International Seaways, Inc. Q2 FY2021 Earnings Call

Good morning. And welcome to the International Seaways Second Quarter 2021 Earnings Conference Call. Participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to James Small, General Counsel. Please go ahead.

Thank you. Good morning, everyone. And welcome to International Seaways earnings release conference call for the second quarter of 2021. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates. These statements may address, without limitation, the following topics: outlooks for the crude and product tanker markets; changes in oil trading patterns; forecast of world and regional economic activity and of the demand for and production of oil and other petroleum products; the effects of the ongoing Coronavirus pandemic; the company’s strategy; anticipated cost savings and synergies and benefits from our merger with Diamond S Shipping; any plans to issue dividends; our prospects, purchases and sales of vessels; construction of newbuild vessels and other investments; anticipated financing transactions; expectations regarding revenues and expenses including vessel charter hire and G&A expenses; estimated bookings and TCE rates in the second quarter of 2021 or other periods; estimated capital expenditures in 2021 or other periods; projected scheduled drydock and off-hire days; the company’s consideration of strategic alternatives; the company’s ability to achieve its financing and other objectives; and other economic, political and regulatory developments around the world. Any such forward-looking statements take into account various assumptions made by management based on a number of factors including management’s experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond the company’s control and could cause actual results to differ materially from those implied or expressed by the statements. Factors, risks and uncertainties that could cause International Seaways’ actual results to differ from expectations include those described in its quarterly report on Form 10-Q for the first quarter of 2021, our 2020 annual report on Form 10-K, and in other filings that we have made or in the future may make with the U.S. Securities and Exchange Commission. With that out of the way, I would like to turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois?

Thank you very much, James. Good morning everyone. Thank you for joining International Seaways earnings call to discuss our second quarter 2021 results. During the second quarter, we maintained an unrelenting focus to strengthen our industry position and enhance our ability to create long-term value for our stakeholders. On slide four, we review our transformational and accretive merger. We detail our fleet optimization and recap our return of capital to our shareholders. Starting with the first bullet, we’re excited to have completed a merger with Diamond S last month. The merger solidified Seaways status as an industry bellwether, with enhanced scale and capabilities, as well as significant financial strength. Combining the two leading U.S.-based diversified tanker owners, with long-term customer relationships and a shared deep culture of achieving stringent safety and operational standards. We’re now poised to deliver compelling strategic and financial benefits to our shareholders and stakeholders, as the tanker market moves into its recovery stage. The merger doubles our net asset value and triples the size of our fleet to 100 ships. We have created the largest U.S.-listed diversified tanker company. Among other benefits, we expect the merger to be accretive to both earnings and cash flow per share. We estimate we will realize annual cost savings of $23 million and revenue synergies of $9 million. Importantly, we expect these synergies to be fully realized in 2022. We have increased our equity market capitalization and our trading liquidity, which we anticipate will provide opportunities for a rewriting of our equity valuation going forward. We have preserved our financial strength and we maintain one of the lowest net leverage ratios in tanker shipping. Our second quarter net loss was $14.3 million, or $0.51 per share, excluding vessel impairment charges. Importantly, please note, at the end of the quarter, we had a total liquidity of $174 million. This includes $134 million of cash. This cash is serving us well throughout the challenging rate environment. As of today, we have approximately $200 million in total liquidity. We have been actively selling older ships at attractive prices, with expected net proceeds of $75 million after repayment of $50 million in debt. We have preserved a combined $34 million of forward drydock and ballast water expenses. Further details on these sales can be found in the appendix. Since the beginning of 2020, we have returned over $70 million to our shareholders. This includes $10.1 million of regular dividends, $30 million in share repurchases, and $31.5 million in a special dividend that we paid just prior to the merger closing. Moving to slide five, we talk about our transformational strategic combination with Diamond S. We joined together two U.S.-based tanker companies, with strong and complementary positions in the crude and product tanker sectors. We solidified our power alleys in the large crude sector focused on VLCCs and Suezmaxes, while we created a new power alley strength in the product sector. We have a sizable and diversified fleet of crude and product tankers. We are positioned to benefit from the positive long-term industry fundamentals ahead of us, as well as near-term developments, as global oil demand recovers, inventory destocking completes, and OPEC+ executes higher production levels. As we focus on continuing to seamlessly integrate the merged company, we welcome the newest members of our Seaways team and look forward to working together to create lasting value for all of Seaways customers and our shareholders. To illustrate the combined entity's earnings power capability, the combined company of 100 vessels would have earned time charter equivalent revenue greater than $800 million in 2020, with an EBITDA of $420 million. Please turn to slide six. We’re smoothly progressing on building our three dual fuel LNG VLCCs. Daewoo is on target for delivery in early 2023. These state-of-the-art vessels will adhere to future environmental regulations throughout their life, being 20% more efficient than a modern eco VLCC and 40% more efficient than a 10-year-old VLCC. These vessels will align with International Seaways ESG principles and will substantially outperform today’s IMO energy efficiency design index and the 2025 EEDI targets. Building on our signing of the first sustainability linked refinancing in the industry in early 2020, we’re very proud to be implementing sustainability initiatives in our fleet in the maritime sector. The $96 million price achieved for the three vessels has materially appreciated, reflecting the strength in steel plate prices and the rapidly filling yard with LNG and container vessels. We expect to earn rates significantly exceeding the benchmark route. This chart illustrates our commitment to working with the tanker cycle. Since becoming an independent publicly traded company more than four years ago, Seaways has invested over $900 million in a newer fleet at the low point in the tanker cycle and acquired Diamond S for $361 million in stock is no different, including at the bottom of the current tanker cycle. The nine ships we acquired have materially appreciated in value and have contributed a cumulative $111 million in operating income during 2020 alone. Our Shell newbuildings and the transformative merger with Diamond S further illustrate our ability to adeptly identify attractive opportunities and move at the right time in the cycle. Let’s turn to slide eight. We provide an update on oil supply and demand. In spite of the Delta variant COVID case increases throughout the world, OPEC+ is acting on their agreement to increase supply by 2 million barrels per day over the period from August to December. This will add to the market 400,000 barrels per day monthly. This increase is on top of the 2.1 million barrels per day of increase implemented from May through July. Right now in the world, 4.4 billion vaccination shots have been administered globally. We’re currently at a pace in the world of administering over 42 million COVID shots per day. This has enabled stronger economic growth, and oil demand jumped by 3.2 million barrels per day in June. The IEA projected July demand to be up by 5.4 million barrels per day year-over-year and forecasts 2022 demand to increase by 3 million barrels per day. Consistent with the recovery in oil demand, oil inventories have declined by 700 million barrels over the last year and are now at pre-COVID levels. Such drawdowns were needed to set the stage for a tanker market recovery, and we are encouraged by the magnitude of the drawdown. Combined with the OPEC+ production increases and a surge in demand for oil as global economic recovery and reopening begin, we’re optimistic that all these signals indicate strengthening in our rate environment going forward. On the ship supply side, the overall tanker order book remains at historic low levels. This is reflected in the 31 VLCC orders in 2019, the same number in 2020, and 27 year-to-date ordered in 2021. Uncertainty in the market, decarbonization regulations, and higher newbuilding costs have suppressed and tempered newbuilding ordering on tankers. Looking at recycling potential, there are many candidates based on the aging global fleet, with 17% of the existing fleet at least 17.5 years old, and 8% at least 20 years old. This aging 25% of the VLCC fleet compares to an order book at just 9.5% in the VLCC sector. As these ships age and reach ballast water treatment deadlines, substantial capital investments are required to keep them trading. Based on these dynamics, the potential for recycling has been building, particularly given the low spot rate environment and record steel prices. Now I’m going to turn it over to Jeff Pribor, our CFO, who will give us the financial review. Jeff?

Thanks, Lois, and good morning, everyone. Let’s move directly to reviewing the second quarter results in more detail. Before turning to the slides, let me just quickly summarize our consolidated results. In the second quarter, we had EBITDA of $10 million. The net loss for the quarter was $18.8 million, or $0.67 per diluted share, compared to net income of $64.4 million or $2.24 per diluted share in the second quarter 2020. When we exclude the impact of vessel impairment charges and merger and integration-related costs, the net loss narrows to $14.3 million, or $0.51 per diluted share. Now if I could ask you to turn to slide 11. I’ll first discuss the results of our business segments beginning with the Crude Tanker segment. TCEs or time charter equivalent for the Crude Tanker segment were $31 million for the quarter, compared to $106 million in the second quarter of last year. The decrease primarily resulted from the impact of lower average daily rates in each of the VLCC, Suezmax, Aframax, and Panamax sectors. Turning to the Product Carrier segment, TCE revenues were $14 million for the quarter, compared to $29 million in the second quarter of last year. This was also due to lower period-over-period average daily blended rates earned by our LR2, LR1 and MR fleets. Overall, as reflected in the chart top left, consolidated TCE revenues for INSW for the second quarter 2021 were $45 million, compared to $135 million in the second quarter of 2020. The decrease was principally driven by substantially lower average daily rates across the fleet for this quarter compared to last year’s second quarter. Looking at the top right of the page, adjusted EBITDA was $10 million in the quarter, compared to adjusted EBITDA of $96 million in the second quarter 2020, again driven by lower average daily rates. On the bottom half of the page, we look at our results over the last 12 months on a year-over-year basis. Consolidated TCE revenues and adjusted EBITDA for the last 12 months ending June 30, 2021, were $237 million and $70 million, respectively, compared to $438 million and $267 million for the prior year LTM period. Now turning to slide 12, I’d like to highlight our track record in returning capital to shareholders since the beginning of 2020. We’ve returned over $70 million to shareholders in the form of special and quarterly dividends, as well as share buybacks. We paid over $10 million in regular quarterly dividends. We purchased nearly 5% of our outstanding shares worth $30 million and paid a $31.5 million or $1.12 per share special dividend to INSW shareholders immediately prior to closing of the merger. Based on our pre-merger market cap, this represents an approximately 8% return in 2020 and a further 8% in 2021 year-to-date. Creating enduring shareholder value remains a priority for us, and we are committed to continuing to pay a quarterly dividend and opportunistically utilizing our $50 million share repurchase program authorization to unlock further value post-merger. Now turning to slide 13, we’ve provided a second quarter review and third quarter earnings update. For Q3, we booked 61% of our available Q3 spot days for VLCCs at an average of approximately $10,800 per day, 45% of our available Suezmax spot days at an average of $6,500 per day, 50% of the available Aframax LR2 spot days at an average of $11,600 per day, and 51% of our Panamax spot days at approximately $10,100 per day. On the product side, we booked 42% of our third quarter MR spot days at approximately $9,600 per day and 26% of our Handysize spot days at $4,000 per day. Now if you turn to slide 14, the cash cost TCE breakevens for the 12 months ending June 30, 2021, are illustrated on this slide. International Seaways' overall breakeven rate was $20,700 per day over the last 12 months. These amounts are the all-in daily rates our owned vessels must earn to cover vessel operating costs, drydocking costs, cash G&A expenses, and debt service costs. On the slide is also shown breakevens excluding principal amortization. In this case, the cash breakeven for the current 12 months was $15,200 per day. The far right-hand side of the bar chart shows the estimated all-in daily breakeven rates for the larger INSW fleet inclusive of Diamond S vessels, referred to as the combined fleet, which is expected to be $17,700 per day over the next 12 months. At this time, I’d like to provide some cost guidance for the combined company for your modeling purposes. For the remainder of 2021, we expect regular daily OpEx, including all running costs, insurance, management fees and other related expenses for various classes to be as follows: VLCCs at $8,800 per day, Suezmax $7,600 per day, Aframax $8,200, Panamax $7,900, and for MRs $7,200 per day, and finally, for Handysize $7,400 per day, excluding any impacts attributed to COVID-19. For details on projected drydock, CapEx, and off-hire days by quarter, again on a combined company basis, you can refer to slide 20 in the appendix. Continuing with cost guidance for the remainder of 2021, we expect cash interest expense will be about $11 million per quarter. We expect cash G&A to be in the region of $11 million per quarter as well. This reflects previous guidance for both INSW and Diamond S, now combined, less a factor for transitioning approximately 25% of expected G&A synergies from the merger. As previously stated, full cost synergies are expected to be achieved in 2022. Finally, we expect about $6 million in quarterly equity income and $31 million for quarterly depreciation and amortization. Now if you could turn to slide 15 for our cash bridge, moving from left to right, International Seaways had total cash and liquidity of $212 million during the quarter, our adjusted EBITDA was $10 million, equity income from JVs decreased by $5 million, and cash distributions from the FSO JV were positive $1 million. We expended $13 million in drydocking and CapEx and $14 million on the first installment as part of our agreement to build three dual fuel LNG VLCCs. We received $4 million in deposits on two vessels sold that are set to be delivered to buyers in the third quarter of 2021. Cash interest and scheduled principal payments on our debt were $21 million. Finally, taking into account the $2 million quarterly dividend and the positive impact of working capital and other charges of $2 million, the net result was at the end of the quarter approximately $134 million of cash and $40 million of undrawn revolver, yielding total liquidity of $174 million. As of today, as Lois mentioned, total liquidity stands at approximately $200 million. Now turning to slide 16, I’d like to briefly talk about our balance sheet. As of June 30, International Seaways had $1.5 million of assets compared to $445 million of long-term debt. Additionally, we had $40 million of revolving credit that remained undrawn as of that date and still remains undrawn. As you can see on the right-hand side of the slide, our net debt-to-total capital at that date was 28%, while our net loan value to our conventional fleet was 37%. Moving to slide 17, we provide a pro forma combined company debt as of June 30, accounting for the merger. The total debt balance was approximately $1.2 billion, and as Lois mentioned, post-merger we continue to maintain low net leverage ratios with net debt-to-capital of 33% and net loan-to-asset value of 45%. The debt facilities reflect our highly competitive cost of capital, including a weighted average interest cost of just 2.72% and a quarterly amortization schedule, with 56% of the debt fixed or hedged. I would point out that the vast majority of the debt maturity dates are no earlier than 2024. I’d like to highlight that we continue to have very strong relationships with a leading group of diverse global banks, and we greatly appreciate the ongoing support of this group, which now includes 12 major shipping banks. Lois, that concludes my remarks. I’d like to turn the call back to you for your closing comments.

Thank you so much, Jeff. On slide 18, I want to conclude our call by detailing the strategic vision of the new International Seaways. We’re focused on capitalizing on our position as a tanker sector leader, executing on our disciplined and balanced capital allocation strategy, and taking further steps to maximize shareholder value. With enhanced scale and capability combined with the best-in-class ESG track record and focus, we’re ideally suited to continue achieving the highest operational standards and meet the evolving needs of leading energy companies and customers. Based on our diversified fleet and crude and products power alleys, we are poised to benefit from positive long-term industry fundamentals. We will benefit as global oil demand recovers, inventory destocking completes, and OPEC+ production increases as per their plan. Based on the accretive nature of our merger, we expect costs and revenue synergies of $32 million to be fully realized in 2022. Complementing our sizable operating platform, we have maintained our balance sheet strength following the close of the merger, positioning Seaways to capitalize on attractive opportunities in the diverse rate environment. As part of our strategic focus, we’ll continue to remain true to preserving our financial strength, which has served us well at this point in the cycle, and execute an accretive and balanced capital allocation strategy. We will prioritize returning capital to shareholders, as highlighted by our recent merger-related $31.5 million dividend, representing $1.12 per share, as well as our outstanding $50 million share repurchase authorization. To reiterate, we’ve returned over $70 million to shareholders in the form of special and quarterly dividends and share buybacks since the beginning of 2020. Finally, creating enduring shareholder value remains of utmost importance to Seaways. Based on our industry leadership and increased upside to the crude and product tanker market recovery over both the near and longer term, as well as the larger market capitalization, we believe we have the potential to have our equity re-rated and close the NAV gap. Thank you very much, and we will now open it to questions.

Thank you. And the first question will come from Omar Nokta with Clarksons. Please go ahead.

Thank you. Hi, Lois. Hi, Jeff. Good morning and congratulations on officially closing the Diamond S deal last month.

Thank you very much.

Hi, Omar.

Yeah. I’ve just had a question. Obviously, you mentioned getting to the 100-vessel mark, which obviously gives you critical mass and a significant footprint. You are selling some older ships and which is something you telegraphed. So I do want to ask maybe just about the Panamaxes in particular. You sold four of those and took away a big chunk of your fleet capacity in that segment. I know those vessels have been involved in the South America niche trade and so just wondering…

Yeah.

...kind of about those, are those to be replaced or is that trade changing in the future?

No. No. Definitely, Omar, those vessels, unfortunately, will turn 20 in early 2022, and it’s not part of our strategy to operate the tankers past the 20-year mark. And what we have done is sold some of those for green recycling in accordance with the Hong Kong convention, and we’re taking advantage of strong recycling prices right now. Moreover, our trading in Panamax International is really a critical niche component where we earn a premium in trade, and we will be supplementing in Panamax International. In fact, we have just recently chartered in a vessel for a couple of years. So we will look in that Panamax pool to sort of bulk back up our presence there. The sale of the Panamaxes is simply strategic because those vessels are going to turn 20 years old and tactical because we wanted to take advantage of the strong recycling prices.

Got it. Thanks, Lois. It’s pretty clear. And you’re -- and it’s a good point, we have seen scrap prices increase significantly this year. Just sort of on the maybe the question regarding overall, you’re looking at potentially other non-core assets to sell. Any color you can give on what you would deem as non-core at the moment, any specifics you can share?

Well, we always say that we have a constant calculation going on regarding the vessels in all of our fleet on their discounted cash flow versus where their prices are in the market. We will continue to look to prune; it’s just a part of our ongoing strategy, particularly with the older vessels where we can take advantage of capital preservation.

Okay. Got it. And Lois, maybe just one final follow-up, I wanted to ask about the 12 ships you’ve agreed to sell. You are going to be bringing in $125 million and netting over… you’ve talked about $75 million after debt repayment. Obviously nice to get that cash cushion. But generally speaking, the $125 seems a little low relative to at least what I had assessed for the vessels. Is there anything you can share there on that or am I just being too aggressive on the valuation?

What I would say is that we’re happy with the prices we’ve achieved, Omar. As you go through the fleet list and detail it out, some of these vessels are older heritage Seaways ships that do not have mortgages on them, such as the Tanabe and some of these Panamaxes, as I mentioned, are being sold for recycling. You may have had a different secondhand value on those ships. However, as I said, those prices are strong in the secondhand recycle market, and the secondhand value has held up, even though the spot market has not. We feel that we’re quite happy with the prices we’re achieving across the fleet. Importantly, I think the factoid we shared regarding our savings on drydocks and ballast waters indicates that some of the vessels we are saving are imminently drydock due and do not have ballast water treatment systems on board. So we’re saving that expense and that off-hire, as well as those capital outlays, and some of those prices reflect that.

Okay. That makes sense. Well, thank you for that. Appreciate the color overall. I will turn it over.

Thank you so much, Omar.

Yeah. Thanks.

And the next question will be from Randy Giveans with Jefferies. Please go ahead.

Howdy, Lois and Jeff. What is going.

Hey. How are you Randy? We’re good.

Hi, Randy.

Congrats. Congrats on the merger. Consolidation is certainly a hot topic in the industry. So glad to see INSW actually making something happen here. So I guess looking at the benefits of the merger. You mentioned the $23 million in cost synergies will be in 2022. Just curious if those cost savings ramp over time or kind of the timing of it and where exactly should we look for the cost savings to flow through the income statement?

Really, of course, some of these costs are fairly quickly realized, for example, the cost of being a publicly traded company immediately falls away. We have a very structured integration plan and we will be realizing additional savings over time. From the revenue perspective, the vessels that we have taken over and are shifting from capital to managed commercial pools on the product areas will see those revenue synergies start to accrue immediately.

Perfect. Okay. And then looking kind of industry-wide you operate, clearly, both crude and product tankers. There’s been a debate on the strength of both in terms of outlook. So I guess which sub-sector do you expect to improve first and which is likely to outperform the other in 2022?

As we speak, I would simply look at where the market is today and the MR sector, in particular, in the Far East, has strengthened over the last week and that is flowing through even LRs and LR2s and now into the Western Basin. By strengthening -- everything is relative, we’re still talking low double-digit time charter equivalent returns. However, you can see the product carrier fundamentals being more closely balanced at the moment than on the crude side. The crude side, as China’s adjusting right now from what we observe, they really have a COVID zero tolerance policy, so they’re locking down with this Delta variant, which is affecting things. But we expect the crude side to also strengthen in 2022.

Okay. That’s it for me. Thanks so much.

Thank you, Randy.

Thanks, Randy.

And the next question will be from Ben Nolan with Stifel. Please go ahead.

All right. Thank you. Good morning, Lois, Jeff. So I’ve got a couple, I want to start with something that you are talking about at the end there. Well, long and short of it is, you’re selling older assets that free up liquidity, asset values have appreciated. You’ve done share, I think you did $30 million in share repurchase last year. How do you think about closing the value, proactively closing the value gap using share repurchases or you kind of need to just batten down the hatches and wait for things to get a little bit better first?

How are you, Ben? I’ll take my first stab, and then I’ll give it to Jeff. It is imperative that we watch closely the developments in the spot market recovery, Ben. The rates that have been experienced, due to lower demands, have been below cash breakeven level. That is priority number one. Beyond that, we do still have a $15 million repurchase program.

It’s amazing, but it’s really only been six quarters since we began to return cash to shareholders with the redo of our balance sheet that allowed for that. We’re going to continue doing that, and quarter-over-quarter we have to be patient and execute. Our high single-digit returns are good benchmarks, and as we get to the end of summer here, we’re going to tell the story. It’s important to communicate that we are now the largest diversified publicly traded tanker company with around 100 ships.

Yeah. So a little bit sort of in that vein still, I guess, the -- you sold 12 ships, I guess, right? They’re all older ships. There’s 12 more that are 15 years old or older. Is it fair to assume that you’re still high grading the fleet and as those sales happen and the leverage falls, you’re sort of increasing your flexibility to do things like share repurchases, or have you done what you need to do with that assets?

We will continue, just as you say. We will take into account and balance everything like what is the pace of the recovery? These are opportunistic and purposeful moves we’re making, and we want to see how quickly the market comes back. We expect both our earnings and secondhand values to go up. We will be careful and judicious, but indeed we will continue to turn the fleet going forward.

Okay. And then shifting gears for my last question here, I’m curious. We don’t talk a lot about the lightering business. It’s been this nice sort of asset-light cash flow generator. How do you think about that business going forward? Are things fundamentally different in the Gulf Coast or how does that fit strategically in with what you’re doing?

I think the lightering fits quite strategically with a fleet of our size and brings us very close to the customers. It’s a high-touch business, which is service intensive. The trading patterns have been affected by COVID, just like everything else, with fewer barrels coming in and fewer barrels going out of, particularly the U.S. Gulf. However, we have a diversified base. We saw Panama having strength, and we’re lighting on the U.S. West Coast and in the Bahamas. We think it fits well with us, and in particular, we saw a strong month in June with underlying volumes of oil that have increased significantly, even though we haven’t seen a spot resurgence in rates. The volume of trade has increased, and lightering will come along with that.

Yeah. All right. Appreciate it. Thanks, guys.

Thank you.

Thanks, Ben.

And the next question comes from Magnus Fyhr with H.C. Wainwright. Please go ahead.

Yeah. Good morning, Lois. Good morning, Jeff.

Hi, Magnus.

Just I have a question on the liquidity. I mean, you have a strong balance sheet. You’ve sold some assets and you have some more assets probably left to sell. With the merger, it looks like the amortization picks up, I guess, there’s about $30 million plus from the Diamond side. You paid a dividend this quarter? What do you guys have left in the toolbox here to extend the liquidity runway and to deal with some of the uncertainty with a delayed recovery and potential for this to run a couple more quarters?

Do you want to jump in there, Jeff?

We start in a really good place, Magnus. We were over $200 million in liquidity, which gave us the opportunity to execute on the Diamond S merger. As we stated, we’re at $200 million in liquidity plus, even after the merger is completed with most of those asset sales still to be completed. We’re really in a strong position. We don’t need to do much else, but we have a number of unencumbered vessels. Those are vessels that, if we don’t want to sell them, we can put leverage on them. So there’s a number of tools we have, but we feel great about where we stand right now.

Yeah. I mean, any thoughts on consolidating some of that debt, maybe to extend the amortization or increase the revolver, given the increased size of the company?

Sure, there’s probably some low-hanging fruit there in terms of optimizing the balance sheet. We will look at it, but there’s no urgency to it. We’ll do that.

Great. Well, thank you.

Thank you.

Thanks, Magnus.

The next question will be from Greg Lewis with BTIG. Please go ahead.

Hey. Thank you, and good morning, everybody. Lois, I kind of wanted to dive in and talk a little bit more about what Omar was talking about the fleet. I guess, I’ll ask, in terms of as we’re selling some of the vessels, not for the retirement, but just kind of, hey, they’re no longer fitting our profile, we pick them up and then Diamond S acquisition. What was the type of appetite in the market?

Yes. The secondhand market has not been extraordinarily deep. It will be deeper when you see that the rates have recovered. However, it has really held in there, reflecting newbuilding prices and kind of holding up. There is interest from multiple buyers for each one of the ships we have transacted MOAs on.

Okay. Great. And then just I’m sure this is a question that you’ll be getting probably until you do another one. You successfully won those three dual fuel LNG VLCC contracts. Could you talk a little bit about the state of that market?

There are still a couple of open inquiries for LNG dual fuel vessels. However, again, that is not a deep market. I do believe we will continue to see inquiry for dual fuel. We are watching everything and keeping up with all of the innovation that’s going on because this will be something we discuss every call for the foreseeable future.

Yeah. Okay. All right. Thank you very much, everybody.

Thank you.

Thanks.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Lois Zabrocky for any closing remarks.

I’d just really want to thank everyone for joining Seaways on our second quarter 2021 earnings call. We really look forward to tanker market recovery and being able to close our price to our net asset value gap going into the end of 2021 and into 2022. So thank you very much.

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.