General Maritime Corporation Q1 2009 Earnings Call Transcript

General Maritime Corporation (GMR)

Q1 2009 Earnings Call Transcript

April 30, 2009 10:00 am ET

Executives

Brian Kerr – IR

Peter Georgiopoulos – Chairman and CEO

John Tavlarios – President

Jeff Pribor – CFO

Peter Bell – Head of Commercial Operations

Analysts

John Chappell – JPMorgan

Doug Mavrinac – Jefferies & Company

Natasha Boyden – Cantor Fitzgerald

Daniel Burke – Clarkson Johnson

Charles Rupinski – Maxim Group

Rob McKenzie – FBR Capital Markets

Jeffrey Scott – Scott Asset Management

Presentation

Operator

Good morning everyone and welcome to the General Maritime Corporation conference call to discuss the Company’s 2009 first quarter earnings call. Today's call is being recorded. We will conduct a question-and-answer session after the opening remarks, and instructions will follow at that time.

A replay of the call will be accessible any time during the next two weeks by dialing 888-203-1112 for US callers and 719-457-0820 for non-US callers. To access the replay, please enter the passcode 4232207.

At this time, I would like to turn the call over to Mr. Brian Kerr. Please go ahead, sir.

Brian Kerr

Welcome, ladies and gentlemen, to the General Maritime Corporation conference call to discuss the company's 2009 first quarter results. I would like to remind everyone that this conference call is now being webcast at the company's web site, www.generalmaritimecorp.com. There are additional materials related to our earnings announcement including a slide presentation on our web site.

You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements.

For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday and the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Annual Report on Form 10-K for the year ended December 31, 2008, and in subsequent reports on Form 8-K.

All share and per share amounts discussed in this conference call, unless otherwise noted, have been adjusted to reflect the exchange of 1.34 shares of our common stock for each share of common stock held by shareholders of General Maritime subsidiary, our predecessor company, in connection with the Arlington combination.

Now I would like to introduce Mr. Peter Georgiopoulos, Chairman of General Maritime Corporation.

Peter Georgiopoulos

Thank you Brian. Good morning. Welcome to General Maritime’s earning conference call for the first quarter and 2009. With me today are John Tavlarios, President; Jeff Pribor, Chief Financial Officer; John Georgiopoulos, Chief Administrative Officer; and Peter Bell, Head of Commercial Operations.

As outlined on slide 4 of the presentation, I’ll begin today’s call by discussing the highlights of the quarter and year followed by Jeff’s review of our financial results for the three months ended March 31, 2009. Following this, I’ll provide some remarks on our company outlook and an overview of the industry. We’ll then be happy to take your questions.

I’ll begin on slide 4. During the first quarter of 2009 General Maritime posted strong financial results and once again met its quarterly dividend target, kinds of its approach for effectively operating the company due to shipping cycles has contributed to the company’s success at growing net income, during a challenging time for the oil tanker industry and the economy in general.

Specifically, during the first quarter of 2009, General Maritime benefited from its four side in securing a large percentage of its fleet on favorable time charters more than two years ago. In addition, the Company's strategic decision in 2008 to once again draw upon its strong balance sheet and acquired ten modern vessels served to further increase its time charter coverage and earnings power during critical time.

In terms of our financial performance, we recorded net income of $18.9 million or $0.35 basic and $0.34 diluted earnings per share for the first quarter compared to $12.9 million or $0.33 basic and $0.32 diluted earnings per share, for the three months ended March 31, 2008. Jeff will discuss our financial results in more detail later on the call.

We are pleased to have declared a $0.50 per share quarterly dividend for the first quarter consistent with the target we established when we consummate the oils and tankers combination in 2008. Including the first quarter 2009 dividend, General Maritime has now declared total quarterly special dividends of $29.99 per share, this equates total $1 billion in dividends being distributed to share holders since 2005.

General Maritime continues to maintain annual dividend target of $2 per share, which is supported by the company’s sizable contracted revenue stream with high-quality counterparts. Currently the General Maritime has 77% time charter coverage representing approximately $260 million in contract revenue for 2009.

Turning to slide 5, we provide a chart that details our physical time charter coverage. Currently, we have 23 vessels and one vessel equivalent under fixed time charters. This represents a 90% increase compared to our April 2008 time charter coverage. General Maritime's sizable time charter coverage enhances its position to maximize cash flow and achieve stability in results for the years ahead.

In total General Maritime has approximately $450 million in contracted revenue through 2013 putting approximately $250 million for the current year. We believe the companies strong time charter coverage is notable for its sizable contracted revenue stream and the quality of the company's charters.

Our (inaudible) the highest operational status has enabled General Maritime to develop a customer list consisting of leading major oil companies and shipping companies such as EXXON, Mobil, Lukoil, Shell (inaudible).

I now turn the call over to Jeff Pribor.

Jeff Pribor

Thank you Peter and good morning everyone. Beginning on slide 7, I would like to review our first quarter financial results. For the first quarter of 2009, excluding 500,000 in other income and $500,000 in additional expenses related to the General Maritime finance litigation the company recorded net income of $18.9 million or $0.35 basic and $0.34 diluted earnings per share for the three months ended March 31, 2009 compared to $13.4 million or $0.35 basic and $0.34 diluted EPS for the three months ended March 31, 2008, which excluded 500,000 in other laws in that period.

Other income for the quarter of a total of $500,000 included a $1 million unrealized non-cash gain associated with the change in fair value of our freight derivatives, as well as a 500,000 loss associated with a monthly cash settlement of our freight derivatives. Net income was $18.9 million or $0.35 basic and $0.34 diluted earnings per share for the three months ended March 31 compared to net income of $12.9 million or $0.33 basic and $0.32 diluted earnings per share for the three months ended March 31, 2008.

The increase in net income was principally the result of a rise in net voyage revenue as a result of the larger fleet compared with the prior year period. The analyzed revenue, if you look at net voyage revenue for vessel days referred to as time charter equipment or TCE. TCE is calculated by the volume net voyage revenue by voyage-based for the applicable time. And you'll find the total number of voyage days used in this competition in the appendix to our press release.

Turning to slide 8, we provide a first-quarter 2009 TCE analysis. Full fleet TCE including time chapters fell to $30,724 for the quarter ended March 31, 2009 compared to $34,918 for the prior year period. The TCE earned by our Suezmax vessels decreased 2.5% to $35,809 from $36,730 in the prior year.

And our Aframax vessels decreased 11.2% to $29,027 for the quarter in 2009 versus $32,705 for the prior year period. The company's total average daily spot rate decreased 24.8% to $26,445 compared to $35,191 per day in the prior year period. The spot rates driven by the company in the Aframax and Suezmax vessels for Q1 2009 were $18,848 and $27,513 respectively.

For the quarter ended March 31, 2009 EBITDA was $48.7 million compared to $33 million for the quarter ended March 31, 2008. Depreciation and amortization for the quarter was $21.9 million compared to $13.2 million last year. This increase is primarily attributable to the delivery of two after Max vessels in the Arlington fleet of vessels since the prior year period.

Our net interest expense increased to $7.9 million during this quarter compared to $6.9 million for the prior year. This increase is primarily due to increased debt deposition from the Arlington transaction offset however by lower interest rate environment.

And now I would like to talk about the balance sheet, which is detailed on page, slide 9. As of March 31, 2009 or cash position was $47.9 million and our total debt was $940.5 million. Turning to slight 10, we provided first-quarter 2009 operating expenses analysis.

To analyze expenses, we look at the cost per vessel day, which adjusts for changes in size of our fleet. Per vessel day cost is calculated by dividing total expense by the aggregate number of counter days that we owned each vessel during the period. Yearly direct vessel operating expenses increased by 2.3% to $8,230 per vessel day for the quarter ended March 31, 2009 compared to $8,049 per day in the prior year period.

The increase was attributable to higher accrued cost insurance, as well as higher cost maintenance and repair. General and administrative expenses remained flat at $11.7 million for the quarter ended March 31, 2009 compared to the prior year.

Our outlook for 2009 and the rest of 2009 is detailed on slide 11. We have not changed our estimates for daily direct vessel operating expenses. Our guidance still remains at approximately $8,150 per day for Aframax vessels and $8,200 per day for our Suezmax vessels.

These amounts represent an increase over 2008 actual expenses and attributable to increased costs experienced industry wide associated with crewing, insurance in maintenance and repair. We expect our remaining nine months of G&A for 2009 to be $28.5 million. Of this total $28.5 million, $21 million is cash expense and the balance is $7.5 million as amortization of restricted stock, which is of course a non-cash expense.

We project approximately $6.68 million in depreciation and amortization for the remaining nine months of 2009. For this period, the nine months was little less, we have six dry docks remaining at approximately 320 associated off hire days. Total costs associated with our 2009 dry docking program are anticipated to be $21.5 million with an additional $6.5 million budget for capital improvements of our fleet.

On slides 12 and 13, we provide a description of our dividend policy and our dividend history. The company has a fixed target dividend of $0.50 per quarter or $2 annually. The company intends to declare these dividends in May, August, November, and February of each year.

We are pleased to have been able to declare a dividend of $20.99 total since we first started paying dividends in May of 2005, including a one-time special dividend of $11.94 and our recently declared $0.50 dividend related to the first quarter of 2009, which is payable on May 22 to shareholders of record as of March 8.

I’d like to conclude my remarks by going through an estimated 2009 break even summary on page 16, which demonstrates General Maritime’s financial position. With our substantial time charter coverage and approximately $250 million in 2009 contracted time charter revenue, General Maritime has its favorable free cash flow and net income break even. Including our projected quarterly dividend, the company’s spot fleet would need to earn only approximately $18,000 per vessel per day in order to break even.

That concludes my remarks, now I’d like to turn the call back over to Peter Georgiopoulos.

Peter Georgiopoulos

Thank you Jeff. As we progress through 2009, we plan to remain true to a core group of guiding (inaudible) that serve the company well through diverse shipping an economic environments. An important to pointed of our prudent approach is our folks on retaining financial strength and flexibility in order to act opportunistically for shareholders.

With ample liquidity we are in a strong position to further our tradition of entering into value creating transactions and continuing to differentiate General Maritime during the time wherein credit markets remain tight. First, we will continue to seek to expand a consolidation leadership and entering to transactions that create enduring value for the company and its shareholders, as we've done in the past.

And actively pursuing this critical objective, we remain disciplined and not wavering from our proven approach of seeking future acquisitions that continue to meet strict criteria. Complementing our focus on prudently growing the company's fleet and earnings power, we remain committed to effectively redeploying General Maritime's cash flow to maximize returns to shareholders.

As part of this effort we plan to look for opportunities to repurchase shares, we believe our stock is undervalued and utilize our cash to further reduce debt. Finally, we will seek to continue the new term value by – to create near-term value by drawing upon General Maritime’s sizable contracted revenue stream and targeting $2 per share annual dividend.

Turning to slide 17, I would like to briefly discuss current market conditions. With 38% of our available the spot days booked for the second quarter, our Aframax fleet is averaging $11,000 a day. With 39% of our available spot days booked for the second quarter, our Suezmax fleet is averaging $28,000 a day. These spot days are related to the Genmar Gulf, our only spot vessel.

The remainder of the Genmar Gulf’s voyage days are booked on short term time charter for $28,000 a day. Current Aframax time charter equipment rates are below $10,000 per day. Time charter equipment rates for Suezmax tankers are around $22,000 a day range.

Turning to slide 18, we give a brief industry outlook. Notwithstanding the effect of the global recession implementation of OPEC quarter cut backs laser tankers were relatively strong in the first quarter, while the macro was down there was – where relatively few deliveries of new build tankers and so supply growth was moderate.

In addition, as a result of this sharp cut down in pricing, financial floating storage remains strong and softened the impact of the drop in front of all demand. Looking ahead to the balance of 2009, the IEA and others now predicts a decline well in global oil consumption for the year.

With estimates of the decline ranging from $1.5 million to $2.5 million barrels a day or 1.6% to 2.7%. Moreover, inventories in OECD countries have built-up to over 60 days of forward demand compared to historical average. And more optimal levels of 53 or 54 days.

This reduction in demand resulting in inventory build has contributed to the OPEC's production cuts of 4.2 million barrels per day with complied estimated at 85% for effective 3.5 million barrels per day, these cuts were in line to reduce inventories in the seasonally low demand period of Q2 should begin to reduce overall inventory levels by the second half of the year.

Further OPEC cuts will hurt the near-term outlook plus speed up the overall process of right size of the inventories. Anyhow then we believe we were reasonable to expect demand for tankers to remain low for much the balance of the year and then pick up at the end of the year or the first part of 2010.

On the supply side, 2009 is expected to be a peak year for tanker deliveries with the crude fleet expected to grow about 14% on dead way time basis, prior to scrapping. Further scrap prices are lower as a result of recession and the influx of scrapping candidates from other shipping sectors however the looming 2010 single hull restrictions and lower rate our Med sure influenced owners decisions.

In particular owners of single hull of third-generation double hulls, tankers were just scheduled for drive back in 2009 2010 and can be expected to think hard about taking those vessels out of service whether by land or scrapping as opposed to making further investments.

Eventually the factors such as gradually recovering energy demand and supply reduction may have reflected in the market and we believe that the turnaround in 2010 leading to significantly better rate environment is a very credible scenario. Most importantly for shareholders whenever the exact ship of the curve, we believe that General Maritime remains very well-positioned for significant time charter coverage in 2009 and 2010.

We believe this positions us well to maintain a strong balance sheet, pay down debt and take advantage of the acquisition opportunities, which we expect will come with the trough of the market.

We now like to open the call for questions. Hello?

Question-and-Answer-Session

Operator

(Operator instructions) We will take the first question from John Chappell with JPMorgan.

John Chappell – JPMorgan

Thank you good morning guys.

Jeff Pribor

Hi, John.

John Chappell – JPMorgan

Peter that was a pretty ugly industrial outlook you gave there at the end. I want to take that and go into two questions on asset values. First of all you spoke about how General Maritime wants to take advantage of this potential opportunity to expand or even modernize the fleet, what are you seeing as far as asset opportunities and what are you seeing as far as pricing is concerned on asset values right now?

Peter Georgiopoulos

First of all I don't think it was ugly I just thought it was realistic.

John Chappell – JPMorgan

Realistic is ugly right now.

Peter Georgiopoulos

You know I think using words like ugly, and I'm trying to be like our President, doesn't get us anywhere.

John Chappell – JPMorgan

Up here right.

John Tavlarios

Challenges.

Peter Georgiopoulos

Anyway all joking aside. Look, we think this is exactly what we've set up the company up for, we've done it many times in the past and we're going to do it again and so for us we think this is a big opportunity because we think that there are people out there who are over levered who look for that last nickel and didn't put their ships on time charters, and you know guys were a little greedy when the market was high and so we think that this will create tremendous opportunities for us. But we are receiving the couple but we've looked at, but nothing has, you know nothing materialized yet.

John Chappell – JPMorgan

And I'll ask the same question I asked on the Genco call too, is there a pretty wide disconnect right now between what sellers are willing to sell at and what buyers are willing to buy it and do you think that's going to narrow sometimes in?

Peter Georgiopoulos

I would say it hasn't gone about yet, it is not even a really discussion, but I think people are realistic about what values are. As we see in a couple of things and to be honest they have come in at numbers that weren't fall of what we would be interested in paying. So, I don't think that gulf is as wide as in the bulk carrier market. I think and they {inaudible] either, you just haven't seen you know much, they just have many deals. So, but we think we will seen a few more on the tanker side.

John Chappell – JPMorgan

Okay. And the other question on asset values and maybe this is for Jeff, as far as the actual Genco, sorry Gen. Mar. and Arlington fleets right now and your debt covenants, where do you stand with the debt covenants as far as the ability to continue to pay the dividend as asset values fall a little bit?

Jeff Pribor

We are absolutely in compliance with all the requirements of those who want to be, the General Maritime and Arlington, so no restrictions.

John Chappell – JPMorgan

Okay. Jeff one more for you and then I'll turn it over, can you just help me to get to the interest expense guidance that you put in your breakeven analysis? Given what you post in the first quarter to get to that full-year number, the quarterly interest expense has to go up about $4 million in the second quarter then stay at a high level, your debt, you know quarter and is actually lower than year end, just having a tough time getting to such a high interest expense guidance level?

Jeff Pribor

Sure let me help John. I would say the variance in this quarter versus what we used in the breakeven which took all soft guidance, previous soft guidance would be two factors, one is LIBOR has been less than the expected and that kind of probably by a million dollars and the is a non-cash effect, which is the amortization of a derivative liability with came with the Arlington transaction. It is providing just under, but it cost $2 million of benefit there that is a non-cash benefit. And those two factors, and you decide whether you want to take about LIBOR, but if everything stays the same that will stay the same through the course of the year and a non-cash adjustment it should be incorporated that would remain – until the maturity of that facility.

John Chappell – JPMorgan

So we have 10, 2 million benefit each quarter from the derivative liability amortization from Arlington?

Jeff Pribor

That is correct and as I said if LIBOR stays where it is you would also have $1 million versus what we’ve used in that slide because we were conservative in our view LIBOR for the year.

John Chappell – JPMorgan

Alright and then just to be clear one last thing, the amortization is not included in that $43 million on the breakeven side?

Jeff Pribor

That is correct

John Chappell – JPMorgan

Okay good. Thanks very much Peter and Jeff.

Peter Georgiopoulos

Thanks.

Jeff Pribor

Thanks John.

Operator

Thank you we will now hear from Doug Mavrinac with Jefferies & Company.

Doug Mavrinac – Jefferies & Company

Thank you and good morning guys just had a few follow-up questions. First, another dividend to shareholders seemingly LIBOR are now falling back on dividends?

Peter Georgiopoulos

Well start again, I have no idea what you just said.

Doug Mavrinac – Jefferies & Company

I was just commenting on the fact that you guys contributed another dividend to shareholders and seemingly everyone else is pointing back on those dividend payments, so clearly you all are able and committed to continue distributing dividends and that looks if I caution, how do you think about your dividend policy and what could cause you to potentially change it down the road?

Peter Georgiopoulos

I mean I would think about it is, you know as we’ve said in the past, we think that we are going to pay this dividend now, if something tremendous came up that we thought was a great opportunity and we need the liquidity to affect the transaction. We thought it was a, just sort of a game change here. We would look at the dividend, but otherwise I think we are very comfortable with it.

Doug Mavrinac – Jefferies & Company

Okay so basically while we are in a low growth mode trying to show cash to shareholders, but if you get back to a high growth mode then there will be cash is better served growing the company?

Peter Georgiopoulos

Right, maybe.

Doug Mavrinac – Jefferies & Company

Okay. Perfect and then second, the time charter rate and this is (inaudible) mixed market, what are time charter rates for say one and three year contracts these days.

Peter Bell

Doug good morning it is Peter Bell. It is very little actual inquiry out there and the rates for the year are certainly no more than 18 a day at this point and going out two and three years it is no higher for Aframax.

Doug Mavrinac – Jefferies & Company

Okay perfect thank you Peter. And then finally based on, you guys is personal experience or even anecdotal evidence, how would you describe the current attitude of the shipping lenders as it relates to their shipping book going forward, are there looking to shrink their book in general or are they just looking to be much more selective in extending credit?

Jeff Pribor

I think the book overall has shrunk in general because I think there are some lenders that have exited the market. I think when you talk about the people you know the sort of the DMV's in the days of the world, I think that they are there for their quality customers, you know the people that – those who had 20 years experience with had repaid their debt and behaved properly, I think that you can get money out there. I think for sort of the second and third cheers little more difficult. That being said the reason is much money out there as it was last year because there are fewer lenders.

Doug Mavrinac – Jefferies & Company

Okay perfect, great, thank you very much.

Jeff Pribor

Thanks Doug.

Operator

Thank you. We will now hear from Natasha Boyden with Cantor Fitzgerald.

Natasha Boyden – Cantor Fitzgerald

Thank you operator and good morning gentlemen.

Peter Georgiopoulos

Good morning.

Jeff Pribor

Good morning.

Natasha Boyden – Cantor Fitzgerald

Jeff couple of questions to you here you’re your Aframax daily vessel operating expenses, I think the budget you've given is $8150 per day, but this quarter I believe it was $8,841 can you just explain that this profiting to that?

Jeff Pribor

Yes this particular quarter that variance was based on maintenance and repair and insurance. So that was the reason this time, but we look at those as one-time items, which is why we iterated our guidance. So that was the variance for this time Natasha.

Natasha Boyden – Cantor Fitzgerald

Okay great, thank you. And just in general given the weakness in the Aframax spot rates lately, are you still pretty comfortable with your other level exposure in that vessel class or would you look to perhaps try and fix some of those at late state when the rates perhaps hopefully will go up?

Peter Georgiopoulos

For the night number always that effects our [ph] ships. You know consistently. So, sure the numbers we would take some late.

Natasha Boyden – Cantor Fitzgerald

Okay and maybe Peter Bell a question for you, with the Suez max trades holding up a lot better than perhaps some of the other classes, is there anyway to take advantage of that with the other vessels may be there with the VLCCs coming in and maybe trying to take those progress?

Peter Bell

Well that is the only reason why they are holding up better than the other classes because of those opportunities for cooperating haven't been there. And that's pulled some of the visa [ph] out of West Africa but those rates, Suezmax rates are under pressure as well now and they are down a little bit even this morning. So, it is kind of the reverse Natasha. If these move back into that market that premium will disappear.

Natasha Boyden – Cantor Fitzgerald

Okay, well thank you very much.

Jeff Pribor

Thank you.

Operator

We will continue onto Daniel Burke with Clarkson Johnson.

Daniel Burke – Clarkson Johnson

Good morning guys.

Jeff Pribor

Good morning.

Daniel Burke – Clarkson Johnson

Jeff a question for you, with regard to looking at opportunities here, could you kind of sketch that what you see as the purchasing power, you have at Gen. Mar. and maybe implicit in that, what amount of leverage do you think the banks are willing to let you place on the transaction or purchase transaction that presumably doesn’t come with that?

Jeff Pribor

Well we said traditionally that we have at least several hundred million dollars in the purchasing power when you combine the availability we have our own liquidity and a revolver in cash, plus you will get lending from bank's as Peter said a minute ago that there are banks out there that to their quality customers and we think we are quite of those that would have 30% loan to value, you know it is probably better, but you can just easily dis-model that and be conservative and you still get several hundred million dollars of (inaudible) without having to get any outside capital.

Daniel Burke – Clarkson Johnson

Thanks at least you had a 50% figure. I looked at the time charter explorations, it looked like for a couple of four of the Suezmax’s with either there were slight extensions and perhaps I am just looking to closely at the list, but is that a signal that you've been in any type of discussions and why would it make sense for Lukoil to be looking to extend those charters even by a couple of months given those rates against the rates we see right now in the market?

Peter Bell

This is Peter Bell. Those two month extensions were done almost at the same time the charters were concluded, negotiated and they where redundant to bring the exploration dates more evenly in line with some of the other shifts, so there is, but those extensions have been there essentially the entire time.

Daniel Burke – Clarkson Johnson

Okay I understand. I guess previously I thought they would he exercised if it had to be more clearly as though they would be exercised now.

Peter Bell

Correct.

Daniel Burke – Clarkson Johnson

And then one last question maybe, the outlook comments appropriately address the crude market, but you will carry some smart explosion of on the product side into 2010, Peter could you maybe address your outlook for the products market compared to how you feel the crude tanker sector will evolve over the next 12 to 18 months?

Peter Georgiopoulos

Product tanker sector looks to be under more pressure just given the few order book, the order book on the MR tankers is very, very heavy. Refinery utilization right now is very low, at least relatively low and the I see the product tanker market is some of the time charter rates have been hanging out, hanging in there, but the TCE’s on these ships are very, very low right now. So I see them as being under increasing pressure.

Daniel Burke – Clarkson Johnson

Alright, thanks for your comments.

Peter Georgiopoulos

Thanks

Operator

Thank you (Operator instructions) We will now hear from Charles Rupinski with Maxim Group.

Charles Rupinski – Maxim Group

Hello guys all my questions asked and answered thank you.

Peter Georgiopoulos

Thank you

Jeff Pribor

Thanks Charles.

Operator

Thank you we will go to Rob McKenzie with FBR Capital Markets.

Rob McKenzie – FBR Capital Markets

Thank you good morning guys.

Jeff Pribor

Hello.

Rob McKenzie – FBR Capital Markets

Couple of things haven't been touched on yet, can you comment on I guess Peter on potential availability of new builds at the shipyard where the contracted party may or may not be able to make the payments on them?

Peter Georgiopoulos

We think that those are opportunities that are going to come, but they haven't come yet, we think that will be more towards the end of this year.

Rob McKenzie – FBR Capital Markets

Do you think that – sorry go ahead.

Peter Georgiopoulos

But we do think those opportunities are going to come.

Rob McKenzie – FBR Capital Markets

Do you think that will be the most attractively priced opportunity or do you see a better opportunities in the second hand vessel market?

Peter Georgiopoulos

I think it is going to be case-by-case. I think it would be case-by-case, because I couldn't say which one of the thing is better at this point.

Rob McKenzie – FBR Capital Markets

Okay would that be your preferred method of growth picking up couple of ships here and there to post Arlington or would you potentially be looking to add something bigger again to the mix?

Peter Georgiopoulos

Whether we got the most value, again as we've done in the past we’ve done both, we've done in both ways. So, wherever we found the most value we would go that route.

Rob McKenzie – FBR Capital Markets

Okay that does it for me thank you.

Peter Georgiopoulos

Thank you.

Operator

(Operator instructions) Thank you. Ladies and gentlemen we will take our final question from Jeffrey Scott with Scott Asset Management.

Jeffrey Scott – Scott Asset Management

Thanks most of my questions have been asked and answered, the final one has to do with the defined litigation has not now been settled in fold?

John Tavlarios

This is John. It has been settled, we are still dealing with the course, but in general it has been settled.

Jeffrey Scott – Scott Asset Management

The size defined seems highly, can you let us know how the size of defined was actually determined?

John Tavlarios

It was just arbitrarily appointed by the court, I mean there has been much higher fines that have been levied out to some of our competitors in the past, but it is something that again was strictly just determined by the court.

Jeffrey Scott – Scott Asset Management

Is it a function of the severity of the offense or how do they get to a number?

John Tavlarios

Again that was something elective by the judge that viewed the case and it was something that obviously in the US has taken very seriously at this time, but that was the their judgment. So, I can't say it is more than anywhere else obviously you weren’t happy, but it is something we expected and we've moved on.

Jeffrey Scott – Scott Asset Management

Can you talk about how the offense happened operationally and what's in place to make sure it doesn't happen again?

John Tavlarios

Well be have had an environmental program, I would say we were one of the leaders in the industry, again we didn't fully agree with the judgment, we do not believe in the offense that took place, but the final judgment was that there was a record bookkeeping incident that there was supposing oil that was transferred from one tank to another and they believe that that was a violation as far as the record bookkeeping policy and that was what the offense was for, it wasn't for discharging oil into the water. So, on that basis the Department of Justice and the Coast Guard have been very aggressive with shipping companies and specifically in US waters on that basis that's why the judgment was against us. So, there were two whistleblowers that had a discrepancy with the chief engineer that they were working for, I think there was some personal atomicity amongst them, but you know as I said that was the final judgment whether I agree or disagree that is another story.

Jeffrey Scott – Scott Asset Management

Was there an oil discharge?

John Tavlarios

There was not. It was a record-keeping violation and on that basis that's what the fine is based on.

Jeffrey Scott – Scott Asset Management

Okay. Last question. If you were to put a round number on the value of this field without any time charter what would it be?

Peter Georgiopoulos

We don't do that.

Jeffrey Scott – Scott Asset Management

You don't do that?

Peter Georgiopoulos

No.

Jeffrey Scott – Scott Asset Management

Okay thank you very much.

Peter Georgiopoulos

Thank you.

Operator

Thank you. And I will turn the conference back over to the General Maritime Corporation Executives, please go ahead gentlemen.

Peter Georgiopoulos

Another time of uncertainty for the tanker industry and the global economy. General Maritimes significant operational financial strength should continue to serve the company and its shareholders well. With a significant part of our fleet on time charters and for all the charter parties General Maritime remains a strong position to achieve stable results.

The company also has liquidity to act opportunistically for shareholders as we seek to add additional value per transactions that meet our strict return criteria. I would like to thank everyone for participating in today’s call and look forward to providing an update in the future.

Operator

Once again ladies and gentlemen this concludes today's presentation and thank you for your participation.

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