Okeanis Eco Tankers Corp.

Welcome to OET's fourth quarter 2020 financial results presentation. We will begin shortly. Ioannis Alefouzos, Chairman and CEO, Aristidis Alefouzos, COO, and John Papayouanou, CFO of Okeanis EcoTankers, will take you through the presentation. They will be pleased to address any questions raised at the end of the call. I would like to advise you that this session is being recorded. John will begin the presentation now.

Thank you. Welcome to the presentation of OET's results for the fourth quarter of 2020. We will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events, including OET's commercial performance, dividend policy, projected dry dock schedules, and anticipated debt capital commitments. Actual results may differ materially from the expectations reflected in these forward-looking statements. Starting on slide three, we review the highlights of the quarter. We generated net revenue of $41 million, adjusted EBITDA of $28 million, and adjusted profit of $8 million, or 25 cents per share. The top-line miss to our own guidance released in December was half-driven by the occurrence of off-hire on the time-chartered VLCC due to having the wrong type of COVID test for crews when entering Chinese ports. The other half of the MISH relates to an IFRS accounting charge on the ballast leg for sailing two Afromaxis in the shipyard for their first special survey in scrubber retrofits. Our board declared a fourth consecutive cash given of 10 cents per share, or $3 million. Since inception, we have returned $1.45 per share in cash to shareholders. As we have always promised, we recently uplisted to the Oslo Bourse from the Oslo Access Market. Towards the end of 2020, and as previously announced, we took some short coverage at rates that are currently well in the money on two VLCCs, one Suezmax, and one LR2. Lastly, we hedged the floating rate debt of the Nishan Nafi. I'll now hand it over to Adi Spili for an overview of our industry-leading commercial performance.

Thanks, John. Once again, OEC is trending as a top performer in the spot market for VLCCs and Suezmaxes. During Q4, we achieved a fleet-wide PCE rate of $28,500 per operating day, net of 9% technical off-hire days. Our VLCCs generated $27,000 per day in the spot market, a 37% outperformance relative to our tanker peers that have reported Q4 earnings. We continued fixing longer West Africa to China runs on our one VLCC trading in the spot market, the Nisosanaf. Our Suez Maxes generated $16,000 per day in the spot market, 40% higher than the tanker peer group average. We continued our strategy of trading the Med-China route and mixed in shorter voyages to avoid fixing long voyages at market bottoms. Lastly, our Aftermax LR2 fleet generated roughly $10,000 per spot day. Our Afromax fleet has now undergone its first special survey and been retrofitted with scrubbers, and we took some short-term time charter cover on our clean LR2, the Nisos Hirakia. Moving on to slide five, we provide guidance for our time charter equivalent revenue in the first quarter of 2021. We include only concluded fixtures in our guidance. We have covered all of our available VLCC spot days at $18,000 per day on a Brazil to China run. The VLCC market in the AG was flooded with older tonnage missing approvals, leading to discounted rates in that region and leading us to the Atlantic Basin. Moving on to Suez Maxis, we have covered 90% of our available spot days at $17,000 per day. The last 10% of available spot days are allocated to Políagos, which will be in a position to fix a front-haul voyage with minimum ballast. This voyage could conservatively make $30,000 per day for 40 days. Lastly, we covered 54% of our AfriMax spot days at $14,600 per day. We estimate the next spot voyage to be in the mid-teens per day. Our commercial performance and time chart coverage comfortably ensures profitability in Q1. In the past weeks, we have seen higher interest in echo scrubber tonnage for longer-term time charter business at increasingly higher rates. When the big trading houses are looking for and taking in longer-term tonnage, it is a clear indication of where freight rates are headed. We have also seen strong interest in the S&P market for echo scrubber vessels. We believe that the echo scrubber values have bottomed in Q3 2020 and have since appreciated by 10%. With the new EEXI regulations, as well as increasing bunker prices, buying interest will focus more and more on OET-type tonnage. On slide six, we quantify our commercial outperformance by taking the difference between our achieved spot rates and those of the tanker peer group, and by multiplying it by the number of spot days available to us. Our spot performance has generated more than $38 million in profit for our shareholders since inception. With our VLCCs outperforming, the peer group averaged by $14,000 per day, our SUIS maxes by $9,000 per day, and our AFRAs by $3,500 per day. OEC has consistently outperformed the peer group. And now back to John.

Thanks, Alex. Starting with our income statement on slide seven. We continue managing our costs well. In 2020, daily OPEX excluding management fees averaged $7,000 per day, while daily G&A came in below $800 per day. We generated total earnings of $3.20 per share, equating to trailing 12-month PE ratio of 2.4. Moving to slide 8, we report book value of 105 kroner per share. As guided last quarter, our leverage peaked in Q3 and has since declined to $835 million at year-end, backed by strong time charter coverage and a very modern fleet. Debt will decrease by $14 million per quarter going forward. On slide nine, we summarize our cash flows. Our liquidity position stood at $32 million at year end, while we have concluded our growth CapEx and scrubber retrofit programs. The next ship due for her first special survey is the Suezmax Milos in the middle of 2021. We are working on bringing this special survey forward to early-mid Q2 to capitalize on the current low market rates. Shifting to slide 10, we provide an overview of our debt stock and amortization by vessel. Our all-in cost of debt in 2021 is roughly 3.5%, and we expect to pay down $55 million of debt through the year. We have one debt majority this year in Q4, the Nesos Tiracia, We have been approached by numerous lenders that are eager to refinance the ship with us, including its existing lender. We anticipate that we will be able to refinance relatively easily if the ship hasn't already been sold until Q4. Lastly, we have now hedged the debt of the fleet, excluding those on bare boat lease and the Afromaxes. It is important to note that when entering into swaps, the timing must align with the amortization schedule of the ship and that hedging rates thus reflect the forward part of the curve and not spot three-month LIBOR. I'll now turn it over to Gianni to walk you through our market outlook.

Thank you, John. I'll start with a view on refinery runs between OECD and non-OECD countries. Non-OECD countries' refinery runs have now recovered to pre-COVID levels, lasting this time last year. The real issue in refinery demand today is in OECD countries, and particularly in Europe, where lockdowns and mobility restrictions continue to impact demand, and where we ultimately expect refinery closures, which is very beneficial for shipping, of course. We are confident that the vaccine rollout will release huge spend-up demand for air travel this year, and that this recovery in aviation demand will eliminate whatever surplus is left, driving increased crude oil production and seaborne trade. On slide 12, we see that forward refining margins have also recovered to pre-COVID levels, indicating that product futures are pricing in a strong recovery in demand later this year. Refinery profitability is a key leading indicator for tanker rates. And higher profitability means higher runs, higher seaborne inputs, and stronger tanker rates. On slide 13, we show that the global oil market rebalancing that the global oil market has made great progress and that the pace of stock growth will only accelerate throughout March. Floating storage and crude in transit are at normal levels, while only onshore storage remains slightly elevated. There are also reasons to believe that China and India will hold structurally higher inventories going forward, suggesting that the rebalancing is more advanced than data suggests. On slide 14, we present an OPEC production forecast and what the incremental volumes mean in terms of VFC demand equivalence. OPEC production has clearly bottomed out, and we expect Q2 to be 1.4 million barrels per day higher than Q1. To put this in perspective, this is the largest quarter-on-quarter OPEC production increase in history. This would be led by the Saudis, and exclude Russia, which we anticipate will also increase production in April. Through the end of the year, OPEC production will grow by 3 million barrels per day, generating the equivalent of 64 VLCCs of demand on a nine-year light basis. At the same time, the fleet is aging. Banker prices are rising and environmental regulations are increasing. 24% of the fleet is 15 years or older, and highly disadvantaged in today's market. We estimate that the echo and scrubber savings on our VLCCs are about $15,000 per day. We believe that the spread will continue to widen. On slide 16, we want to point out that in a tight market, VLCC rates do not rise in a straight line, but rise exponentially. From the current low utilization of 83%, we expect the market will tighten to the high 80s by the end of this year and into the low 90s in 2022. To summarize on slide 17, crude oil trade, tanker rates, and asset values have bottomed. Charters are actively looking for period tolerance with forward delivery. Our conversations with trading houses suggest that the refiners are scouring the market for oil. and that the rebalancing will be complete by the summer. We're excited about the next couple of years in the tanking market. I think now we're ready to take, I guess, questions, huh? Yes.

We'll now open the line for questions. Please press star 1 on your telephone keypad to raise a question. We also kindly ask participants submitting questions via the webcast to phrase their comments in the form of a question and refrain from abbreviations. We do currently have a question on the phone line. This comes from the line of Peter Yalsby from Fernley Securities. Please go ahead.

Hi, guys. Just a quick one in terms of In terms of your coverage, you obviously have quite substantial TC coverage relative to your peers. I know the outlook for most is that we'll see a recovery in the second half of the year, but I think it's fair to say there's still quite a bit of uncertainty. Given that uncertainty, I'm just curious to hear how you think of managing those open vessels you have on a risk-reward basis. Are you looking for more charter coverage or are you happy with kind of where you are in terms of your fleet composition at the moment?

Well, we're very bullish on the market and we intend to try and reduce our TC coverage as much as possible in the next months. We believe that the time for cover is over effectively and that now it's the time to increase our spot exposure. We really don't see any any way that the market will be at current or weaker levels in the next quarter. As we said in our report, we expect OPEC to increase its oil production. And generally, if you consider that outside Europe and the United States effectively, that the rest of the world has reached pre-COVID levels in oil demand. Well, I think this answers everything, especially since Europe, as you know, plays a very small part in the oil demand in Europe has stopped increasing. It's quite stable. We are also extremely confident that we will wake up in one or two months from now in a different world where substantial parts of the population will have been vaccinated. And I think we cannot envisage today the potential rebound in travel and in general activity that is coming. We can see an extremely bright future, not only for the end of this year, but also for the coming years. We are very, very bullish.

Thank you. Thank you. Just one more quick one. In terms of the fuel spreads, I guess we don't talk as much as we used to do about them, but things are improving. And maybe for John, in terms of how you see, based on your oil market view going forward, how do you see the fuel spreads kind of playing out? Do you expect them to stay here, or are there any particular developments you're expecting to see going forward?

We've understood that VLSFO refining margins are at very good levels for the Asian refiners. Demand has held up well in terms of bunkering demand, of course. Right now, things present a very rosy picture for the VLSFO price in Asia. Sour crude, obviously, that market has been very tight given that OPEC has been holding back production. And so there, with the return of sour barrels from OPEC, you can see more HFO production entering the market, which should maybe loosen fundamentals for HFO. So overall, we think here in the $100 to $120 spread range, I think this is a very comfortable place for spreads, with the potential to widen structurally over the next couple of years.

And if I may add, John, I think that historically we've seen that spreads generally widen as the price of crude increases. And we expect an extremely firm crude price. I think we will probably exceed $100 per barrel. And I think at that stage we might have massive differences between low sulfur and heavy sulfur fuel oil. Diesel will be in great demand with

economic recovery that's coming and this will also impact the spreads further thank you all right thanks very much guys that's all for me thank you the next question comes from the line of iric havalton from pareto securities please go ahead yeah hi i i wanted to ask you on your emission reporting slides Jan-Willem Wasmann, Are you, I mean 2023 is actually not too far away now. Are you sensing or seeing any change in the approach you have or the dialogue you have with charters with regards to the submission reporting and the Jan-Willem Wasmann, energy efficiency indicators and so on. It would be interesting to just hear your, your views and thoughts on how things are going to play out here in a few years time when this is, I mean we're in a total ESG frenzy at the moment, and you are kind of on the forefront of this development in your market. So curious to just hear your thoughts and what you might see there, because it's going to have an impact, right?

Hi, it's Aris Thiedis. Look, I agree that charters and owners and the entire community are paying much more attention to the emissions that the vessels produce and that in the future, the EXI and the other indexes and regulations that will be put in place will have a greater impact on which vessels are chosen for business. I think at this point today, the decision on selection of the ship is still predominantly based on the fuel efficiency rather than the emission that the ship has. so it's more of an economic decision. But I think generally this is expected to change over time. And with the new EEXI, we'll see also that older ships, which, to our technical understanding as of today, our fleet won't require any retrofit to comply with the new regulations. But ships, let's say, built 10 to 15 years ago, could have their speed reduced to comply with the regulation by up to even 25-35%. And this will create big issues for older tons. So at this point, you know, efficient and ships with fewer emissions will have a huge advantage in the market.

But you think it's really going to be speed reductions that's going to be the kind of only solution to this? And obviously, it's... If all ships over 10 years old are going to slow down by 20-25%, I mean, how is that going to be economically feasible for the tanking market, do you think?

Well, I mean, I think it needs to be considered about how you comply with this formula that derives the EXI. And you can put on a Mewis duct or change the propeller or put on some expensive paint, But I don't think that these changes will ever achieve, you know, the emissions target that the vessel will require to have. And due to this, the only solution you have is to reduce the output of your engine so you can comply with the formula.

If I may add something, I see that this is Yanis. I would say that when a 19, 2020 ship will be making, let's say, $60,000 a day, A 2011 build ship will be making 20. That's how this will be achieved, I guess.

I agree, and I think this is something that hasn't been... We haven't talked enough about this, so I guess this is something to talk about for 2021. Finally, one more, if I may. Your aftermaths, as you previously talked about, maybe selling them at some point. They don't, two of them at least, are in a difficult spot market. We've seen some interest and increase in eco-ship values. You plan on hanging on to them given your market outlook?

Look, I mean, we've said multiple times that we're interested in selling the ships. We're just looking for the right opportunity that makes sense to us. We feel comfortable with the way that the market is developing. And we think that the prices will continue to appreciate.

Okay. Thank you very much, guys. Thank you. Thank you.

There are no further questions in the queue, so I will hand the call back to your hosts.

Okay. Well, thank you very much. I guess, gentlemen, I didn't hear of any lady being present. So we hope that next time, in a quarter from now, We will have more exciting news for all of us.

Thank you. Thank you.