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Executives

Thor Knappe - Senior Vice President, Business Development & Investor Relations – Monaco

Peter Livanos - Chief Executive Officer and Chairman of the board of directors – Monaco

Henrik Bjerregaard - Chief Financial Officer - Monaco

Analysts

Herman Hildan - RS Platou Markets

Chris Wetherbee - Citi

Oyvind Berle - DNB

Nish Mani - JPMorgan

GasLog Ltd (GLOG) Q3 2012 Earnings Call November 21, 2012 8:30 AM ET

Operator

Good morning. My name is Patrick, and I will be your conference operator today. At this time, I would like to welcome everyone to GasLog's Third Quarter 2012 Results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this conference call is being recorded.

Today's speakers are Peter G. Livanos, Chairman of the board and Chief Executive Officer; Henrik Bjerregaard, Chief Financial Officer. And, to commence the call, Thor Knappe, Senior Vice President of GasLog.

Mr. Knappe, you may begin your conference.

Thor Knappe

Thank you, operator. Good afternoon and good morning to those of you in the Americas. Thank you for joining us for our third quarter 2012 results conference call.

In addition to Peter G. Livanos, GasLog's Chairman of the Board and Chief Executive Officer and Henrik Bjerregaard, GasLog’s Chief Financial Officer, also joining us this afternoon is Phillip Radziwill, GasLog’s Vice Chairman and Paul Wogan, Chief Strategy Officer.

As a reminder, this conference call webcast and the presentation we are using this afternoon are available on the Investor Relations section of our website gaslogltd.com. A replay of this call will be available until November the 28 at 5:30 p.m. London Time, 12:30 p.m. U.S. Eastern Time.

As shown on page 2 of the presentation, many of our remarks this afternoon contain forward-looking statements. Let me refer you to our third quarter 2012 results press release and our reports filed with the SEC, where you will find factors that could cause actual results to differ materially from these forward looking statements.

In addition, some of our remarks this afternoon contain non-GAAP financial measures as defined by the SEC. A reconciliation of the non-GAAP financial measures to the most comparable GAAP measures is attached as an annex to this presentation. Today's call is set to end at 2:30 p.m. London Time, 9:30 a.m. Eastern Time.

If we now turn to slide three, the agenda for the presentation and I will turn the call over to Peter Livanos, GasLog's Chairman of the board and Chief Executive Officer.

Peter Livanos

Good afternoon and good morning. Thank you for joining us. On today's call, I'll provide you with an overview of our third quarter 2012 highlights and performance. Henrik will then review the third quarter 2012 financial results and provide a summary of our committed revenue picture. I will then show an overview of our fleets and charter information followed by an update on the LNG market and we’ll conclude the prepared comments with a strategic update on our business and its position within the industry.

If I could ask you to please turn to slide four of the presentation, highlights. We’re pleased with the company's performance this quarter. Adjusted EBITDA of $9.7 million for the quarter, better than expected reflects the continued full employment of the delivered fleet.

Adjusted profit was $4 million, and on an unadjusted basis profit was $2 million, adjusted earnings per share was $0.06 and the earnings per share was $0.05 for the same period. Our bottom line results were impacted by non-cash items, specifically unrealized foreign exchange gains and a non-cash loss from interest rate swaps, which were entered into prior this quarter. Henrik will go into more details of our third quarter results shortly.

As promised, we have today announced our first quarterly dividend of $0.11 a share. The dividend will be payable on December 17th to stockholders of record as of December 3rd.

The LNG shipping industry outlook remains positive with strong fundamentals for the supply and demand of LNG. The results of our strategy of aligning our shipped assets with LNG project continues to develop in the way favorable to increased growth for GasLog.

Our two ships in the water currently on multi-year charters to a subsidiary of BG Group plc, performed without any off-hire, thereby achieving full utilization for the period.

Our eight ships under construction at Samsung Heavy Industries are on time and within budget. Our first ship is scheduled to be delivered at the end of January with the second ship scheduled for delivery towards the end of Q1 2013. The third ship was launched during Q3 2012. We are pleased with our interest rate hedges which Henrik will go into in more detail later.

I will now turn the call over to Henrik Bjerregaard, our CFO, who will take you through the third quarter financials in more detail.

Henrik Bjerregaard

Thank you, Peter. Good afternoon and good morning. Thanks for joining us today. I will now take you through the financial highlights, so you should kindly turn to slide five of the presentation.

Revenues for the quarter increased by $1 million or 6.4% to $16.9 million compared with the same period in 2011. This is mainly a result of an increase in the revenues from external customers in the vessel management segment and to a lesser extent an increase in revenues in the vessel ownership segment in which GasLog's existing fleet performed at 100% utilization.

Adjusted EBITDA was $9.7 million for the quarter, compared to $10.3 million for the same period last year. Increase in adjusted EBITDA is mainly due to the following: a $0.6 million increase in the vessel operating and operating and supervision costs, a $0.6 million increase in the G&A expenses after resulting a foreign exchange gain, a $0.6 million increase in financial cost, a $0.4 million decrease in this year of the profit from Methane Nile Eagle due to a scheduled dry docking, also which was partially offset by $1 million increase in the revenues as mentioned earlier.

For the third quarter, adjusted EPS was $0.06, compared to 0.12 in the same quarter last year. EPS was $0.05, compared to EPS of $0.12. Decrease in both, adjusted EPS and EPS are due to the lower adjusted profit and profit, as well as the significant increase earlier this year in the weighted average number of shares following the completion of the IPO and the concurrent private placement.

The last line of the slide shows the utilization of our two existing ships GasLog Savannah and GasLog Singapore. We are pleased to say that 100% utilization has been achieved since delivery in 2010.

Please turn to slide six of the presentation. The main items on the balance sheet under tangible fixed assets are the two existing ships with a book value of $430 million. In addition, our all eight ships under construction had a book value of $196 million as of September 30, 2012 with the increase reflecting the progress in the construction and the installment paid.

If we look further down this table, you can see that GasLog has short-term investments of $212 million and cash and cash equivalents of $26.7 million. The short-term investments are on time deposits with top tier banks.

Now turn to slide seven of the presentation. Looking at the equities and liabilities, we see that contributed surplus for the third quarter of 2012 was $628.9 million, as compared to $300.7 million at the end of 2011. The increase of $328.2 million over the year in 2011 is mainly from the IPO proceeds and the pre-IPO shareholder contributions of $18.7 million.

Major items under liabilities relates to the two debt facilities on the existing ships. These are the $24 million in [truant portion] loans and $237.1 million in non-truant portion of the same facilities.

Please turn to slide eight of the presentation, where we can see the contracted revenue. This table, which many of you have seen by now, summarizes GasLog’s contracted revenue and charter coverage within the vessel ownership segment over the next 10 years.

You will notice a rise in our estimated contracted revenues over time. This reflects the growth of our fleet over the coming years and the concurrent commencement of charters from delivery to us by the yard for the six of the eight new buildings. These revenue figures do not include any earnings for the two uncommitted ships. And similarly, there are no revenue included for likely earnings from the ships following the completion of their initial charter.

Given that we have announced our first dividend today, let me talk upon the dividend potential of GasLog. Once we have taken delivery of all the vessels currently under construction, we will have the theoretical potential of reaching a payout ratio of 70% of net profit. Obviously, our actual dividends will be set by our board each quarter and will depend on our financial results, outstanding commitments and obligations and other factors, including our view of where we can find the best return for our shareholders.

Please turn to slide nine of the presentation. As we have mentioned before, we have secured debt financing for eight ships that we have on order. GasLog's June newbuilding program is fully funded from the proceeds of our IPO, to congruent private placement and the established debt facilities.

Of the eight ships under construction, we have four loan facilities with an aggregated amount of $1.13 billion. Borrowings under these facilities will be withdrawn upon delivery of the ships, which is scheduled for various dates between 2013 and 2015. We mentioned last time, that we are currently looking at the refinancing of GasLog Singapore, where the existing facility matures in 2014. We continue to make progress on this.

As of September 30, 2012, GasLog has entered into 15 interest swap agreements for the total notional amount of $865.7 million. This is in relation to the outstanding indebtedness of $262.6 million and the undrawn loan agreements of $1.13 billion. In total, 62.2% of GasLog’s expected floating interest rate exposure has been hedged at a weighted average interest rate of approximately 4.3%, including margin as of September 30, 2012.

During the third quarter, GasLog recognized a non-cash loss of $1.7 million on interest rate swaps, mainly due to the mark-to-market valuation of six interest rate swaps signed in 2012, which do not qualify for hedge accounting.

That concludes the financial highlights of the presentation, and so please turn to slide 10 of the presentation, and I'll hand you over to Peter.

Peter Livanos

Thank you, Henrik. Slide 10 maybe familiar to many of you illustrating our portfolio of ships and charters. Our counterparties are financially strong and well established in the LNG industry. In addition to our existing charters and the associated revenue stream, we maintain flexibility to capture potential upside through our uncontracted ships and undeclared options.

GasLog remains focused on the latest diesel electric propulsion technology, which offers significantly lower fuel consumption and emissions compared to traditional steam powered LNG carrier. We consider our relationship with both, BG and Shell strategic, as they are likely to be involved in future LNG production projects.

In thinking about our capital structure and potential growth opportunities, we are evaluating a number of alternative, including an MLP that we feel could be beneficial to our growth aspirations and shareholder value.

We now turn slide 11 of the presentation where we touch upon on the LNG industry. We are confident that the current supply and demand dynamics of the LNG industry are positive for LNG shipping. Although the near-term spot market rates declined in the third quarter, they remain very high on an historical basis and we expect this firmness to be reflected in long-term charter rates.

Recent announcements in the LNG industry regarding new production projects are expected to create increased requirements for LNG carriers. During the third quarter of 2012, Cheniere Energy took FID from the construction of the first two production trains at Sabine Pass. We hear that 2015 startup is possible. This is a landmark for the LNG industry, potentially are showing in a wave of LNG exports in the lower-48 states. In Australia, we saw the FID of a second train of Australia Pacific LNG. In East Africa, we see continued additions of gas reserves as new gases coverage are announced. These developments should continue to further strengthen future demand for LNG carriers, in particular, U.S. export given the large potential volumes and trade businesses. With regard to future LNG Australia, North America and East Africa, we are already starting to see LNG shipping procurement activities for some of these projects.

Moving onto slide 12 of the presentation, as you can see from the graph here, we expect that LNG is set for significant growth through this decade combined with increasing distances, this lead the strong demand for LNG ships.

Let's move to slide 13 of the presentation. In summary, we are pleased with our financial results for the quarter, reflecting full utilization of the fleet. We are also pleased to be announcing the dividend as we continue to deliver on what we have promised. The growth of our contracted revenue performance for 2012-2015 is on track and we are looking forward to the January delivery for the first of our new buildings.

That brings to the end of the presentation. Operator, can you please open the call for questions?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). We will now take our first question from Herman Hildan from RS Platou Markets. Please go ahead.

Herman Hildan - RS Platou Markets

Good afternoon, gentlemen. I have two quick questions. The first one relates to the refinancing of the GasLog Singapore that you mentioned. Could you give us some indications on how much leverage you are targeting for the vessel and also by what time you would be able to secure that refinancing?

Henrik Bjerregaard

Herman, thanks for your question. This is Henrik. Well, I think, what we can say and what we are seeing in the market for with what counterpart i.e. charters like these, we are seeing leverage in the area of 70% on assets like this. Definitely for company GasLog, that should be achievable. Timing wise, I think, we are going to close that one early in 2013.

Herman Hildan - RS Platou Markets

Okay. So, basically that should potentially release some additional cash and could you give any guiding on how you wish to invest that net cash? Would that be closing further newbuildings or would it be purchase of shares, or how do you think about that?

Peter Livanos

Hello, Herman. Peter Livanos here. Look, certainly, we will release some additional cash and we will look at investing that in any number of interesting projects that we feel we will be looking at in the coming months to year.

Herman Hildan - RS Platou Markets

Okay. Thank you. Just one final question, you briefly mentioned the fuel savings that you have on the tri-fuel diesel electric vessels, could you give us some, from the experience that you have now with one steam vessel and to tri-fuel vessels, could you say something about how big the fuel savings are? And also, I guess, give some indication on the different and economics between these two designs and how much you are targeting to gain on that, call it, cost savings in terms of rates for steam versus TFDE ship?

Peter Livanos

Actually, we have the experience of 6 tri-fuel ships and eight turbine ships, so we've got some pretty good data points. As far as we can see, it's between 60 and 80 metric tons a day of service speed, an advantage for the tri-fuel ship.

Herman Hildan - RS Platou Markets

And also, I guess, given the size of the engine that the tri-fuel vessels can carry more cargo as well compared to steam vessel?

Peter Livanos

Well, it's not the engines that do that. It's obviously the dimensions of the ship that really are the focal point on current cargo capacity.

Herman Hildan - RS Platou Markets

So, how much is the call it the efficiency between these two types of ships? Would you reckon, call it, dollar per day basis?

Peter Livanos

Well, I mean, if you just look at the fuel savings and you take 60 to 80 metric tons and multiply it by fuel cost that was somewhere, let's see. Let me do the calculation.

Herman Hildan - RS Platou Markets

I can do that. Understood, but what I really wanted to try to get to this in terms of your negotiating with charter partners. How much premium you are asking for your open new builds relative to the rates that you are seeing for steam vessels in the market today on market rates?

Peter Livanos

I don't think it's quite as simple as that. Certainly, the tri-fuel ships have a significant cost advantage on consumption. What you have to think about is whether the ship is acceptable to the charter or not in the first place. And, in many cases, we've looked at and continue to see tenders that come onto the market where a steam turbine is just not at all acceptable to bid on it no matter what the rate is.

So, I think that if you try to simplify your conclusion down to simply a fuel savings, you will be missing a very large part of the picture. Fuel saving is important, the environmental saving is important. There's no doubt about that, but really we are looking at a different level of acceptability for the modern propulsion system over the old propulsion system.

Herman Hildan - RS Platou Markets

Okay. So, let me just finalize with one last question. There's been a lot of talk about backwardation on long-term rates over the last 12 to 18 months. What kind of level are you targeting for your open new builds?

Peter Livanos

I haven't heard any talk on backwardation on long-term rates. I have heard some talk about some softening on the short-term rates, but long-term rates, we haven't seen anything like that as we look at various projects and tenders.

Herman Hildan - RS Platou Markets

I meant the structure. But, my question was what kind of rates are you targeting? Will you be happy with, say, $85,000 a day for a 5 to 10-year contract, or are you targeting more like $100,000 a day?

Peter Livanos

Again, it's going to depend on the capital cost of the ship if I am looking at a new ship. I am obviously happy with a higher rate than a lower rate, but I believe that the long-term rates or five to seven year rates around the sort of mid-80s or just north of mid-80s is probably realistically where the market is today. For forward delivery, remember you've got to look at based on a forward delivery position.

Herman Hildan - RS Platou Markets

Okay. So, I guess, the first new builds that you've ordered has kind of been on sort of back-to-back with a contract with the majors, so by taking the new building risk, you are basically getting another $10,000 extra relative to what you have on your current bid?

Peter Livanos

Again, I think that's a bit of an oversimplification. We have done our existing business based on back-to-back or in some cases very close to us actually ordering the ship, but that was more as a result of our relationship with the people that we are doing business with and our pretty good understanding of the way that projects were ramping up in terms of the capacity need they need around shipping.

Herman Hildan - RS Platou Markets

Okay. Thank you.

Peter Livanos

You're welcome. Please feel free to call me at any time.

Operator

We will now take our next question from Chris Wetherbee from Citi. Please go ahead, sir.

Chris Wetherbee - Citi

Thanks. Good afternoon, guys. Maybe just a quick question. Peter, you mentioned in MLP structure, could you elaborate a little bit on kind of what you may be considering as far as alternative finance structures going forward? I mean, how are you thinking about that?

Peter Livanos

Well, we are thinking about all sorts of finance structures and basically investing the various alternatives that may fit our profile. And, at this point though it would be very difficult for me to go into any more detail on that, Chris, I am sorry.

Chris Wetherbee - Citi

Okay. Just trying to get a sense maybe of what could have changed in the thinking from when you went public the way you did versus what maybe you are thinking about in the future. Is there anything that I should be picking up as specific benchmarks along the path there, or is it just kind of you have to look at all options when you are thinking about this?

Peter Livanos

No change to the fundamental logic and to the fundamental story that we had and continue to have around the GasLog business. But, as life evolves, it's very important to understand what options are available to the company in the search of trying to get the best value back to the shareholders and that's what we've continued to do and that's what we'll continue to do.

Chris Wetherbee - Citi

Okay. Any kind of timing benchmarks to look for here, or is this just something that will be kind of an ongoing process?

Peter Livanos

It is an ongoing process. It will be vague of me to try and guide you into timing benchmarks. So, I don't know I can take it any further than that, but it's an ongoing process and it's a process that we take, that we develop resources to and take seriously.

Chris Wetherbee - Citi

Okay. No. That's helpful. I appreciate it. And then, maybe a follow-up just on the SG&A side. Obviously, some very strong performance on cost controls in the third quarter. I just wanted to get a sense of maybe what is a good run rate for that line item as we move forward into the fourth quarter then also into 2013?

Peter Livanos

Henrik?

Henrik Bjerregaard

Yes, and that's a very good question, because as we have been discussing on the previous calls, we have over the quarter seen quite a lot of one-off items, and I think we are moving in now to sort of the state of the business where the one-offs are getting minor and minor. It's like looking at the Q3 financials, I would say, there's probably what I would reckon as a one-off of $300,000 being training expenses.

If you sort of dial that out of the number, the run rate that you're seeing in Q3 is what I would say is a good indication of things going forward. Naturally, as we intend to add more vessels to the portfolio, there will be an increase in such costs going forward, but looking ahead what we have of committed vessels, we are actually at, what I would say its run rate G&A that we should be looking at.

Chris Wetherbee - Citi

Okay. I'm sorry. Just to make sure I am clear on that, you said there was $300,000 of maybe kind of one-off expenses included in the $2.9 million in G&A expenses?

Henrik Bjerregaard

Yes.

Peter Livanos

We have additional cost in this quarter that I do believe that sort of could be classified as one-off.

Chris Wetherbee - Citi

Okay. And, excluding that is it more appropriate kind of run rate for where we are with the current fleet as it stands right now?

Peter Livanos

Yes.

Chris Wetherbee - Citi

Okay. That's very helpful. And, then maybe just a final question to really get a sense of how you think about the options. I know we've asked you that question before, Peter, but just trying to get a sense of kind of how you are thinking about some of those option vessels and maybe if you feel like you are closer potentially, you are making some agreements there? Just want to get a kind of feel for how you are thinking about it?

Peter Livanos

I continue to think of the options and having the ability to have placeholders of the shipyards is very important. You know that the fundamental business model that we are working to is to align ourselves the increased liquefaction projects that we see going on, including the U.S. export projects. We've seen that move at a fairly solid rate. And so, having those options, we consider it a valuable starting point in discussing with the yard to be able to get ships.

Chris Wetherbee - Citi

Okay, so we'll keep an eye on those liquefaction projects going forward. I think that's it for me. Thank you very much for the time. I appreciate it.

Peter Livanos

Thank you very much.

Operator

We will now take our next question from Jon Chappell from Evercore Partners. Please go ahead, sir.

Jon Chappell - Evercore Partners

Thank you. Good afternoon, guys.

Peter Livanos

Afternoon, Jon.

Jon Chappell - Evercore Partners

Peter, I wanted to ask you about the ships for delivery in late 2014 and early 2015 that don't have the contracts assigned to them yet. As you think about the timing of that, as we head into the winter, how are you seeing the contracts kind of develop and what kind of duration are you looking for on those ships. You ideally hit a five to seven-year duration similar to what you have in the current vessels, or would you maybe try to stagger the portfolio a little bit more with some shorter term contracts?

Peter Livanos

Okay. I think our base case is to look at the five to seven-year window as we have with the others. That's not to say that if we saw an extremely compelling rate for a shorter duration charter, we wouldn't take it.

At this point, I continue to be very, very positive about that. We are seeing a kind of an interesting dynamic as some of the projects that looked as if they were going to be there in early '13 or delaying a bit and that falls very much into a new ship being a preferred ship for the project as it has the ability to take a later ship. And, so I am actually feeling quite good about them.

Jon Chappell - Evercore Partners

And, to kind of wrap that up, what do you think the timing would be on when you would sign those contracts? Clearly, you have a long runway until they are actually delivered, but how early before the delivery would you like to have them?

Peter Livanos

I have constantly said when I have been asked that when I expect this to be done between now and the end of the first quarter of '13, and I have no reason to believe that that should be adjusted.

Jon Chappell - Evercore Partners

Okay. And then just as we look at the growth opportunities beyond the new builds and the option possible declarations, how many ships would you estimate would be ordered speculatively for 2013 and 2014 delivery and are you seeing owners who are maybe starting to figure out that, number one, the chartering of those ships isn't as easy as they thought? And then number two, associated to financing, it isn't nearly as easy as they thought they were?

Are you seeing any speculatively ordered ships coming across your desk, and I guess just the follow-up to that would be, how do you perceive financing? Any potential growth beyond what you've already locked in?

Peter Livanos

Well, since the last time we spoke, I really haven't seen any significant speculative ordered new ships. I think, it's important to note that at this point, a '13, '14 delivery is just simply not likely or not possible with the shipyards. I think it would be extraordinary if a shipyard could squeeze a birth out then simply because of the amount of time it takes to build one of these ships.

The fever of speculative orders of new entrants has died off and I think that that is as a result of some of the new players really are beginning to understand that it isn't quite that easy even in the very hot market to fix a ship without having a good solid platform. And, as a result of that, we've seen a very little fixing from these new owners. Most of it has been around existing players with good track records.

You are absolutely right to point out the debt. Debt is becoming precious, I think, in the world in general, in shipping in particular. And, although our sector had a favorable position with debt, it is certainly becoming a more selective both, in terms of who the debt is being given to and around what sort of project use the ship has, and so those two factors are taking the boil out of the speculative opportunistic orders.

Jon Chappell - Evercore Partners

Yes. I mean, I can understand how the ship can be built in that type of time period, but there were probably some orders or maybe some slots that were flipped from the LCCs or capesizes to you.

LNG carriers on a speculative basis that are scheduled to be delivered in 2013 and 2014, and I was just wondering have you seen any offers from people who figured out that they don't have the platform to operate these vessels who have deliveries already set for '13 and '14 that were maybe looking to find either a joint venture partner or looking to sell the vessel to someone who can operate it more efficiently?

Peter Livanos

Well, look. I mean, if you take '13, as sort of the year that we'll hit us very quickly there. There are about 8 to 10 speculative ships, and by that I mean ships that have not been committed. Most of those are in the hands of existing, well established players who have a particular strategy around that. Let me go no further.

The ones, who were the new entrants into this, we understand that they have been out marketing those ships, but we have not as yet seen them being preferred candidates to any of the projects we have looked at and we have seen take tonnage.

Jon Chappell - Evercore Partners

Okay. That's very helpful, and then just one last quick one. We are hearing a lot about potential crew issues as a lot of the newbuilds hit the water and these are obviously far more specialized ships than bulk carriers. How are you setting up to crew the newbuilds as they start to deliver in 2013?

Peter Livanos

We're actually quite fortunate, because we have very large fleet under management. It's allowed us to take a good long-term view of building up our officer core, and so we are very comfortable that our existing officer core and people around it will fulfill the requirements we have for the ships that we have on order and then some. We guard our crews carefully, we have a very, very high retention rate in excess of 92%, 93%, and so we have been focusing on the crew and the crew issue going back for years and so it's not something that is taking us by surprise and I think we feel we are very much on top of that.

Jon Chappell - Evercore Partners

Great. Thanks for your help, Peter.

Operator

We will now take our next question from Oyvind Berle from DNB. Please go ahead, sir.

Oyvind Berle - DNB

Good morning, gentlemen. Could you please shed some light on the possibilities in using the bond market to finance both, further dividend payouts and option declarations please?

Peter Livanos

Well, I'll turn it over to Henrik, but I might give you sort of a less granular financial view. We see the bond markets have been used very successfully and your group has done a very good job in getting some good bonds away for other ship owners, so it's certainly something that we look at as we look at a broad range of various financial structures that we may want to implement in our evolution.

I am not sure that to just simply go out and borrow money to pay a dividend is fully in line with the business model that we have. So, if we were to use the bond market will be against the growth of the company and against accretive additional projects of the business, but Henrik, do you looked at it in a more detail?

Henrik Bjerregaard

We definitely looked into that in detail, and I think what we sort of learned during those investigation is, it is definitely a tool we should have into toolbox and we've been looking into the region bonds model, we have been looking at the U.S. bonds model and what seems to be appealing about especially in the region bond market is the execution time.

And, going back to what Peter is saying, I think actually specifically the region model allows us for looking at the bond as a tool in connection with new projects and using that with execution period being potentially like three or four weeks, which is something that can be done alongside with a specific project.

Oyvind Berle - DNB

Do have any examples of new projects or?

Peter Livanos

I think that probably my legal team would jump all over me if I took that question anything more than a casual punt.

Oyvind Berle - DNB

We wouldn't want more than a casual punt then please?

Peter Livanos

There are plenty of new projects out there. All you have to do is look at the liquefaction plants that are committed to be built and make some calculations on the way the [Turner] move in. If I were going to take a stab at it, I would say on top of the current order book, we are probably going to need a good 40 or 50 ships to meet those projects.

Oyvind Berle - DNB

Well, thank you, gentlemen.

Operator

(Operator Instructions). We will now take our next question from Chris Combe from JPMorgan. Please go ahead, sir.

Nish Mani - JPMorgan

Good morning, guys. This is actually Nish Mani standing in for Chris. Just have a quick follow up question on the discussion around the purchase options and additional opportunities to acquire vessels from those with poor market positioning.

Just from a financial perspective, I mean how much scope do we have here for dividend growth if we were going to be able to exercise either the options or new transactions?

And then specifically, I guess, in taking a look at this, is it really more of a liquefaction capacity issue at Cheniere Australia, or is it debt financing and timing? I just want to get some visibility into what's driving the decision, particularly given the fact that the options expire in just a month or so?

Peter Livanos

Well, let me take the strategic side of that and I might let Henrik go into the more financial side of it. If I can understand you are sort of saying, what are the drivers of how we look at new business. Is that basically it?

Nish Mani - JPMorgan

Yes. Exactly.

Peter Livanos

It is simply around capacity increases in liquefaction and the requirement the companies tie in those projects to commit tonnage to it that we feel that we've got a pretty good competitive edge and that's where we've been executing today. So, we constantly are in contact with a number of people who are doing that.

We have a very easy dialogue back and forth on how they look at committing tonnage to those projects, so that's essentially what the driver would be for sort of the strategic growth of this as opposed to any opportunistic growth that may come from potentially the acquisition of ships that are in the hands of people who may have had the wrong decision to go into this sector in the first place and we have not. We aren't seeing any of that.

Operator

(Operator Instructions).

Peter Livanos

Well, if there are no more questions, thank you everybody for your time and for those of you who were going to enjoy, have a happy thanksgiving.

Operator

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.

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