Dynagas LNG Partners LP (NYSE:DLNG)
Q1 2016 Earnings Conference Call
May 18, 2016 10:00 AM ET
Tony Lauritzen - CEO
Michael Gregos - CFO
Steven Tittsworth - Stifel Nicolaus
Gregory Lewis - Credit Suisse
Fotis Giannakoulis - Morgan Stanley
Amit Mehrotra - Deutsche Bank
Thank you for standing by ladies and gentlemen and welcome to Dynagas LNG Partners Conference Call on the First Quarter 2016 Financial Results. We have with us Mr. Tony Lauritzen, Chief Executive Officer; and Mr. Michael Gregos, Chief Financial Officer of the company.
At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today.
At this time I would like to read the Safe Harbor statement. This conference call and the slide presentation of the webcast contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Security Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, which may affect Dynagas LNG Partners’ business prospects and results of operations. Such risks are more fully disclosed in Dynagas LNG Partners’ filings with the Securities and Exchange Commission.
And now I pass the floor to Mr. Lauritzen. Please go ahead, sir.
Good morning everyone, and thank you for joining us in our first quarter ended 31, March 2016 earnings conference call. I’m joined today by our CFO, Michael Gregos. We have issued a press release announcing our results for the said period.
Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our press release.
We are pleased to report the partnership’s earnings for the first quarter ended March 31, 2016. In particular, we’re focused on the performance of our fleet from a safety, operational and technical point of view, and we are satisfied to report that during the period, our fleet reported 100% utilization, which we believe is reflective of the quality of our fleet and our manager's operational ability.
The first quarter ended March 2016 was strong and successful in terms of concluding further business. Our fleet’s income is produced from multi-year time charter contracts with international energy companies, who pay a fixed daily rate for the chartered vessels. As the charterers also pay the majority of variable costs, such as fuel, the partnership enjoys steady and visible cash flows that are not directly linked to oil or gas prices. Going forward we will be focused on securing further contract coverage and high vessel utilization.
Turning to slide three. During the first quarter, we concluded three long-term charters and one charter extension. We entered into a long-term charter agreement for the Yenisei River and the Lena River with Yamal Trade for 15 years followed by three five year periods each. The Yenisei and Lena River charters will commence within a one year delivery window starting from January 1, 2019 and 30 June, 2019 respectively. The existing Ob River charter with Gazprom Global LNG has been extended to the second quarter 2018 and then onwards employed for 10 years from following this extension to Gazprom Marketing and Trading.
We believe the conclusion of these charters reflect the need for vessels that have the flexibility to trade in ice bound areas and as conventional carriers, our track record in providing energy shipping service and our ability to perform even in challenging markets.
On April 21, 2016 our quarterly cash distribution for the first quarter of 2016 of $0.42 in a quarter per common and subordinated unit was announced and was paid on May 12, 2016 to all unit holders of record as of May 5, 2016. The cash distribution is equal to an increase of 15.8% over the partnership's minimum quarterly distribution per unit. On April 21, 2016 the partnership further announced a cash distribution of $0.56 in a quarter per unit of its Series A preferred units for the period from February 12, 2016 until May 11, 2016.
The distribution was paid on May 12, 2016 to all unit holders of record as of May 5, 2016. Distributions on the Series A preferred units will be payable quarterly on the 12 day of February, May, August and November at an equivalent of $0.5625 per unit provided the same is declared by the partnership's Board of Directors.
I will now turn the presentation over to Michael, who will provide you with further comments to the financial results.
Thank you Tony. Turning to slide four of the presentation, I will review some recent financial highlights. It was another good quarter in which we continue to deliver positive financial results. Q1, 2016 adjusted EBITDA amounted to $35.2 million, which was a significant increase of 25.3% compared to Q1, 2015 as a result of the effect of the acquisition of six LNG carriers and Lena River in December 2015 and lower than expected vessel operating expenses.
For the quarter we owned an average number of six vessels versus five vessels in Q1, 2015 and our fleet average charter hire gross of commissions on a cash basis amounted to about $81,300 per day per vessel. Our average operating expenses amounted to about $11,600 per day per vessel which was significantly below our expectations. We do want to highlight that we do not expect daily vessel operating expenses to be so low for the coming quarters.
Our total cash flow breakeven excluding distributions amounted to about $45,300 per day per vessel. Adjusted net income for the first quarter amounted to $18.9 million or $0.48 per common unit after taking into account the Series A preferred unit's interest on the partnerships net income.
On slide five, you can see the first quarter 2016 results versus the same period of 2015. As you can see our financial performance for the quarter was significantly enhanced following the Lena River acquisition with its related time charter. Compared to the same period in 2015, adjusted net income was up 24.4% and cash available for distributions is up by 26.5%.
Moving on to slide six to discuss distributable cash flow. Cash available for distribution was $22.7 million for the first quarter as compared to $18 million for the first quarter of 2015 for the reasons mentioned before. For the first quarter we distributed $15 million to our common subordinated and general partner units emanating from the quarterly per unit cash distribution of $0.4225 and $1.7 million to our preferred unit holders which gives us a strong coverage ratio of 1.36 times. Excluding our preferred units, our distribution coverage amounts to 1.5 times.
On a steady state basis we expect our coverage ratio to be around 1.3 times for the year, including distributions to common, subordinated and preferred unit holders.
On slide seven just a few words on our capital structure and liquidity. As of March 31, we had about $80 million in cash on hand and total liquidity of about $120 million including the undrawn amounts from our revolving credit facility. As of March 31 we had $747 million in total debt, which suggests net debt to Q1 2016 EBITDA on an annualized basis of 4.7 times. Despite the challenging capital market conditions we did manage to acquire our last two drop down vessels, the Lena River and the Yenisei River without issuing any equity and as a result we have reached the higher end of our leverage targets.
Moving on to slide eight, we do not have any near term maturities since our first maturity is our $250 million unsecured note, which matures in October 2019, and thereafter our two secured facilities, which mature in late 2020 and 2021 respectively.
Moving on to slide nine, this slide outlines our cash distributions history, since we went public in November 2013. The growth in our fleet has allowed us to increase our distributions to unit holders by 16% since our first cash distribution in February 2014. Since our IPO we have paid total cash distributions to common unit holders of $3.83 per unit. We consistently pay our cash distributions to our unit holders solely from our existing fleet contract coverage. We believe our current cash distribution payout is sustainable given our current time charter contracts and basis reasonable expectations of where we expect time charter contracts will be renewed.
That wraps it up on my side. I’ll pass the presentation over to Tony.
Thank you, Michael. Let’s move on to slide 10 to summarize the partnership’s profile. The partnership’s fleet currently accounts six high-specification and versatile LNG carriers with an average age of about 5.8 years in an industry, where expected useful economic lifetime is about 35 years. Our vessels have unique features that enable them to operate as conventional LNG carriers as well as operate in ice bound areas that are restricted for conventional vessels.
We have a strong diversified customer base with leading energy companies, namely: BG Group, Gazprom and Statoil and Yamal Trade. Our contract backlog is about $1.6 billion and our average remaining charter period is about 10.3 years which compares well to our peers.
Moving on to slide 11, five out of the six vessels in our fleet have ice class 1A notation. Our fleet is fully contracted in 2016 and 88% in 2017, a time we expect the LNG shipping market to be strong due to the current ongoing construction and ramping up of new LNG production plans, measured against a perceived relatively insufficient order book combined with an existing fleet that contains a large number of under-sized and aged vessels.
Our fleet can handle conventional LNG shipping as well as operate in ice bound and sub-zero areas. This means we are able to and have been successful in pursuing business opportunities in two different markets, namely conventional shipping and the unique market for ice bound trade.
As an extension of the ability to operate in ice bound areas, we are the only company in the world with a current capability and experience in transiting LNG carriers in the Northern Sea routes, which we deem an important advantage due to the ongoing development of LNG production along this route. Based on the three long term charters we conclude that this last quarter, it has again been demonstrated our fleet’s ice class features as well as our experience in harsh environments has proven to be a strong advantage. Our multi-year fleet employment profile, first-class customer base provide solid cash flow visibility going forward.
Our charterers are performing very well on their obligations and the vessels are utilized. The contractual relationship between our customers and the vessels are on a time charter party basis. Time charter parties are very powerful contracts where the charterer pays a fixed day rates of hire to the owner regardless of the vessel is being used or not. And all major variable costs such as fuel costs are for the charterer’s account. Therefore, and coupled with our multi-year employment profile, the partnership enjoys visible and stable revenues that are not directly affected by oil or gas prices.
Let’s move to slide 12. Our potential dropdown candidates count nine LNG carriers where all of the vessels have contracts in place, amounting to a multi-billion dollar contract backlog. All dropdown candidates are high specification, ice class and winterized. Four of the vessels are of Arc-4 type 162,000 cubic meters and delivered from the yard. The remaining five vessels are Arc-7 type, 172,000 cubic meters and currently under construction at DSME in Korea for delivery in 2017 and 2019. These last five vessels are 49% owned by our sponsor and 25.5% owned each by Sinotrans and China LNG Shipping.
Let’s move to slide 14 for industry update. In a summary, the industry is in a place where the gas market is expected to grow significantly in the next decade, due to the environmentally friendly properties of natural gas. There are substantial volumes of additional LNG expected to be produced in the near term to medium term. The world's LNG carrier fleet is characterized by too few vessels to carry those incremental volumes in the long-term and there are too many old technology vessels. Also, no new orders have been placed recently.
Let’s analyze the world’s LNG fleet in detail. The current existing LNG world fleet consists of about 432 vessels and the order book counts 128 vessels totaling 560 vessels, as shown on the bar to the left. The average cargo size today is about 143,000 cubic meters. If we add up all vessels in the existing world’s fleet, with sizes below about 140,000 cubic meters, meaning well below the average cargo size, we count about 144 vessels equivalent to about 33% of existing world fleet. The average age of these undersized vessels are about 18 years.
When we compare these on average old and undersized vessels of 144 units with the order book of 128 units, we note that these aged and smaller units accounts a large number than the order book. Furthermore, 91% of the order book has already been committed to charterers. This means that there are very few new billings that may be available to facilitate the need to replace on average old and small tonnage and to carry expected incremental LNG production going forward.
Moving on to slide 15, according to the order book, most new bills will be delivered during the period 2017 and 2018, which is also a period we expect significant additional LNG production, as seen later in this presentation. We have seen a slowdown in ordering activity of LNG carriers. To our knowledge there has not been any LNG carrier ordered since Q3, 2015. There only a very few yards in the world that has the experience and capability to build LNG carriers and if one were to order today, our guess is that the yards would be able to offer tonnage for delivery 2019 at the earliest.
Let’s move to slide 16. World energy consumption has been steadily increasing over time. The largest sources of energy come from coal, oil and gas. Since decades, gas has been the fastest growing resource of those commodities. Going forward, we believe that coal and oil related consumption will be second rated to gas due to the environmentally friendly properties of gas. And therefore world’s gas production will continue to grow faster than coal and oil. It is anticipated that world energy production will increase by 10% within 2020 and by 30% within end 2035. From now until end 2035, gas with 39 production growth is by far expected to outperform growth in coal at 14% and oil at 13%. And we believe LNG will be the fastest growing large subsector of the gas industry.
Let’s move to slide 17 for some details of an outlook on LNG supply and demand. Based on current construction of new LNG production terminals, the forward sale of new LNG as well as FID taken on new LNG terminals, the next years are expected to be dominated by strong LNG production growth. It is conservatively forecasted that 137 million tons of new annual incremental LNG will come to the market between now and 2020. This represents a total increase of 55% compared to 2015.
We assume that the majority of new LNG is coming from terminals already under construction, meaning a high probability of project completion. The source of this new LNG is primarily from Australia, North America, Southeast Asia and Russia. We continue to believe that the Far East will remain large buyers going forward, and however growth may also come from European markets. We also believe we will continue to see new niche import markets such as South Asia, Middle East and South America. We believe that there are sufficient buyers for the new LNG to be absorbed.
The majority of the new LNG export volumes have sale agreements or off take agreements in place. We also believe that the existing import markets will continue to increasingly rely on LNG as a competitive and clean energy resource. When we compare an LNG supply to LNG shipping capacity available from now and forward we remain confident that the market outlook for shipping looks favorable, in particular, from 2018 onwards.
The growth in LNG production, set at 55% within 2020, is estimated to outpace increase in LNG shipping capacity set at 30% within the same period. The majority of the LNG will be delivered already within 2019 and as mentioned earlier yards can likely only deliver vessel from 2019 onwards, meaning we should expect the proceeding years to result in healthy shipping markets.
Additionally, the partnership fleet is ice classed and winterized, enabling the flexibility to pursue the best of two different markets, which has proven to be a strong advantage so far and which has enabled the partnership to transform itself from a specialist small scale medium term supplier of tonnage to become a medium sized long-term preferred supplier of specialist tonnage with tremendous tangible growth opportunities.
We have now reached the end of our presentation and I now open the floor for questions.
Thank you, sir. [Operator Instructions] Your first question today comes from the line of Ben Nolan from Stifel. Please go ahead, sir.
Hi, this is actually Steven Tittsworth in for Ben Nolan. I have a couple questions. The first one is around the vessels chartered to Yamal. There is a little bit of a gap between the initial contract ending and the contract with Yamal beginning. Does Gazprom have extension options that cover that gap period?
No, they do not. They do not have extension period that cover those gaps. So we will be focused going forward on closing those gaps. We thought as a strategy it would be clever to secure the long-term profitable and good contracts and thereafter close the smaller gaps.
Okay, that makes sense. And my next question, I know you've talked previously in the past about potentially entering the FSRU market. We are wondering if you can provide an update on those plans and if you still plan on using one of your non ice class vessels as a potential FSRU conversion candidate?
So the Clean Energy which is the candidate that you mentioned, we are still potentially contemplating to convert her into a regasification vessel and we are embarking on making all the studies and plans enabling us to do so. But at the same time we are also aware of that this vessel has proven itself a very sought after in the Pacific, for the Pacific trades basically trading intra-Pacific. And since there are substantial volumes of additional production coming from Australia going forward we will obviously look at the best of the two possibilities.
So either just contract her as a conventional LNG carrier or potentially convert her into a regas vessel.
Are you still focused on conversions which you potentially just contract the brand new build FRSU vessel?
Well on a sponsored level, we are certainly also looking at potential ordering new FRSU vessels.
Okay perfect. And my last question just has to deal with the overall increase in spot activity we're seeing for LNG carriers. Could you give us an estimate as to how you think the market is moving in terms of allowing owners to increase pricing power and how many vessels you see potentially need to leave the market in order for there to be an uplift in spot rates?
Well, as you may know Dynagas is the joint venture partner together with Gas Angola [ph] and what we call the [indiscernible], which is in particular focused on spot activity. And it is true that we have seen a pretty substantial increase in activity. We still have to wait for this to translate into an increase in rates. And we do believe that will happen as some vessels are exiting, let's say the spot markets and as new production is coming on-stream. And we see those changes, let's say happening month-by-month. We do believe that at the end of this year will look substantially different compared today when it comes to both spot activity and charter levels.
Okay, perfect. That does it for me. Thank you for your time.
Thank you very much. Your next question comes from the line of Gregory Lewis from Credit Suisse. Please go ahead sir.
Yes, thank you and good afternoon.
You mentioned potentially FSRU newbuilds at the sponsor level. Clearly it looks like there is an opportunity in the FSRU market over the next, let's say three to five year period. As you view the FSRU market, do you kind of view it more of a newbuild market, or do you think I's really going to be more an opportunity to take some of these older LNG vessels and get them out of the market. They are not as competitive as the newer vessels. And could we really see the FSRU market not be a dumping ground, that's not the right word I want to use. But I guess for a lack of better word, could that be sort of a release valve for a lot of these older LNG vessels that are currently—their days in the conventional market are just numbered given the move to ME-GI and tri-fuel diesel engines?
Well, thank you for that question. I certainly don't think that the FSRU market is a dumping place for vessels out there. First and foremost, the charterers of FSRUs will be very diligent as into what they will be chartering in. When we look at vessels that technically would be let's say available to convert into FSRUs, many, many of these vessels are old steam vessels that are very small. Let's say the average age of all of the steam vessels are probably, I take a guess here, they are probably around 130,000 cubic meters. And in our opinion to convert 130,000 cubic meter vessel into a re-gas ship into an FSRU wouldn't really cut the needs of the charterer.
Whereas for example the vessel that we have, which is the Clean Energy, which is the steam vessel and the only steam vessel that is not contracted out for long-term, well she was the largest vessel, or thereabout of her type. So she's 150,000 cubic meters and in the world there not that many vessels of that size. We think that she's a very good candidate given her size and also given her technical parameters. She has very, very big boilers and it really makes her very suitable for that kind of conversion.
So I do not think that we will see a whole lot of conversions going forward. I think that we will see conversions on the suitable vessels because it makes a lot of sense and it satisfies the need of the charterer.
Okay great. And then just another question, you mentioned on your longer term outlook that the market looks like it's going to be short of vessels. As we stand here and what the summer of 2016, if we wanted to place orders for newbuild LNG vessels, and it doesn't look like there has been one placed, since I don't know, October of last year. If we were to want to order one of these at a shipyard today, what type of turnaround time do we think we could get from getting the engine, getting the unit built and taking delivery of it?
Yeah, you're probably looking at 2019. I mean according to our inquiries and we see 2019.
Okay great. Okay guys, hey thank you very much for the time and have a great day.
Thank you very much.
Thank you very much. Your next question comes from the line of [indiscernible] from Stifel. Please go ahead
Hi good morning and congratulation on those long-term contracts. Just wondering, so the two vessels now that you have that do not have any long-term contracts, the Clean Energy and Arctic Aurora, anything you could tell us in terms of what you're thinking about those and are you in active discussions with current or new customers about long term contracts or you're trying to space out the signing of these types of contracts to maybe holding off until later on in this year or next year on those vessels?
Yeah, so when it comes to those two vessels specifically, I mean I think we just discussed the Clean Energy at length. We said that we will pursue in parallel both traditional charters and the conversion into FSRU. And when it comes to the Arctic Aurora she's on to Statoil. And Statoil has a revolving option on her that they have to declare at some point later this year. So it wouldn't make sense for us to go out and try to entertain discussions on the vessels that we potentially wouldn't be able to follow through.
And also we know that the vessel has been performing extremely well for the charterer. So I think that we will, we'll leave it for later this year to comment on what the charterer intends to do here. But I mean clearly, there is a need to continue transporting those volumes.
Okay, great, understood. And then just one other questions, of the two vessels the Lena River and Yenisei that are currently in to Gazprom that will convert over to Yamal in 2019, was that more an indication of just Yamal's strong interest and need for vessels versus Gazprom pulling back from the company or the industry or was it just like the healthy competition between the current and the new customer and you decide to go with Yamal as you have with a number of other vessels up at the parent.
Well, it was certainly not a result of Gazprom pulling away from the company. I mean as you're seeing in parallel we have done two other long-term extensions with Gazprom. So clearly the companies are working close together and the cooperation is going very well, and we wish to do more business together. When it comes to why did the vessel change hands, well, it was more of a discussion on that, Dynagas LNG partners and on a sponsor levels is really becoming a large scale shipping provider to Yamal LNG, and since they needed several units to support their shipping needs these vessels also then came in to discussion.
Great, thank you.
Thank you. Your next question comes from the line of Fotis Giannakoulis from Morgan Stanley. Please go ahead.
Yes. Hi Tony, and congratulations for the good quarter. Tony, I want to ask, what is this phrase that you have in your press release regarding the conditions of the second TC [ph] vessels that there are still have to be met? Are there any - is there any risk in this contracts what are the subject that you are mentioning?
Well, thank you Fotis. Good to hear from you. So yes on the Yenisei River there is a condition related to, let's say the bilateral performance of other shipping activities that our sponsors affiliates are providing to Yamal LNG. We don't - I mean we believe that these conditions will be met going forward.
So this is something that is in your hand. It's not an external factor that might be impact this contract. Is that correct?
Well, it is a - let's say, it is a bilateral condition. So yes part of it is in our hand and part of it is also outside our control. But that being said we believe that these conditions will be met.
Okay. Thank you, Tony. And regarding the potential conversion of the Clean Energy, I assume that any conversion will be after you have won an award for a specific project. It's not going to be a speculation. If you can confirm that and also during the time of the conversions how do you think of dealing with a cash flow that the vessel will not be generating? And I'm asking because an MLP and usually doesn't - it doesn't have vessel which are under contraction or under conversion. Will the sponsor be able to step in and provide for this lost cash flow?
Thank you. So yes, I think it's reasonable to believe that a potential conversion will be done against the contract. Potentially on a sponsor level somewhere some long lead items may be ordered in advance in order to shorten the time to market. When it comes to the way that we will manage the cash flow, this is still something that we are looking into and we haven't concluded let's say, or how to deal with it yet.
And in the event that we do not have a conversion, for these two vessels that they are open, that they are going to be come up in the next couple of years. What is the rate that you think that you need to get in order to maintain your current distribution or at least not to put your current distribution at risk and also you have more vessels at the sponsors level and they come, they are drop down candidates. I understand that you have been reluctant to issue equity during the recent turmoil. But it seems that the MLP valuations they have improved. How are you going to think about doing additional drop down, which means obviously issuing new equity?
Well, Fotis, before I let Michael comment on it, let me just say one thing is that there is only one vessel that potentially becomes open, and that would be subject to conversion into FSRU and that's the Clean Energy. The other vessel which is the Arctic Aurora, it's a DST ice class vessel and we do not see the need or the reason for converting her into an FSRU. We believe she has a good home. It's not (inaudible) going forward and if not there are plenty of other takers we believe that would be interested in that vessel. So as I said that before, I leave it to Michael. Thank you.
Hi, Fotis. I mean yes you are right. We think the company's costs of equity obviously has come down significantly in the recent weeks. There have signs that the MLP sector has been - has shown signs of stability.
I mean all I can say is that we’re monitoring the situation in terms of future drop downs. We’re not exactly where we would like to be yet. But we’re headed in the right direction and the cost of equity is extremely important for future drop down, since we cannot do drop downs which are majority debt financed anymore.
Okay thank you very much, gentlemen. Thank you Michael, thank you Tony.
Thank you. Our next question comes from the line of Amit Mehrotra from Deutsche Bank. Please go ahead.
Yeah, guys. Congrats on the recent spurt of announcements. What a difference couple of months makes. I hopped on a little late, not sure this was asked, but wanted to ask you on sort of your very recent position on the distribution growth strategy. I mean clearly it made sense at the time, at the end of March given what the yield was at that time. But as you just mentioned Michael with units basically up 50% since then your yield is much more reasonable. So how do you think about that Tony, Michael or if you could maybe even help - just give us some view and could we see some pivot back to a distribution growth strategy at least on back of the delivery in December? Thanks.
Yeah, no, hi that’s a good question. I mean obviously we’re looking what’s going on in the market. For the Lena River we eventually did not increase distribution because I don’t think anyone expected us to increase the distribution given what - where our units are trading. I don’t think we would get any benefit out of it. So it’s something we’re monitoring. It really depends on how the market values us. Obviously a lot has happened over the past couple of weeks or months in terms of positive developments for the company. We hope the market comes to recognize this. There will come a point where the distribution growth will be rewarded and when that time comes we’ll be there.
Okay, yes, that’s fair. And then just one follow up on the numbers here, with respect to the coverage in the quarter. Obviously you saw that spike I guess a little over 1.35 times which makes sense. But just wanted to ask you hypothetically if we were to pull forward the rates, the new rates on the three recent employment announcements, all else equal and I understand that there are just a lot of moving parts here. But all else equal just trying to understand what that coverage pro forma would be so we can get a sense of the new earnings path of the assets and if they were done at reasonably consistent rates as what they were they are currently employed on?
Yeah, I mean that’s not a question that I can answer over a conference call. That’s quite a question which requires a lot of discussion and background…
Is it over one time, is it over one times, I mean is that you can talk about that at least.
Okay, great and one market related question. I think it might have been covered earlier. I'm not sure, but obviously with all this new liquefaction capacity that's coming online could drive I would think some shifts in the trading routes of LNG and closer potential liquefaction capacity closer to consumer regions and whether that could essentially drive an overall shortening of the trade routes and trying to understand in your view what kind of impact that could have on the spot market, maybe structurally impair it or not and also what impact if any could that have on the long term time charter market? Thanks.
Well, thank you for that question. So the imminent incremental production is coming from Australia. And we were originally expecting all that LNG just to stay in the region and go off to Japan, Korea and China going forward since China is always a growth market. Well that being said I think that we’ll see those volumes going elsewhere as well. I think we’ll see lot of those volumes going into Pakistan, maybe into the Middle East and other niche markets going forward.
So we see a lot of new markets are being developed and created as production is coming. So I think that - also that, as I said the spot market is growing. It takes a bit longer time for the new LNG to be placed with buyers and so I think overtime we will see an increase in ton miles compared to what we have just now.
Okay, interesting. Okay, that’s all I had guys. Congrats I hope in three quarters we’ll be talking about another 40%, 50% rise in the stock price, appreciate it. Good luck.
Thank you very much. We have no further questions at this time. Please continue.
So thank you for your time today and for listening in in our earnings call. We look forward to speak with you again on our next call. Thank you very much.
Thank you. That does conclude our conference call today. Thank you everyone for participating. You may now disconnect.
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