GasLog Partners LP (GLOP) CEO Andrew Orekar on Q2 2018 Results - Earnings Call Transcript

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About: GasLog Partners LP (GLOP)
by: SA Transcripts

GasLog Partners LP (NYSE:GLOP) Q2 2018 Earnings Conference Call July 26, 2018 8:30 AM ET

Executives

Joseph Nelson - Deputy Head of Investor Relations

Andrew Orekar - Chief Executive Officer

Alastair Maxwell - Chief Financial Officer

Analysts

Gregory Lewis - BTIG

Christian Wetherbee - Citigroup

Fotis Giannakoulis - Morgan Stanley

Ben Nolan - Stifel

Noah Parquette - JP Morgan

Randy Giveans - Jefferies

Hillary Cacanando - Wells Fargo

Operator

Good morning. My name is Brian and I will be your conference operator today. At this time, I would like to welcome everyone to GasLog Partners Second Quarter 2018 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.

Today's speakers are Andy Orekar, Chief Executive Officer, Alastair Maxwell, Chief Financial Officer; and to commence the call, Joseph Nelson, Deputy Head of Investor Relations. Mr. Nelson, you may begin your conference.

Joseph Nelson

Good morning and thank you for joining GasLog Partners’ second quarter 2018 earnings conference call. For your convenience, this call, webcast and presentation are available on the Investor Relations section of our website, www.gaslogmlp.com where a replay will also be available.

Please now turn to Slide 2 of the presentation. Many of our remarks contain forward-looking statements. For factors that could cause actual results to differ materially from these forward-looking statements, please refer to our second quarter earnings press release. In addition, some of our remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these is included in the appendix of this presentation.

I will now hand over to Andy Orekar, CEO of GasLog Partners.

Andrew Orekar

Thank you, Joe. Good morning and thanks to everyone for joining GasLog Partners second quarter earnings call.

I will begin today's call with our highlights for the quarter. Our CFO, Alastair Maxwell, will follow with a review of our financial performance and drop-down pipeline. After which, I will conclude with an update on the LNG and LNG shipping markets and our distribution growth outlook. Following our presentation, we would be very happy to take any questions you may have.

Turning to Slide 3 you can see our highlights. In the second quarter, we closed our accretive acquisition of the GasLog Gibraltar and attached multi-year charter Shell for $207 million. The drop-down was partially funded by the issuance of $45 million of new common units to our parent and GP sponsor GasLog Limited.

We completed the dry-dockings of the GasLog Santiago and the GasLog Sydney, which included the installation of reliquefaction modules on both vessels. Ahead of that are commencing new charters later this year. The dry-dockings were completed on-time and on-budget and the reliquefaction unit should improve the future marketability of both vessels.

During the quarter, we successfully re-chartered the GasLog Sydney for 18 months to Cheniere. This charter agreement is the partnership’s second multi-year charter award this year, with a new, high-quality counterparty and increases our contracted days to 91% in both 2018 and 2019.

Our Partnership performance results for revenue, EBITDA and profit delivered annual growth of approximately 20%, 18% and 18% respectively. With further distribution a $0.53 per unit for the second quarter or $2.12 on an annualized basis, which is unchanged from the first quarter and represents approximately 4% growth over the second quarter of 2017.

Our distribution coverage for the quarter was 0.94 times due to the scheduled dry-dockings of the GasLog Santiago and the GasLog Sydney. That increases to 1.18 times when adjusted for the days when those two vessels were up higher.

Lastly the current liquidity available to fund our next acquisition and the GasLog Shanghai’s both the anticipated strength in the spot market, today we are reiterating our 5% to 7% distribution growth guidance for 2018.

With that as an introduction, I will now hand it over to Alastair to take you through our financials.

Alastair Maxwell

Thank you, Andy and good morning to everyone. I’m delighted to report another solid quarter in terms of the operational and financial performance of our partnership.

Please turn to Slide 4. In the second quarter of 2018, we achieved strong quarterly partnership performance results for revenues and EBITDA both metrics showed substantial increases over Q2, 2017 due to acquisition of GasLog Greece, the GasLog Geneva, the Solaris and the GasLog Gibraltar. All of which were increasing to our distributable cash flows and to our distribution per unit.

Andy has already mentioned the fact that our coverage ratio in Q2 was impacted by the extended drive of the use of the GasLog Santiago and the GasLog Sydney and would have been 1.18 times based on distributable cash flow adjusted for the dry-dockings.

Looking forward, the dry-docking of the GasLog Seattle is scheduled to commence in the fourth quarter. Although this is a regular dry-docking closely by the 30 days and it will be no incremental CapEx.

In addition, we are not exposed with the spot markets through the GasLog Shanghai, which has been trading in the Cool Pool and so until redelivery from Shell in May. While we are optimistic about the outlook for the LNG shipping spot market over the next 18 to 24 months, we also expect there will be interesting opportunities to find longer term employment for the vessels in the current environment.

Moving to Slide 5. We - additional information on the accounting treatment of vessels trading in the Cool Pool. To GasLog Partners this refers only for the GasLog Shanghai. This has been included in the financial statements the GasLog and the GasLog Partners this year for the first time due to new rule of [indiscernible] pool and disclose all revenue applicable from January 2018.

The first line in the table shows the direct revenue from the GasLog Shanghai since we enter the Cool Pool on May 18, which are included within the revenue line. As a result, Shanghai retreated at the Cool Pool for 44 days in the quarter. Similarly voyage expenses and commissions for the GasLog Shanghai are included within the overall peak voyage expenses and commission in our P&L.

The net pool allocation represents the adjustments made by the Cool Pool to ensure dual participants received the same net results based on the revenue and cost sharing accounting as a pooling arrangement. This figure can vary significantly depending on which vessels OpEx and for what voyages during any given quarter. The total net results on this table is effectively net contribution from the GasLog Shanghai, during the period in which she was trading in the Cool Pool.

Turning to Slide 6. Well some of the financial impact of the recent dry-docking. During our last call, we noted that the scheduled dry-docking of the GasLog Santiago and the GasLog Sydney were likely to results in a coverage ratio less than one during the second quarter and it proved to be the case.

As a reminder, dry-docking are required every five during with routine maintenance for ships that performed and then special surveys to undertake them. A typical dry-docking balance is approximately 30 days and we look forward to no revenue in the vessel during the period. But, we do have incremental operating expenses.

In addition, we are still greedy for fashion modules on both the capital [indiscernible] Atlantic and for Sydney during the dry-dockings which I have the east vessel book value and market value and which required an incremental six to ten days over the regular driver of these vessels.

There is a total of hires 76 days but only during second quarter. As you can see from the chart on the right, the total impact of the two dry-dockings during the quarter was 0.24 times. As previously noted, we expect to maintain the regular dry-docking began in Seattle see later in the fourth quarter and we anticipate that the associated 30 days of our hire will impact our distribution coverage accordingly.

Turning to Slide 7, the financial position of the partnership. As can be seen on the top chart, we have repaid approximately $250 million in debt since Q1 2017 including the $90 million of the junior transfer and the five vessel or refinancing facility as well as $60 million in the Company debt on top of our scheduled observation payment. This represents well over one time our EBITDA over the last four quarters.

On June 30, 2018 a net of the $250 million of debt reduction, we had total available liquidity including the revolver capacity of $204 million. After adjusting for the remaining $16 million to be paid for the reasonable perfection module installed on the GasLog Santiago and the GasLog Sydney. We have total remaining liquidity of $187 million. With these recite our leverage is still moderate with 51.2% of total cap and our reported net debt to EBITDA is 4.9 times.

However, if we adjust for the two scheduled dry-docking during the second quarter as well as the full quarter contribution from the acquisition of the GasLog Gibraltar. Our net debt to EBITDA declined to 4.3 times. Our strong liquidity position and growing debt capacity maybe well producing to fund future growth.

Turning to Slide 8. We will discuss the recent developments within our fleet. The top chart on this slide shows that 13 vessels comprising the partnership fleet today. GasLog Partners recently announced a new 18 month charter with [indiscernible] GasLog Sydney, the new charter is schedule to connect later this year and the Sydney will have limited all time prior to the start of our new charter of this year redelivered from Shell.

In addition, [indiscernible] has also extend the charter by offering additional programs at escalating rates. Largely, when considering the new charter for the GasLog Sydney, Virginia our total contracted revenue days increased to $0.91 in both 2018 and 2019.

Turning to Slide 9. We will discuss our future growth opportunities, the full power shows the 11 vessels on multi-year charter owned by our parent capital [indiscernible] together the charter period ranges from 2018 to 2029 and represent over $200 million in total annual EBITDA.

These vessels provide visible future growth opportunities for GasLog Partners and will contribute positively to the average charter length of our fleet as well as to our distributable cash flows. Most recently, our parent GasLog Limited ordered a new 180,000 cubic meter carrier with [HDF] (Ph) proportion at Samsung, secured by new seven year charter with Centrica.

This is our parent second new-build charter award with Centrica and further extends the drop down pipeline for GasLog Partners. The charter is expected to commence in 2020 and we are excited to be expanding our relationship with another high quality time counterparty.

With that ,I will turn it back to Andy to discuss the outlook for the LNG commodity and LNG shipping markets.

Andrew Orekar

Thank you, Alastair. Turning on Slide 10, which shows the new LNG supply coming online. This year approximately 30 million tonnes of new liquefaction capacity is scheduled to start up, an increase of 9% over 2017. Projects expected to commence production later this year include the Yamal Train 2, Ichthys and Prelude LNG.

In 2019, an additional 48 million tonnes of new LNG capacity is scheduled to come online, including initial trains of large projects such as Corpus Christi, Cameroon and Freeport, which are expected to have a significant impact on tonne miles as more cab is exported from the U.S.

Further ahead, there is approximately 18 million tonnes of new capacity scheduled to start production in 2020 through 2022, including Train 3 at Corpus which took FID in the second quarter.

In terms of future supply of LNG, according to Wood Mackenzie, there is at least 125 million tonnes potential incremental capacity estimated to have a breakeven of less than $10 per mmBTU. Our price level of historically stimulated demand for long-term LNG supply contracts.

Turning to Slide 11, and trends in LNG demand. This slide shows the increasing import by country on a trailing 12 month basis. LNG demand grew by 30 million tonnes over the 12 months period ending June, an increase of 9%. China posted the largest increase in absolute volumes importing over 15 million tonnes more LNG, or increase of 50% as the country’s Central Government continues to implement its policies of increasing natural gas usage as a percentage of the overall energy mix.

While Chinese demand has been strong, LNG growth has been broad-based, particularly in Asia, as demand from Pakistan, India, South Korea and Taiwan has grown by a combined 12% year-over-year or approximately 9 million tonnes.

Turning to Slide 12, and the future outlook for LNG demand. This slide talks the current demand growth projections from major market participants, consultancies and investment banks. Taking together, the average of these forecasts delivers compound annual demand growth of 6% in the 2017 to 2025 period, with the balancing point between supply and demand occurring soon as the early 2020.

More specifically, Wood Mackenzie estimates an additional 65 million tonnes of new LNG supply over and above what is currently under construction will be needed meet local demand by 2025. With construction lead times of at least three to five years for new liquefaction plant, final investment decisions for additional capacity will be needed over the coming 18 months to meet this projected demand growth.

Turning to Slide 13, where we discussed how this impacts the supply and demand balance for LNG carriers. This slide illustrates our view of shipping supply and demands through 2025 based on Wood Mackenzie and Poten data.

The shaded area represents low and high vessel demand scenarios based on Wood Mackenzie LNG demand growth projection in a range of 1.5 to 1.7 ships required per 1 million tonnes of U.S. volumes and 1.3 to 1.4 ships required for non-U.S. volumes.

The solid dark blue line shows vessel supply based on ships on the water today and the current order book with no assumptions made for scrapping or FSRU conversion. The dotted dark blue line represents a scenario where all older vessels built before 2000 and without charters are either laid up or scrapped.

Based on these scenarios, there is expected to be a shortfall between 28 to 56 vessels by the end of 2022, demonstrating the recent new orders will be deprived by the market. The shortfall by 2025 has increases between 105 to 137 vessels, in line with Wood Mackenzie’s most recent LNG demand forecast.

However, it is very important to remember that an absolute shortage of ship is not required for our market to be strong. When fleet utilization rise above 80% to 85%, freight rates and cash flow improved considerably. In summary, we continue to believe the LNG and shipping market when we incremental in vessels over the next three to five years.

Turning to Slide 14 now were we discuss the supply of LNG carriers. According to data from Potent, there are approximately 85 carriers on order today, nearly 70% of which are backed by long-term charters. When taking into consideration, deliveries schedule for 2018 and 2019, we expect the order book as a percentage of fleet to decline to 7% by the end of next year a low level by four of our patterns.

It takes between 2.5 and three years to construct an LNG carrier, meaning a vessel order today will have an earlier possible delivery date of 2021. With this visible to supply outlook we expect the LNG shipping market to continue to strengthen in 2019 and 2020.

Turning to Slide 15 where we look at recent spot market developments. This slide shows the development of TFDE spot rates from the period beginning in 2000 through today and highlights the year 2016, 2017 and 2018, as well as the peak years of 2011 through 2014. As can be seen in the chart spot rates have increased dramatically since the beginning of May, now reporting headlines TFDE rates of $75,000 per day an increase of 86% over this time last year.

The sharp increase in sport rates was followed by an increase in spot fixing activity, which continue to rise in the second quarter of 2018. As can be seen in the table on the upper right, a 110 spot fixtures reported during the quarter, representing a 41% increase year-over-year and a 57% increase over the first quarter.

Fixing activity was supported by a combination of the cooling season in the Northern Hemisphere, eating season in Southern Hemisphere, increasing LNG production capacity and charter is seeking to fill shipping requirements and anticipation is strong like our demand, particularly in Asia.

While GasLog Partners only exposure to the spot market through the GasLog Shanghai, we are encourage by the recent positive developments in the LNG shipping market.

Turning to Slide 16, and a recap of our growth track record and distribution guidance. You can see on the far left panel, we have now grown our cash distribution by a 9% compound annual rate since IPO. Today, we are maintaining our quarterly distribution at $0.53 per unit or $2.12 annualized, which represents an approximately 4% increase on a year-over-year basis.

As shown on the far right panel of slides, we are reiterating our guidance of 5% to 7% year-on-year distribution growth for 2018. This guidance is supported by our recent rechartering of the GasLog Santiago and GasLog Sydney, our accretive acquisition of the GasLog Gibraltar and the GasLog Shanghai trading in a strengthen in spot markets while also reflecting our one additional scheduled dry-docking commencing in the fourth quarter.

Now turning to Slide 17. In summary, in the second quarter of this year GasLog Partners continue to execute its growth strategy. Securing a new multi-year employment for the GasLog Sydney with Cheniere and completing our 10th accretive vessel drop down since IPO. Despite statutory impact to our coverage ratio in the second quarter we were able to maintain our distribution while improving our fleet’s future marketability.

Following our recent acquisition in new Charter agreement, we continue to believe 5% to 7% growth is an achievable target for 2018 and we had not further equity funding requirements for our next acquisition.

Finally, looking longer term, continued progress of new liquefaction and strong LNG demand should result in continued strength in LNG shipping rates.

With that I would like to open it up for Q&A. Operator could you please open the call for any questions.

Question-and-Answer Session

Operator

My pleasure sir. [Operator Instructions] and our first question comes from the line of Greg Lewis with BTIG. Your line is now open.

Gregory Lewis

Yes, thank you and good morning.

Andrew Orekar

Hi Greg good morning.

Gregory Lewis

Andy, I mean you have a Shanghai trading in the Cool Pool, you know clearly we have seen a little bit of an uptick in rates. As you think about the strategy for that vessel, and really what I’m getting that is, what kind of developments are we seeing in the time charter market. Are we seeing with the uptick in rates, are we seeing a resurgence in that market, are rates moving higher, are we seeing duration for vessels in the time charter market picking up?

Andrew Orekar

Yes, Greg I think you summarized it well. I think with the pickup in spot rate that is really the gap for slot winter and it continues here in 2018, we have seen at the increased enquiries for multi loans and multiyear charters and we and our partners have done pretty much exactly what we said we would do which was try to address our free exposures this year relatively early and provide more guidance on cash flow to our MLP investors.

So beginning with San Diego and now with Sydney we have been able to agree a few multi-year deals here that the Sydney rates being higher than the San Diego and our hope is that for Shanghai that trend can continue. But the strength in the spot market has led to increased enquiry for term business that we are hoping to take advantage of that.

Gregory Lewis

Okay, and is there any lead times to move Shanghai from the Cool Pool to the time charter, I mean is that something that could be actively been looked at now or since it just was contributed have to kind of stick around with Cool Pool for a little while?

Alastair Maxwell

Greg its Alastair here. So the answer is we can remove the vessel effectively with no issues, the messy one is on the short-term charter within the [indiscernible] you would need to complete that charter. But something to that, we can play that right with very little notice.

Gregory Lewis

Okay, great and then just one more from me. Just if we were to look back historically when we have seen FIDs come to market, you know based on some of your comments, it seems like that is where you believe the market is heading. From time we see FID, when do these projects and typically start to look to contract down vessels?

Andrew Orekar

It basically depends, typically the off takers tend to move more quickly because they understand their economics for that specific project for people like [indiscernible] and others who are keeping marketing volumes. They tend to play a little closer to that and wait until its closer to the gap actually being on the water you know I think a lead time of 12 to 18 months through those types of volumes is not uncommon and as I said is the large uptick has typically moved well in advance of that. So it really depends on project, but again the people taking more risk tend to move sooner.

Gregory Lewis

Perfect guys, thanks for the time.

Andrew Orekar

Thanks.

Operator

Thank you. And our next question will come from the line of Chris Wetherbee with Citigroup. Your line is now open.

Christian Wetherbee

Hey thanks and good morning guys. Hey Andy, I just want to ask I guess thought on the distribution 5% to 7% distribution 5% to 7% appreciate the reiteration there. You have had another drive out coming up in the fourth quarter, should we assume that maybe the lower end is probably the right way to think about it. Are you sort of that maybe that is just not the right way to think about it, even though your coverage ratio will be impacted by those dry dockings. I just want to get some color within that and sort of how do you think about the cadence?

Andrew Orekar

Sure. So as I said, we do have another dry-docking later this year. As Alastair mentioned in his remarks that it does not involve the installation of a reliquefaction module. So it will be a shorter dry-docking. And the timing of that is scheduled to commence in the fourth quarter at this time.

I think with our guidance generally our view is - I think like most MLPs we feel like we are not getting quite full value from the growth that we are delivering and providing guidance for. And so, I think in that case, we are probably more likely to be conservative within the range we have given rather than say the top end or exceeding it.

But it does depend on the activity for the rest of the year and how well the Shanghai does in the spot market and another acquisition is being complete. So still very comfortable with that guidance, but again I think the top end would be more subject to a tailwind in the MLP market and really more direct value being given for growth that has been achieved.

Christian Wetherbee

Okay, okay. That makes sense and that is helpful. When you think about it, you sort of lead me to my next question which is sort of the drop-down pipeline and how you think about timing and sort of the appetite here, obviously no new equity funding requirements at this level or at this point. How do you think about sort of the back half of the year and the potential for an incremental drop-down before year end?

Andrew Orekar

Sure. So I think if you have obviously followed us since the beginning, I think our history has been about one drop-down every six months or two per year and I think this year wouldn’t expect anything different from that cadence. So I would expect us to complete another drop-down before year end and hopefully can do so here before the fourth quarter.

Christian Wetherbee

Before the fourth quarter, okay. Okay. That is helpful. And then I just wanted to come back to the conversation you are just having on the Shanghai, I want make sure I sort of understand your preference given the model of GasLog Partners. Do you want the Shanghai to be in the Cool Pool or would be the preference to sign something with term?

Andrew Orekar

I think it’s a balance really, I mean we have gone from a market where multi-months and multi-year deals were quite hard to come by, certainly hard to come by at rates that we found attractive to a market where they are a bit more prevalent and at the same time we are in a spot market that has every sign of being strong for the end of the year.

So I think we really took action on our first two exposures, really wanted to take some of the uncertainty away from those cash flows over the next several years and I think we can afford to be a bit more patient on the Shanghai.

So right now I think as an MLP our preference is always to be able to provide more visibility, but with the fleet of 13 ships, having one in the spot market is not necessarily a bad thing.

Christian Wetherbee

Okay. That’s helpful. Thanks for your time, I appreciate it.

Operator

Thank you. And our next question will come from the line of Fotis Giannakoulis with Morgan Stanley. Your line is now open.

Fotis Giannakoulis

Yes. Hi, gentlemen. Thank you. I want to follow-up on the Shanghai and some of the vessels that they come out of their existing contracts in the future, are there any sorts of potentially funding some of the drop-downs with vessel swaps, vessels really do not have a contract like this, Shanghai with vessel that they have contracts that they are held by the parent?

Andrew Orekar

Hi, Fotis, it’s Andy. I think from the outset, we have had a very supportive general partner who I think has been nothing, it’s not creative in ways to think about value for both GT and the LT, I think most recently you have seen that with our apparent taking unit to partially from the [indiscernible] drop down.

So I think we have the good fortune of having not only a three to 13 ships with prolong contract, but up to 10 more ships at the parent who have charter of a year plus and obviously many have charter that are much longer than that.

So I think we have the ability to be creative around future growth, I would say today given our ability to raise capital and given the needs of the business. I think we don’t necessarily need to pursue a transaction like you did described. But again, I think there is a lot of creativity and alignment and value creation for both the parent and the LT. So I guess it could be a possibility in the future.

Fotis Giannakoulis

Thank you Andy. And jumping a little bit to the market, there is a lot of discussion in the last few weeks and months about trade barriers about the pension between U.S. and China have you seen any impact of this pension for the LNG market and the Chinese purchasing we have seen year-to-date that the growth in the Chinese month is spectacular, but I’m wondering if you see any implications on the contracting activities the space and the potential impact on future FIDs for U.S. companies?

Andrew Orekar

Sure, I mean at the outset I would want to give the caveat that is - we recently don’t have any differentiated insights into trade negotiations between the U.S. and China. But would note that China has not include the U.S. export of LNG on its proposed tariff and of course given the demand trends you have mentioned making LNG more expensive for them when they are increasing imports 50% type basis is making up the first thing they would do.

But even if they were to do that, that I don’t think their demand is going to reverse course based on whether or not the LNG comes from the states or elsewhere and so there should be enough liquidity in the LNG market to allow for progress lost if tariffs on U.S. LNG were enacted, but I think their demand will continue.

Clearly if not the top in the press is not helpful for U.S. LNG, but to-date we haven’t seen any significant impact on the demand for LNG or our shift as a result of what we are all reading in the news papers.

Fotis Giannakoulis

Thank you Andy. One last question about vessel supply. I’m wondering these vessels that they can potentially be scrapped, are they currently fully utilized, are they serving contracts and also if you can talk to us about the potential increase in the order book. What is the capacity of the CPR how many CPR they are active right now in receiving orders. How many orders can we see every year and who are the potential companies that they can place these orders, companies which have the interest in placing orders and the financial capability.

Andrew Orekar

Okay, I think that was about four questions there. First I will try to go through them, and if I missed one let me know. Maybe starting at the backend, most of the industry outside Japan is serviced by the three large Korean shipyards and at the peak of the market, you know I think our peak year is still about 55 to 65. I think a great deal of that capacity has come out today and I would expect going forward that number to be lower than that.

And today as you heard from us in our prepared remarks to really get a shift now if the order now is going to be early 2021 at that. So I think that the outlook for these next several years is quite clear and I think that the folks who are placing orders are - what you expect - that people like [indiscernible] were typically trying to put something at the long-term charters.

There has been a few orders that are from uncommitted vessels, but given the strength of the market we are describing I think many if not all those vessels will be put on charter by the time they deliver.

And so you know order book today has 85 ship to this and nearly three quarters of that are on long-term charters. So I think that trend which has been the case in LNG for long-time I think that will continue. Sorry, what was the first part of your question again?

Fotis Giannakoulis

The other part was about the potential scrapping yes, and if you could - some of the vessels.

Andrew Orekar

Yes. So today I don’t have the exact figure to hand it of which vessel gets scrapped when they end our charters, but there are a number of older vessels you know built for 2000 that are still operating our long-term charters and will end a 20 year charter and probably will travel to compete.

There also are about 20 vessels that are laid up that have not somehow laid up and might be potential scrapping candidates. They haven’t come out lay up in last winter and this sort of fall in winter it maybe a sum that they will never come out of lab.

So unlike other shipping markets we have not seen a active scrapping efforts take capacity out of the market. You know one or two ships a year has kind of been the average in recent year, so we are hopeful that that as this market matures becomes more of a future of the supply.

Fotis Giannakoulis

Thank you very much Andy.

Andrew Orekar

Thanks.

Operator

Thank you. And our next question comes from the line of Ben Nolan with Stifel. Your line is now open.

Unidentified Analyst

Hi this is [indiscernible] for Ben. I was going to ask in regard to the ATM program. I know you mentioned earlier that you currently do not need equity funding for the next drop down, but in the longer term would you look to be using a two add dry powder?

Andrew Orekar

[Technical Difficulty].

Unidentified Analyst

Okay, thank you.

Operator

Thank you. And our next question will come from Noah Parquette with JP Morgan. Your line is now open.

Noah Parquette

Thank you. I wanted to ask you don’t have probably a ton of data, but for the two we look with extra modules you put in, are they performing so far out in-line with expectations and how do you think about putting that on future ships is it something that will go on a ship that’s not target.

Andrew Orekar

Sure. Hi Noah its Andy. It is early days with those ships just coming back out of the yard, so far so good. It does take a period of time for the units to get up to full capacity and deliver their full benefit. So I think we will have more to come on that in the future quarters.

I do think clearly the ability to reduce unit freight cost for customers on the style of carrier has been attractive, of course there is a cost associated with it. The reason these two ships were targeted were their dry-dockings happen to coincide with nearly the end of their existing charter period.

And so, the dry-docking and the sort of regular dry-docking plus relook installation could happen just before they are entering new charter. And so, we saw the opportunity to really have a differentiated offering there.

For other ships that might go into dry-dock with two, three, four, five year up in that charter, it’s a little unclear if it’s worth spending the money, because of course that doesn’t change the charter rate that it goes back down after the dry-docking.

So that was something we will continue to evaluate in the future, but it makes more sense for some ships than others.

Alastair Maxwell

Yes, Andy, just to add that. One of the key criteria is the boiler levels of each ship and obviously the higher the boiler then it will benefit, you get some of the relation that’s in the two, GasLog Partners and one ship in GasLog - where we are installing the reliq modules that are ones which have slightly higher boiler freights.

Noah Parquette

That makes sense, thanks. Just one question on the Shanghai, it sounds that 1.1 million by 43 days its looks like $25,000 a day, I’m thinking about that right or is there something else?

Alastair Maxwell

I can’t give you what are the number is on a per day basis, but the aggregate impact was I think $5.8 million. So if you put over the 76 days and it will give you the answer.

Noah Parquette

Okay. That’s all I have.

Operator

Thank you. [Operator Instructions] and our next question will come from the line of Randy Giveans with Jefferies. Your line is now open.

Chris Robertson

Hey, guys. This is Chris Robertson on for Randy. Thanks for taking my call and congratulations on the new contract. Speaking of that, could you give any detail on the day rate?

Andrew Orekar

It’s Andy here. All of the freights in our charters are confidential, but still unfortunately I can’t. I guess the color I would give you is you have seen us talk many times before about a mid-cycle rate of about $75,000 a day and I think we have had a nice trend from our first multi-year charter of the year which was at some discounts with that to the charter with the Sydney which is north of that and I think our hope is that as we continue to strengthen the spot market, its plays out over the remainder of the year, continued interest in multi-month and multi-year charters that we can get closer to that mid-cycle rate with our next few ships.

Chris Robertson

Okay. So not to hammer the point again on the Shanghai, but would that apply then - you would be looking for mid-cycle rate of around $75,000 per day on that particular vessel if you were to pull it out of the Cool Pool?

Andrew Orekar

It really depends on the charter and the term, but we wouldn’t say it’s hard and fast, that is our rate objective. But I think the trend is clearly pointing towards rates that are getting closer to that mid-cycle number as it’s up to us to take the right term and right risk in the counter-party to achieve that.

Chris Robertson

Okay. And then you mentioned earlier that there is - you can pretty much pull the vessel out of the pool with little notice. But are there any lock-up periods for the vessels that enter a lease?

Alastair Maxwell

No, there aren’t. So the notice period is 30 days, as I said earlier the key thing is whether the vessel is on a chance at any given point in time. I think the Shanghai is on multi charter for the time being. So that will need to be completed. But otherwise there are no lockup arrangements or other restrictions.

Chris Robertson

Okay, that is helpful. And one last question for me. So currently in the 25% IDR split kind of approaching the 50% split, have you discussed resetting the IDR table with [GR] (Ph)?

Andrew Orekar

So I think as we mentioned, if you listened into our Investor Day back in April, we made note of the IDRs and the trajectory that we have been on obviously that is bit of a high plus problem that with the growth we have achieved, we are getting closer to that 50% tier likely next year and we discussed the [2008] (Ph) that we would be seeking a potential modification of the current IDR structure by year end and so we are still quite actively working on that and hope to have more news in the future.

Chris Robertson

Alright, thank you very much.

Operator

Thank you. And our next question will come from Hillary Cacanando of Wells Fargo. Your line is now open.

Hillary Cacanando

Thanks for taking my questions. In the past you use to have a slide that showed a multiple of vessels required for everyone and PTA volume coming out of shipping test. Do you have the actual multiples for the second quarter coming out of the impact and [indiscernible] point for the second quarter?

Andrew Orekar

I don’t I know exactly. I don’t have at the hand for the second quarter. What I can tell you is that there was a period during the winter time where the multiplier for vessels come in at high as two times. I think some of the average figures I have seen for the U.S. more over a longer period has been upward with this 1.7 to almost 1.8 time.

We can try to follow-up, we can get you the lump by our by quarter. But I think it’s safe to say our range of 1.5 to 1.7 that we showed in the slide for the U.S. volumes feels conservative relative to the observed data so far that could be.

Alastair Maxwell

Andy the number seems to be [indiscernible] with 1.86.

Hillary Cacanando

1.86 is the average, okay. Sounds good, thank you. And then on the Cool Pool with Dynagas taking the three vessels out of the Cool Pool, are you or GasLog as a member looking to expand the Cool Pool include new members. Is that something…

Andrew Orekar

So definitely wouldn’t will that add. Today we have fix seats in the Cool Pool from GasLog as you know and there are 11 in Cool Pool from those are 17 ships in the Cool Pool against 18 when we started it with [indiscernible]. So the Pool itself is still functioning very effectively as a pooling arrangement and the means of providing innovative and commercially attractive shipping services pool in a wide range of customers.

So I think we are very open to expanding the pool and I think we feel that the larger the pool is more effective it can be. So definitely we would include that, in the current environment as well where we are looking at a strong spot market and active chartering interest have to promote it to people look to put their ships into the Cool Pool always trying themselves slightly relatively in a different environment.

Hillary Cacanando

Makes sense. Okay that is it for me. Thank you so much for taking my questions.

Andrew Orekar

No problem.

Operator

Thank you. And I’m showing no further questions in the queue at this time. So now it is my pleasure to hand the conference back over to Mr. Andy Orekar, Chief Executive Officer for some closing comments and remarks.

Andrew Orekar

Thanks very much. Thank you to everyone today for listening and your continued interest in GasLog Partners. We certainly appreciate it and look forward to speaking to you all next quarter. Thanks very much.

Operator

Ladies and gentlemen, thank you for your participation on today’s conference. This will conclude our program and you may all disconnect. Everybody have a wonderful day.