Imperial Petroleum Inc.

Good morning, everyone, and thank you for joining us today at our fourth quarter conference call of Imperial Petroleum. I'm Harry Vazquez, CEO of Imperial, and with us today is our CFO, Mrs. Aguilari. Before we commence our discussion, we'd like you all to read the Safe Harbor language in slide number two. In essence, it's made clear that this presentation may contain some forward-looking statements as defined by the Private Securities Litigation Reform Act. We raise the attention of our investors to the fact that such forward-looking statements involve risks and uncertainties which may potentially affect our company's performance in the future. In addition, we'd like to state that during this call, we will quote monetary amounts. These, unless explicitly stated, otherwise are all denominated in U.S. dollars. Let's start from slide three for a summary of our company highlights. Focusing on our fourth quarter's operational and financial results, Without doubt, the key highlights of our company are the two successful equity offerings from which we raised a total of about $90 million. We thank all of our participating shareholders for their confidence in Imperial Petroleum and then trust in our growth strategy. Indeed, since our public trading commencement, our shares have been highly liquid and have attracted plenty of investor attention. Our daily average trading volume is region 30 million shares, outpacing the majority of the other listed shipping companies. We have placed great emphasis on our growth and the testimony to our commitment to expand our fleet is the acquisition of two product tankers, the Injustice and the Clean Nirvana. The first vessel was delivered on March 28th and the second will be delivered by the end of May. Total consideration for these two transactions is in the order of 31 million for which we have already secured the related financing. Following these deliveries, our fleet will consist of six oil tankers with an average age of approximately 13 years. With regards to our performance during the fourth quarter of 21, the tanker market remained weak for the majority of the quarter, undermining our earnings potential, particularly for the ships in the spot market. Market outlook was slightly more positive towards the end of the year on the back of low inventories and production growth. Hence, prospects for tankers were more positive for 2022. The unfortunate outbreak of the war in Ukraine created turbulence in most shipping segments, including oil tankers, as energy prices and supply have been adversely affected. Seaborne energy trade is now governed by risk and uncertainty, thus resulting in a rise in shipping rates, especially in Europe. Summarizing our fourth quarter results, we ended the quarter with a net loss of $1.5 million, mainly due to the weak market we faced at the time. Our performance for the whole of 2021 was soft, as we ended the year with a net loss of $3.6 million. Looking at our capital structure following our two offerings, we have a very strong cash base of about $90 million with a debt of only $28 million, allowing us to dedicate our funds to a healthy and rapid fleet expansion while keeping leverage at moderate levels. On slide four, we will discuss our share performance. Shortly after the spin-off, Imperial Petroleum shares became very liquid with large daily trading volumes. It was surprising to witness that in less than a month, from mid-February up until the beginning of March, our stock appreciated by about 1,400%. Following our second public offering, our NAV per share is about $2. Slide 5 is a summary of our current fleet deployment status. Our contract coverage is in the order of 100%, as all of our tankers are currently under period employment. One of our product tankers is under bearable charter, while our remaining three vessels are under time charter contracts. We recently agreed on a minimum two months time charter for Afromax tanker staff Berana at a daily rate of $33,000 per day. As evident from the earnings visibility table, virtually 50% of our period contracts hold the charters extension options, all at incremental rates. Should all the charter extension options get exercised, Fleet coverage for the whole of 2022 will be in the order of 53%. Moving on slide six in order to discuss tanker market fundamentals. The fundamentals and prospects for the tanker market prior to the Russia invading Ukraine were promising with the world closer to overcoming the difficulties brought upon a two-year pandemic period. The COVID-19 pandemic brought upon a fall in demand followed by an equally sharp fall in supply of oil and oil products. As oil demand was recovering strongly and oil product reserves around the globe remained at historically low levels, it was expected that tankers would find themselves in high demand this year. The unfortunate invasion of Russia in Ukraine and consequences thereof have startled the world energy markets, and exactly how things will evolve in the medium term is quite difficult to predict. But what seems quite certain in the short term is that trade flows have changed and will change even further. And when trade flows change, the market inefficiencies that are created will in most cases result in increased ton miles potentially to a significant extent, a factor that is positive for shipping and especially for oil. But exactly how the balance between increased ton miles versus potentially lost volume as a consequence of the sanctions on Russia will play out is still to be seen. In more detail, the war in the region of Ukraine and fears of potential shortages in the supply of Russian crude oil have caused the price of oil to trade in the region of $100 per barrel since March. Similarly, tanker charter rates increased significantly, especially in Europe, as charters seek to secure tanker tonnage. Average spot daily AfraMax tanker rates spiked to $88,000 per day at the beginning of March and are currently in excess of $20,000 per day in contracts with Q4 when spot rates were in the region of $8,000 per day. The situation in Ukraine and the global response with sanctions to Russia continues to evolve, and as mentioned, its impact on energy supply and demand, energy prices, tanker operations, and charter rates remains subject to considerable uncertainty. This uncertainty has escalated energy and energy transportation prices. In slide seven, we are providing an update on the order book focusing on the MR2 product tanker segment in which we mainly operate. The MR2 segment, 47,000 to 52,000 deadweight tons in which we operate. It has a total of 1,233 ships, which is equivalent to about 46% of the total MR fleet. About 16% of the vessels in the MR2 segment are above 15 years of age. The MR2 order book is currently 106 vessels, which is equivalent to 8.6% of the total MR2 fleet, a relatively low order book. With regards to new building ordering, this has remained low in the past years, mostly due to uncertainty around environmental regulatory aspects, scare birth capacity, higher steel prices, and a broader market uncertainty around the COVID-19 pandemic. I will now pass the floor to our CFO, who will provide a summary of our financial performance.

Thank you, Harry, and good morning to everyone. I will present a summary of financial performance for the fourth quarter and 12 months 2021. The market during the fourth quarter of 2021 remained challenging for tankers. Summarizing our performance, we did face two main hurdles that led to an operating loss. The first was the ballasting of one of our product tankers to its new charter employment in November, from which we incurred voyage costs of about $800,000, and the second was our high general administrative costs, due to the spin-off of our four tankers from Stelkas to Imperial Petroleum. Focusing on our fourth quarter 2021 financial performance, in slide 8, revenues came in at 4 million, marking a decrease of 1.6 million, or 28%, compared to revenues of 5.6 million in Q420, mainly due to the weakening of the tanker market. Voyage costs marked almost 300,000 degrees in voyage expenses, mainly due to the decrease of spot days by 24 days or 27%, offset by voyage costs of $800,000 incurred due to the ballasting of our product tanker clean flasher to its new period deployment. Our running costs were stable as our fleet mix, i.e., number of vessels on bare boat, remained unchanged. General administrative costs increased by almost $250,000 compared to the same period of last year as we incurred one-off charges related to the spin-off process. Basically above, we generated an EBITDA of 800,000 and a net loss of 1.5 million in Q4-21. For the 12 months of 2021, we marked a 3.3 million decline in net revenues and a net loss of 3.6 million, primarily due to the softening of the tanker market and increases in both voyage and operators' costs, as we had more vessels operating under time-charted contracts or in the spot markets. Moving on to slide 9, let us take a look at our balance sheet for the 12 months of 2021. Our total cash base, including restricted cash, decreased by $1.3 million compared to 2020 due to our operating income decline. Following our capital offerings, our cash is now around region $90 million. Total debt is in the order of about $28 million, and this equates to a giving ratio of 13% basis fleet book values. Concluding our presentation in slide 10, we outlined the key variables that will assist us progress with our company's growth. The fundamentals going forward are our proven growth expertise, our attention on operating costs and leverage levels, and our strong relationship with charters. At this stage, our CEO, Mr. Harry Vazquez, will summarize our concluding remarks for the period examined.

Since becoming an independent public company, Imperial Petroleum has had an outstanding course. The daily share trading volume has stunned all of us, and investors expressed their trust in our company's vision by helping us raise about $90 million of new equity. We are truly indebted and obliged to our investors and grateful for their trust and confidence in Imperial Petroleum. Our core strategy is growth, as evident from the acquisition of the two product tankers recently. We will focus on expanding our fleet further and endeavor to convert shareholders' expectations into reality. We have now reached the end of our presentation and we would like to open the floor for questions. So operator, please open the floor.