchase options is now approximately $120 million, highlighting our ability to capitalize on this value appreciation. Perry will take you all through the financials in the next section. Thank you.

Thanks, Mikael. In the first quarter of 2024, we’ve seen another continuation of very strong markets, mainly driven by additional ton miles arising from the ongoing issues around the Red Sea. This has led to spikes in spot rates across all segments, reaching higher average TCE rates than those during the fourth quarter of last year. As a result, we’ve achieved a net income of $219.6 million in Q1. During the quarter, we further optimized our balance sheet by reducing leverage. Our net LTV ratio has further decreased to 24.2% due to accelerated debt repayment and higher asset prices. Our net LTV has been on a steady downward trajectory, reducing by more than 7% if you compare it to the first quarter of last year. This deleveraging has gone in parallel with increased shareholder distributions in the form of cash dividends. In line with our recently updated dividend policy that Mikael has just outlined, I’m pleased to announce that a dividend payout ratio of 80% of net income for the quarter will be distributed. This means we will distribute a total of $175.7 million for the quarter, which corresponds to $0.3443 per share or approximately NOK3.7 for the quarter. This is Hafnia’s highest quarterly dividend payout ratio and amount to date and will continue to have further upside potential as we continue to further reduce our leverage in these strong markets. We move to the next page, for the first quarter, we generated a TCE income of $378.8 million, which is similar to levels we generated last year. For this quarter, the IFRS 15 load-to-discharge adjustment has resulted in a negative TCE adjustment of $7.2 million. Including this, we ended the quarter with an adjusted EBITDA of $287.1 million, and as I said, a net profit of $219.6 million. Also, our fee-focused business has benefited from this strong rate environment, generating close to $10 million or $9.8 million, from our commercial pool and bunkering business. These adjacent business streams have continuously performed well and I will explain more detail on the pool and bunker economics later in this presentation. Our balance sheet is very strong, with a cash balance of $129 million and a total liquidity of over $410 million. This includes undrawn facilities of $283 million. At the end of Q1, around 82% of our loans were hedged at a weighted average of 1.7% base rate or the SOFR basis. This hedging strategy has largely protected us against a high interest rate environment, thereby controlling our financing costs. As a forward-looking company, we will continue monitoring our key leverage ratios and work on refinancing parts of our balance sheet to further reduce our funding costs and cash flow breakeven levels. This will enable us to deliver strong shareholder returns and to seize upon any opportunities that may arise. Even with the increased payout of dividends, as we have just announced, we continue to reduce our outstanding debt levels by further repayments. Now moving on to the operating summary. In the first quarter, our TCE was based on 10,455 earning days and we generated an average TCE per day of $36,230. This improved largely from $30,732 per day in the fourth quarter. OpEx costs, which consist of vessel operating costs and technical management expenses, were based on 9,555 calendar days in the quarter, leading to an average of $7,886 per day, higher than Q1 last year, mainly due to timing differences in vessel supplies. Looking into the rest of the year in terms of current coverage levels for 2024, the product tanker market has still shown tremendous strength in the second quarter and in the remainder of the year, due to factors like shifts in refinery capacity and firm oil demand in developing economies. So as of the 10th of May, 2024, 68% of the total earning days in Q2 2024 have been covered at an average of $37,896 per day. For Q2 to Q4, the rest of the year of 2024, 32% of the earning days were covered at an average of $33,901 per day. We then move to the next page. We’d also like to re-emphasize the strength and importance of our pool and bunker service business. As an introduction, Hafnia currently operates a fleet of over 200 vessels across eight commercial pools and they range from the largest product tankers to small specialized chemical tankers of under 20,000 deadweight tons. Our highly specialized and dedicated Chartering and Commercial Departments are responsible for developing, marketing and negotiating all contracts for vessels that the pools operate. Firstly, Hafnia receives pool management commission in the form of a fixed fee and then a percentage of all net pool income. For all our pools, apart from the specialized and chemical pools, we charge a fixed fee of $271.5 per calendar day per vessel, plus 2.25% of net TCE earnings made by the vessel per on hire day. For specialized and chemical pools, we charge a higher fee of $296.5 per day and a 2.75% of net TCE earnings. For our bunker buying business, we receive bunker commission only in the form of a fixed fee of $2 per metric ton to $3 per metric ton delivered to the vessel where Hafnia bunkers have acted as a broker. We have, over the years, increased our pool offerings and have consistently performed well in this business stream. With this success, we will continue to invest in our commercial platform to increase the service level and build skill in the pools and bunker business by adding external vessels with the right pool partners. Then moving to the next page, benefiting from solid fundamentals and anticipated increased oil demand, we can expect 2024 to be another strong year. We’re well prepared for this market through our strategically positioned fleet and high spot market exposure. This page represents a comparative analysis of the three scenarios outlining Hafnia’s potential earnings for this year. These scenarios include, firstly, the consensus forecast from the equity analysts; secondly, an extrapolation of the Q2 covered rates applied to the available earnings in 2024; and a third scenario based on Q2 to Q4 covered rates similarly applied to the available earnings in 2024. In each of the three scenarios, the indications indicate yet another exceptionally robust year for Hafnia with net profits in these scenarios in the range of $800 million to $900 million. Moving on to the next topic, I’m sure you’re aware that we have in April completed our dual listing of our common shares on the New York Stock Exchange in addition to the current Oslo Stock Exchange listing. This listing marks a significant milestone in our growth journey and we believe it will broaden our investor base and enhance our access to the capital markets. Our presence in the U.S. market will provide investors direct access to our commercial performance and a proven track record of shareholder returns, while also generating increased value for our current shareholders through additional trading liquidity, now also in dollars. We can already see the trading activity picking up in the U.S., representing about 15% of the total trading volume, bearing in mind that our dual listing earlier was not associated with any capital risk. With that, Jens will now be sharing an industry review and market outlook. Thank you.

Thank you, Perry. Hafnia primarily operates within the cyclical and volatile product-tanker segment. Charter rates and tanker capacities depend on several factors, and over the next few pages, we will provide current market updates and our expectations. Since the beginning of 2024, the product tanker market has been positively impacted by ongoing safety issues in the Red Sea, which caused shifts in trade routes, so vessels are now sailing south of Africa. In addition to the usual northern hemisphere winter seasonality, droughts in the Panama Canal and low diesel inventories in Europe have contributed to a strong first quarter. Consequently, CPP on water, which usually is a proxy for transportation demand, has also surpassed all-time highs. The growth in oil and water is driven by longer voyages, not only from the Middle East to the West, but also across the Pacific, where the West Coast Americas are, to a greater extent, being supplied from the Far East. This represents a positive outlook, as periods of high CPP on water and ton days have historically corresponded with periods of strong earnings. Looking at the volume over the past five years, we’re witnessing a steady rise in daily CPP and chemical loadings and longer transportation distances compared to previous years. This more-than-proportionate increase in ton miles can be attributed primarily to eastern refineries supplying many Atlantic consumers. Dirty petroleum products and crude oil, on the other hand, have seen a slight decline in cargo volumes, as they’ve been struggling due to OPEC production cuts. We can expect these high ton-mile levels to continue accommodating the dislocation between refining capacity and the end-users of refined products. Slide 16. While the impact of sanctions on Russia’s products has been fully felt, with market inefficiencies and new trading lanes being calibrated and eventually settled upon, there remains an impact on inventories which have yet to be addressed. Worldwide product inventories remain below average, especially Europe’s distillate inventories and there’ll be a need to replenish them. This potential increase in European imports to replenish inventories will likely be through long-haul trades from the Middle East, where refinery capacities focused on middle distillates continue to open. With firm global oil demand anticipated, we expect a further drawdown of inventories to support product tanker demand and ton-mile growth. Slide 17. Apart from inventory levels and firm oil demand, the evolving refinery landscape is poised to bolster the product tanker market. In 2023, export-driven volume gains were largely driven by refinery start-ups in the Middle East, such as Al Zour in Kuwait and Duqm in Oman, both refineries amongst others, coming online in Africa and Asia, are expected to continue ramping up production this year. The Nigerian Dangote Refinery has also commenced exports. It’s generally understood that this refinery will be an export facility as its product specs go beyond Nigerian regulatory demands. When all these four refineries run at full capacity, global exports will increase by 0.7 million barrels per day to 1 million barrels per day from these refineries. On the other hand, continued refinery closures are anticipated in regions such as the U.S. and in Europe, necessitating these regions to replace volumes with imports. This continued dislocation of refineries and oil-consuming regions will continue to shift global oil trade flows and add to product ton-miles. Next slide. Looking at the product tanker supply, the outlook remains positive. As a start, the global product tanker fleet is getting increasingly old. When we look into individual segments, the number of vessels reaching the above 20-year age bracket will increase significantly in the next few years and the number of newbuilds on order are not enough to replace this tonnage. We’re seeing a substantial reduction in utilization for vessels above 20 years of age, even during the current strong market. This disparity has also become increasingly large in recent years. This is mainly due to increased downtime and longer commercial waiting periods between voyages, and partly due to Russian trading tonnage ballasting longer for subsequent employment. Even for vessels aged between 15 years and 19 years, we see lower utilization than those aged below 15 years. The market will benefit from increased scrapping and less efficient and generally older fleet profile. Slide 19. Looking forward, the outlook for product tankers remains very positive. Global oil demand is now largely driven by macroeconomic factors and market fundamentals, rather than policy decisions. Although global oil demand in 2024 began to lose momentum, decreasing by 0.3 million barrels in the first quarter, compared to 102 million barrels per day in the fourth quarter, there’s still an anticipated increase of 1.2 million barrels per day in 2024. On the supply side, despite an uptick in ordering activities in 2023, the order book remains moderate and most of the orders placed are set to materialize in 2025 onwards. Overall, the fundamentals for the product tanker market remain strong, mainly attributed to firm oil demand, low inventories and the dislocation of refineries. The supply side further adds to this, as we can expect higher utilization of the existing fleet as older vessels become less efficient or get phased out. And with that, Mikael, over to you for the next couple of slides.

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

We will start with Omar. Please unmute yourself to ask your question.

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

I can take that. Generally, the purchase options can be exercised regularly, some on a quarterly basis and some yearly. For us, it is currently more cost-effective to keep them as chartered-in vessels rather than purchasing them.

Thank you for your insights. Regarding the Red Sea rerouting, you have mentioned its tightening effect on the product market. Could you provide an overview of how it has impacted various segments, particularly the LR1s, where you have a significant presence, as well as the MRs? There has been considerable focus on the LR2s.

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

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

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

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

Yeah.

Okay. Great. Thank you. Frode, may I ask you to unmute yourself?

Yes. Thank you. Hi, guys, and congrats on the dual listing in New York. What’s the feedback, what have you learned so far and what’s your expectation of this dual listing? That’s the first question.

Yeah. Thanks for that question. And no, I think, at least for the time being, we’ve experienced quite a good interest from the investors in the U.S. We’ve seen increased liquidity of our shares and one of the backgrounds for doing it was really to try to capture into both sides of the investor pockets in Oslo, Scandinavia and in New York, and so far, it looks like we are seeing traction. I think there’s a positive view on our dividend policy and where shipping is in general. So far, at least with no interest, there’s still some time to go on this, we feel. I mean, obviously, it takes time to build up more liquidity. But for sure, yeah, so far, it’s only been a positive response.

It’s good to hear. Thanks for providing details on the pool business. That seems like a valuable business. I just wanted to ask, what do you consider a fair earnings multiple for this type of business?

Hi, Frode. Hi. It’s Perry here. Thanks.

Yeah.

I think that’s an interesting question. We see the pool business really is adding to the shipping business as well, because it gives us wider scope commercially, etc. If we look at an EBITDA multiple, it’s difficult to find really peers, right? There’s been some M&A in the market. I think if we look at overall implied multiples, some of the analysts have taken an approach of that, I think, last we’ve seen was in the range of $100 million in total value.

Okay. That’s good. My last question was more on the market. You mentioned Dangote in Nigeria. Interesting to hear you think that could be positive in terms of exports. Maybe you could elaborate on that and what’s your overall view on this refinery changes? Yeah, first off, you have the seasonal effect of a big ramp up and then there’s new capacity coming online. So what’s your thoughts there? Thanks.

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

Okay. Thank you.

You’re welcome.

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

Hello, good afternoon everyone, and thank you for taking my question. I'm a bit nervous as I sometimes struggle to unmute. My first question is regarding the chartering portfolio that Perry mentioned. I've noticed that the rates appear to be in a position where there are beginning to be opportunities for longer duration, specifically time charter coverage. This seems to align with the strategy on the LR2 side. Looking ahead to the next few quarters, should we anticipate there will be chances to extend the duration on the LR1 portfolio as well?

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

Okay, perfect. I have another question. We often talk about ton-miles, but not as much about congestion. I'm curious about the MR market. I understand that the Panama Canal isn't a major bottleneck for the product sector, but I'd like to know what you are hearing and seeing regarding congestion. It seems like congestion at the Panama Canal is beginning to decrease. Is that already happening? Do you have any sense of where we stand in that process?

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

Super helpful. Thank you.

You’re welcome.

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