管理層發言
Hello, and welcome to the Scorpio Tankers Inc. Second Quarter 2026 Conference Call. I would now like to turn the call over to James Doyle, Head of Corporate Development and Investor Relations. Please go ahead, sir.
Thank you for joining us today. Welcome to the Scorpio Tankers Second Quarter 2026 Earnings Conference Call. On the call with me today are Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; Chris Avella, Chief Financial Officer; Lars Dencker Nielsen, Chief Commercial Officer. Earlier today, we issued our second quarter earnings press release, which is available on our website, scorpiotankers.com. The information discussed on this call is based on information as of today, July 30, 2026, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release as well as Scorpio Tankers' SEC filings, which are available at scorpiotankers.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at scorpiotankers.com on the Investor Relations page under Reports & Presentations. The slides will also be available on the webcast. After the presentation, we will go to Q&A. Now I'd like to introduce our Chief Executive Officer, Emanuele Lauro.
Thank you, James, and good morning or good afternoon to all. So last quarter, I spoke about our focus on the things that we can control, like strengthening our balance sheet, lowering our cost of capital, reducing our cash breakevens, optimizing our fleet, securing attractive time charter contracts and returning capital to shareholders. That approach has not changed. And during the second quarter, we continued to execute against each of these priorities. Financially, the results speak for themselves. The second quarter was the strongest in Scorpio Tankers history, generating adjusted EBITDA in excess of $300 million and adjusted net income of $243.7 million. We continue to strengthen our financial position. Today, our cash position stands at more than $1.9 billion. During the quarter, we completed one of the most attractive financing transactions in the company's history. We've issued $605 million of convertible bonds at a yield to maturity of approximately 1%. We also repaid at the same time $589 million of debt, which was carrying an interest rate between 5% and 7.5%. Replacing our highest cost of capital with our lowest cost of capital further improved our balance sheet and reduced our cost of funding while preserving significant financial flexibility. As a result, our daily cash breakeven remains approximately $11,000 per day, which is one of the lowest in the industry. We also continued during the second quarter to optimize our fleet. Since the beginning of the year, we have sold 19 vessels, most of them 11 or 12 years old, at prices above what we originally paid for them more than a decade ago. As a point of reference, the last four sales, which were all LR2s, were completed at prices above the cost of the LR2 newbuildings we currently have on order. Tomorrow, we will welcome the STI Moxie, our first MR newbuilding, which is delivering into the fleet tomorrow. This brings our orderbook down to 13 vessels. This reflects our philosophy on fleet renewal, realizing attractive values from older assets while reinvesting in more fuel-efficient vessels that will strengthen the fleet for many years to come. Returning capital to shareholders also remains a priority. During the quarter, we purchased approximately 2 million shares for $155 million. And today, our Board declared a quarterly dividend of $0.45 per share. These actions combined represent more than $175 million returned to shareholders during the second quarter. On the commercial side, we entered into charter agreements for three MR vessels for a minimum period of three years. These vessels are expected to enter the time charter contracts in December of this year, allowing us to benefit from the current strong spot environment that we are experiencing. Customers do not commit to multiyear charters without confidence in the market, and we view these agreements as another encouraging indication of the long-term fundamentals of our business. While freight rates have moderated from the exceptional levels we've experienced earlier in the year, they remain at levels that continue to generate meaningful free cash flow for us. At the same time, geopolitical developments, particularly in the Middle East, continue to create uncertainty. We do not pretend to know how or when events will evolve. Shipping has always been and will remain a cyclical business. Markets rise and fall and geopolitical events introduce uncertainty that no one can really predict with precision. Our job is not to predict the cycle. Our job is to be prepared for it, and this is what we're doing. That is why we continue to strengthen our balance sheet, lower our cost of capital, reduce our cash breakevens, optimize our fleet, renew our asset base and maintain sustainable liquidity. We believe these decisions position Scorpio Tankers to generate meaningful cash flow when markets are strong, while giving us the resilience and financial flexibility to capitalize on opportunities when conditions inevitably change. The philosophy has served us for many years, and it will continue to guide us in the years ahead. My opening remarks are over, and I would like to turn the call back to James, please. Thank you.
Thanks, Emanuele. Slide 7, please. In the second quarter, rates reached record highs. Records by definition aren't meant to last. We've seen geopolitical events drive rates to high levels before. What's more important is not the peak, it's the floor. Today, product tanker rates remain above $30,000 per day despite lower seaborne volumes in what is typically the seasonally slower part of the year. At these levels, the company generates significant free cash flow. As Emanuele said, we don't pretend to know how or when the conflict in the Middle East will be resolved. But what we do know is that global inventories, commercial, strategic and floating have been drawn down meaningfully. We also know the refinery dislocation is structural. Refining capacity has shifted farther from the consumer, and that isn't something that reverses quickly. Looking ahead, we believe the product tanker market is well positioned. A global inventory restocking, combined with the recovery in underlying demand should support higher seaborne exports, ton miles and rates. Slide 8, please. After the MOU was signed in mid-June, tanker flows through the Strait of Hormuz rose to 12.6 million barrels per day and closer to 17 million, including Saudi Arabia's Yanbu exports. But the region is fragile. Last week, the Houthis attacked two commercial vessels in the Red Sea. We've seen this before. In 2024, rising risk in the Bab-el-Mandeb pushed owners to reroute around the Cape of Good Hope, in some cases more than doubling sailing distances. If that pattern repeats, it would mean incremental ton-mile demand from rerouting alone, adding further support to freight rates. Slide 9, please. Ton-mile demand has been the defining factor behind today's freight market. In June, seaborne refined product exports declined by 2.3 million barrels per day or 11% year-over-year. However, longer voyage distances have largely offset that decline, tightening effective supply and supporting a strong freight market despite lower volumes. Refinery dislocation has been a key component in driving ton-mile demand, one we expect to continue. Slide 10, please. Refining margins have reached record levels. Geopolitical disruptions have exacerbated a dislocated refinery system. Since 2019, refined product demand has grown almost 4.5 million barrels per day compared to 1.8 million barrels per day of net capacity additions. Compounding that, much of the new capacity that has come online sits in the Middle East and China, farther from the end consumer. Slide 11, please. As flows normalize, demand for refined products could increase by more than 3 million barrels per day through year-end. Global visible inventories are down over 400 million barrels since the start of the conflict. So much of that demand will need to be met by increasing refinery runs rather than inventory draws. And given the refinery dislocation, that production increasingly has to be shipped, creating a constructive backdrop for product tankers. Slide 12, please. The Aframax/LR2 crude tanker market is benefiting from two forces at once: disruption in the Middle East, and rising crude production from the United States, Canada and Latin America. Together, they have pushed seaborne volumes up by nearly 1 million barrels per day and spot rates above $100,000 per day. Given the spread, we've moved a few of our LR2s into the crude market to capture the higher earnings. Slide 13. This is particularly important when looking at the orderbook. While the orderbook is 20% of the fleet, more than half the orderbook is LR2s. Today, 66% of the LR2 fleet is trading crude oil, and we expect this to continue. As a result, the effective product tanker orderbook is smaller than it appears, reinforcing the view that fleet growth will be more moderate than expected. Slide 14, please. As you can see on the left, 21% of the product tanker fleet is already over 20 years old. By 2028, it will be 31%. On the right, roughly 25% of the Aframax/LR2 fleet and 9% of the MR/Handy fleet are sanctioned with average ages of 19 to 21 years old. In a normal market, much of this older tonnage would have already exited the fleet. The combination of an aging fleet and a meaningful share of sanctioned tonnage points to further tightening of effective supply. Slide 15, please. When you adjust for aging vessels, sanctioned capacity and LR2 crossover, effective supply growth is lower than the headline orderbook implies. We expect fleet growth to average roughly 3% to 4% over the next three years and potentially lower. As refinery utilization and seaborne flows increase to support demand and global restocking, the market should tighten further. Near-term, that means higher refinery runs and seaborne exports. Longer-term, refining capacity stays constrained while the fleet ages. We expect ton-mile demand to outpace fleet growth. With that, I'd like to turn it over to Chris.
Thank you, James. Good morning, good afternoon, everyone. Slide 17, please. This quarter, we generated $300.5 million in adjusted EBITDA and $388 million in net income on an IFRS basis. This includes $154 million gain on the sale of 10 vessels during the quarter. Additionally, we declared a $0.45 per share dividend and repurchased $155 million of our common stock, thus returning an aggregate of over $175 million to shareholders. The chart on the right shows the evolution of our net debt position since December of 2021. Our capital allocation policy over this period has been headlined by debt reduction. As you can see, this approach has resulted in the reduction of our net debt position by $4.2 billion from a net debt position of $2.9 billion at the end of 2021 to a net cash position of $1.3 billion as of today. To put this balance sheet transformation into context, our net cash position is worth approximately $26 per share as of today. This balance sheet strength provides the company with considerable optionality, particularly in the market environment defined by elevated volatility and geopolitical uncertainty. Slide 18, please. The chart on the left shows our outstanding debt by type since December of 2021. Over the course of four years, we transformed our balance sheet by transitioning out of expensive lease financing into more flexible, lower-cost secured debt. However, our efforts didn't end there. During the second quarter of this year and into July, we executed on a series of transactions that further transformed and strengthened our balance sheet. In April, we closed on an offering of $375 million in aggregate principal amount of five-year senior unsecured convertible notes, bearing a 1.75% coupon rate and a conversion price of approximately $100 per share. Upon conversion, we have the option to settle the convertible notes in cash, shares of our common stock or a combination thereof. In May, we executed a follow-on offering of the same convertible notes at a price of over $110 to par for gross proceeds of over $253 million. When taking this premium into account, the yield to maturity on the combined issuances is below 1%. We also closed on the sales of 15 vessels, all at cyclically high prices. We earned the highest average daily TCE rate in the company's history. We announced two new secured credit facilities with seven-year tenors and bearing margins of 120 basis points. We repaid $389 million of legacy secured debt, all of which was due to mature in 2028. We redeemed our $200 million 7.5% coupon rate senior unsecured notes. So as of today, we have $655 million of debt, $605 million of which consists of convertible debt. The chart on the right shows the trend in the weighted average margins on our secured debt. As I mentioned, in the second quarter of this year, we continue to focus on lowering our cost of debt by repaying over $389 million of debt across five credit facilities, all of which were scheduled to mature in 2028 and carried margins of between 170 and 197.5 basis points. And our efforts to lower our cost of capital didn't end there, as can be seen with our recently executed $50 million credit facility with Bank of America and recently announced $90 million credit facility commitment from Standard Chartered and DekaBank. Each of these credit facilities carry margins of just 120 basis points and have seven-year tenors. Slide 19, please. The chart on the left shows our liquidity profile. We had $2.2 billion in cash as of July 28, and an additional $483 million in availability under revolving credit facilities for a total of $2.4 billion in available liquidity. We've entered into agreements or letters of intent to purchase 14 newbuilding vessels and to contribute equity for the minority interest in a joint venture of eight VLCCs. The chart on the right is a waterfall reflecting the commitments under these agreements or letters of intent. Our remaining newbuilding and joint venture commitments totaled just over $978 million as of today, excluding any potential financing. Our disciplined allocation of capital over the past three years has afforded us the financial flexibility to enter into these agreements. As shown in the payment waterfall on the top right, these payment obligations are spread out over the next four years. But hypothetically speaking, we could pay for all of these vessels today in cash without having to raise any additional capital. Slide 20, please. Our cash breakeven rate, which includes vessel operating costs, cash G&A, cash interest payments and commitment fees and any scheduled loan amortization is below $11,000 per day and is at the lowest level in the company's history. This rate continued to decline given the cash interest savings resulting from our Q2 repayment of $389 million in secured debt, along with the July redemption of our senior unsecured notes of $200 million. To illustrate our cash generation potential at these cash breakeven levels at $20,000 per day, the company can generate up to $246 million in cash flow per year. And at $30,000 per day, the company can generate up to $520 million in cash flow per year. This concludes our presentation for today. On behalf of the management team, we'd like to thank you for your time and attention. And now we'd like to turn the call over to Q&A.
分析師問答
Thank you. Your first question comes from Omar Nokta with Clarksons Securities.
I just wanted to ask maybe a couple of perhaps market-weighted questions, but also pertaining to Scorpio. I wanted to ask on LR2 specifically and how that's been developing recently. In the past, it had seemed that there was somewhat of a separation; you would say, for product players that were keeping their LR2s clean, and then crude players who owned LR2s traded them dirty. Has that changed? Are clean owners like yourselves starting to trade the LR2s more actively in the dirty market? James, you mentioned in your presentation that you switched a few ships into the crude trade and also how two-thirds of the fleet today is also running dirty. But I guess just kind of big picture, as we think about how LR2s are trading today, are they becoming a bit more fungible, if that's the right term, in terms of moving in and out of the crude trade? And I guess I'm asking that because when I look at your performance for the third quarter so far, that $65,000 on the LR2s, it seems that that's perhaps tracking closer to the dirty Aframax average versus, say, the clean LR2s. Any color you can give on that would be helpful.
Omar, this is Lars here. To be honest, we have always been kind of dipping into the dirty market as well on the Aframaxes. We look at it and have always looked at it from an opportunistic vessel-by-vessel perspective. There's not a broad fleet strategy in terms of that. But you mentioned fungible. It has been the case for a couple of years now that the fungibility between LR2 and Aframax has been very apparent. We have seen a lot of cross-trading for the last couple of years. When markets spike on the clean side, we have been holding the ships in the clean market. When we've seen, as we have over the last period, a very strong Atlantic Basin on the Aframaxes, we decided to tap into that. And clearly it's not only us doing this. We count today about 170, maybe just over 170 clean LR2s only trading in that market. And you've got over 250 Aframaxes trading dirty, a lot of them obviously in the Atlantic Basin. The thing that's really interesting, in my view, is that even with that amount of ships coming into that market because of the ton-mile that James was talking about and the volumes in general, that market has been strong throughout. There's no doubt in my mind that with that relatively low number of LR2s going into the Aframax market, it wouldn't take very much before you start seeing the LR2s, as we have been seeing over the last week now, with rates in the West moving up, and suddenly you see a normalization and you will start seeing ships moving back into clean as well. So I think you need to look at LR2s and Aframaxes as a much closer unison unit today.
Yes. That's quite helpful commentary. And then maybe just as a follow-up, you just referenced what we've seen in the Atlantic here over the past couple of weeks. Can you maybe just give a perspective on what's driving that? We've seen it, it seems like across the board, whether it's LR2s, LR1s, MRs, everything seems to be moving quite a bit higher here over the past couple of weeks relative to what we've been seeing. And it looks like rates perhaps are approaching kind of maybe not the highest yet, but it seems like they're at their highest levels in at least a few months. What's been behind this latest move?
Yes. Well, first of all, I've been doing this for a long time. I've never seen a July or August market like this. This is not what you would consider a normal summer lull. First of all, you've got great refining margins, talking about the MRs. The U.S. Gulf has been running at extremely high utilization rates. And then you obviously have all the different geopolitical backdrops, which influence things: Russia being one, they don't have the exports they had; issues with the Bab-el-Mandeb; issues with Hormuz; and stocks in general being low. So the volatility that we have seen talking about the MRs has been profound. In Q2 we saw records, then we had a bit of a drop. You're seeing now another resurgence, as you could see on the rate reports today, where TC14 is now moving up from its lows and have now moved north of 320. So the triangulation element on the Atlantic Basin has been strong. The same goes with the Aframaxes. Activity in the Mediterranean has been strong. We have the issues around CPC and other geopolitical issues. Dislocations tend to be positive for tankers in general. The ton-mile story is valid, and we see it every day. The spreads and the arbitrages are opening opportunities for business. Also, more oil coming out of South America and the United States has been underpinning the dirty market as well.
Your next question comes from Chris Robertson with Deutsche Bank.
Fantastic job on what you're doing with the balance sheet and all the issues you've raised that you can control. Kudos to you there. I wanted to ask about the market: when the situation in the Middle East began and there were some very unusual, long-distance trading patterns, at least initially during the height of the disruption, can you comment on whether some of those routes have become more enduring? And can you give some examples of how things are trading now on some of those longer, unusual routes?
Yes. If we go back to when it all kicked off during the second quarter, we saw some really uncommon voyages, which were down to the stress factors in place and short-term fixes. I think there was a calibration after that, and the long-term routing still very much is in vogue. It has also helped that we've seen a little uptick in Chinese exports, so there's more balance. But when you overlay that with diminished Russian exports and changes from South America and Africa, you've been seeing other supply chains created, which have increased ton miles and contributed to tightening. Over the last couple of weeks, we've seen another uptick in Asia. Transpac moves have increased substantially. We haven't seen China move above what we'd anticipated, but there has been a general understanding of where oil is coming from until the next shock occurs. Overall, there's been somewhat of a normalization, but everything is still underpinned by extended turmoil.
Just a follow-up question, maybe as it related to Omar's line of questions around the LR2s trading dirty. Just wanted to better understand the dynamic here because such a great percentage of the LR2 fleet is trading dirty at the moment. Is that mostly due to geopolitical disruptions and ton-mile dynamics? And could the downside be the unwinding of geopolitical risk? Or what would keep that as a more enduring force going forward versus being more transient?
I think the short answer, Chris, is it's all a question of time charter equivalent. You had the dirty market ramping and the LR2 market quieting, and that spread made it attractive to dip into dirty trades. From the last couple of years, if that spread flips, vessels will quickly move back into the clean market. A case in point: a couple of years ago the LR2 market out of the Arabian Gulf was weak while Aframax markets were strong, and you suddenly saw many vessels move into the clean market. That flip-flopping has become more common, particularly on coated Aframaxes. There is more operational experience now on how to do this efficiently, including by us. So we don't fear that fungibility — it's market-related and can be durable depending on spreads, but it can reverse if market dynamics change.
Your next question comes from Ken Hoexter with Bank of America.
Emanuele and James, great rundown. You emphasized, I think, James, in your presentation, the floor is more important than the peak with rates remaining above $30,000 in this backdrop. Maybe a little bit of your thoughts on the floor in this backdrop, given, I think, Lars, you were just mentioning never seen a July like this. So maybe thoughts on the floor, thoughts on seasonality and where we go from here.
Lars, do you want me to take that? Thanks, Ken. Typically, you get through peak gasoline season at the end of the summer and go into maintenance. What we've seen is because of the longer voyage distances and rerouting, we're seeing unique voyages, as Lars highlighted, and we think that's going to continue as disruptions and potential rerouting in the Red Sea cause vessels to go around the Cape of Good Hope. Also there are disruptions with refining capacity in Russia, including Russia's export ban on gasoline and diesel. That's going to increase Atlantic Basin MR volumes for compliant ships in Africa and Latin America. At the same time, we expect more naphtha to go from the U.S. Gulf to Asia. So there is a constructive dynamic. Lars highlighted strength with LR2s and Aframaxes trading crude oil. We think that will pick up as you get into maintenance since more crude volume from the Atlantic Basin needs to go to Asia.
All right. Lars, do you want to jump in or you want me to follow up? I guess I'll throw a follow-up and anybody can jump in. You mentioned inventories were down about 400 million barrels since the start of the conflict with much current demand needing to be met by refinery runs versus inventory draws. Maybe your thoughts on the time frame, in terms of if we're going into maintenance season, the drawdown or the ability for refineries to continue to meet that demand versus the time frame for beginning to restock?
So there was a lot of crude that was shipped in June, and it takes about 30 days for that to get to Asia, 45 days to get to Europe, and that's arriving now. I think runs are going to pick up in those regions, and you'll get increased regional trading, which is going to be positive for the medium range ships. If you looked at refinery runs year-over-year, July was down about 5 million barrels per day. But out of the Middle East refining capacity, the only refinery that's actually down right now is Jizan. As things normalize, we expect runs to pick back up. So while you might have the U.S. Gulf maintenance coming in September, we expect runs throughout the rest of the world to pick up at the same time. That's going to create a constructive dynamic for us. Also, the fleet is really out of its normal positioning, which should be constructive as well.
Your next question comes from Stephanie Moore with Jefferies.
I think maybe just continuing the last conversation here. Do you think the events we've seen over the last six months, or the last 12 months, have structurally changed the LR2 market from anything we've historically seen? And how are you weighing the supply and demand landscape over the next 12 months?
I'll start. What's happened over the last six months is hard to say will persist tomorrow; we don't know. But looking at fundamentals: the longer voyage distances certainly tighten supply. That has been a key thesis for a number of years and it hasn't changed. The issues of the sanctioned fleet and its age are significant; in a normal market, those ships would exit. I believe those sanctioned vessels will not re-enter primary trade. Crude supply and refineries being located farther afield also haven't changed. What has changed is more dislocations and disruptions over the past months and years. Dislocations have created opportunities for both product and crude tankers. Looking medium-term, considering global stock draws and flat prices, at some point you'll need to build inventories back up. Consider fleet age profile and upcoming deliveries: in a normal circumstance, it doesn't look scary for supply-demand. But we live in a highly uncertain political environment with frequent shocks. From an operational and commercial perspective, our aim is to be as nimble as possible to react to changes quickly.
Understood. Just a follow-up here: following the refinancing activity, your debt profile is now heavily weighted towards convertibles. How should we think about potential dilution and conversion scenarios that may be your preferred method of settlement, especially should the stock trade meaningfully above the conversion price?
Stephanie, thanks for the question. We're fresh off the convertible issuance, and we're happy with the transaction and execution. One of the biggest features of the notes is that we can settle them in cash or shares. The trigger for forced settlement is 130% over the conversion price. So if we get to those levels, we'd be thrilled, and we will decide how to settle at that time. Right now, the maximum number of shares that can be issued is six million shares — that's what the conversion rate implies. That's something for down the road, but we are happy with how the notes fit into our capital structure and particularly with the low cash costs, which have driven down our cash breakevens.
Your next question comes from Sherif Elmaghrabi with BTIG.
Just one for me today. During the quarter, one of your LR2s had its time charter extended. Looking at the rest of the fleet, there's a handful of other tankers rolling off time charter in the next year or so. I'm wondering if you see a higher likelihood that these time charters get extended, if there's even options to do so? And maybe your thoughts on what you're seeing in the time charter market more broadly.
On that particular time charter, it was an option historically that was in place. Any time charters we would do today would be new market time charters. In terms of time charter strategy, we've always been opportunistic to have a balanced view on how much of our fleet is on time charter. We have a number of ships rolling off. A few time charters have been secured at levels we haven't seen before. Interestingly, time charter inquiry has been generally high even over the summer months. The people looking at time charters tend to be oil companies and now some traders as well. So there is a generally good level of demand. For us, it's very much a balanced, opportunistic approach, and we work with counterparties with whom we have long-standing strategic relationships.
Your next question comes from Liam Burke.
Prior to the dust-up early in 2026 in the Middle East, the outlook for product tankers was great: you had an aging fleet and redistribution of global capacity. Presuming things get back to normal someday, are we looking at redistribution continuing? Or are some of the traditional refiners in the Middle East and China going to continue refining oil? Or do you expect the process to continue?
Liam, thanks for the question. We absolutely expect the refinery dislocation to continue. It takes at a minimum seven years to build a new refinery and many of those refineries haven't started construction today. If you think about demand in emerging markets where we see a lot of growth, there's not refining capacity being built there. In developed markets, Northern U.S. and West Coast U.S., we closed capacity. So we see a scenario where ton miles are going to continue to grow over time. If anything, the recent conflict has widened cracks between crude and product prices, reflecting how dislocated the refining system is, and we'll be happy to transport those cargoes to consuming regions.
Okay. And on the supply side, we've got an aging fleet, especially on the MR side. Are extended rates going to, at the far end, extend the life of some of these older MRs? Or would you anticipate the traditional rule of once it hits a certain age, refiners don't want to use the vessel?
I think it's fair to say there is a hard stop at 20 years these days for many charters. Even in very strong markets it's uncommon to see ships over 20 traded in primary trades. People used to look at lower age limits for time charters, but that has moved higher. Even during strong markets, it's uncommon to see ships over 20 being time chartered. From a fleet segment perspective, the age profile on MRs and Aframaxes is interesting and will be worth watching over the next couple of years as older tonnage cycles out.
Your last question comes from Kristoffer Skeie with Arctic Securities.
I was just wondering if you can comment on the VLCC joint venture and the rationale behind the investment. Who are the other partners? Where are the vessels ordered and at what price typically? And what type of leverage levels are you aiming for? In other words, what's the equity commitment there?
Thanks for the question. From a financial standpoint, the exposure, as you can see, is not meaningful compared to our balance sheet. The reason we did this investment is more strategic. The partner is the ultimate beneficial owner of the largest private shipbuilder in China, and we have had a relationship with him for many years. This opportunity came about where he was looking for a partner on the shipping side and potentially to operate the vessels once delivered. We thought it made sense to participate even though financially it's not a meaningful transaction for our balance sheet. On expectations for rates, the ships are delivering later. We are going to take delivery of the Hanwha ships before that. It's too early to talk about market expectations; our view is no better than anyone else's. We like the sector, we believe in the sector, and we've been looking at getting exposure gradually. You may remember our DHT investment; after we divested from DHT in late 2025, we decided to get into the physical side by ordering ships at Hanwha, and this joint venture is a nice top-up with a strategic angle for us.
That concludes our question-and-answer session. I would now like to turn the call back over to Emanuele Lauro, CEO, for the closing remarks. Please go ahead.
Thank you very much, operator. I don't have any closing remarks. Just wanted to thank everybody for their time and continued support and look forward to speaking with you going forward. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect.