Okeanis Eco Tankers Corp.

Welcome to OET's first quarter, 2025 financial results presentation. We will begin shortly. Aristides Arafouzos, CEO and Iraklis Sparounis, CFO of Akarnis Eco Tankers, will take you through the presentation. They will be pleased to address any questions raised at the end of the call via the webcast. I would like to advise you that this session is being recorded. Iraklis will begin the presentation now.

Thank you. Welcome to the presentation of Akarnis Eco Tankers results for the first quarter of 2025. We'll discuss matters of the forward-looking nature and actual results may differ from the expectations reflected in such forward-looking statements. Please read through the relevant disclaimer on slide 2. Starting on slide 4 and the executive summary, I'm pleased to present the highlights of the first quarter of 2025. We achieved fleet-wide time charter equivalent of about $38,500 per vessel per day. Our VFCCs were at $38,000 and our SUIS maxes at $39,200. We report adjusted EBITDA of $32.5 million, adjusted net profit of $11.4 million, and adjusted EPS of $0.36. Continuing to deliver on our commitment to distribute value to our shareholders, our board declared the 12th consecutive distribution in the form of a dividend of $0.32 per share. Total distributions over the last four quarters stood at $2.22 per share, or 91% of our earnings for the period. Slide 5, we saw the detail of our income statement for the quarter. TCE revenue stood at $48.6 million, EBITDA was $23.5 million, and reported net income was $12.6 million, or $0.39 per share. Moving on to slide 6 and our balance sheet. We ended the quarter with $43 million of cash. Our balance sheet debt continues to be amortized by approximately $12 million every quarter, now standing at $634 million as of year-end. Our group leverage stands at 59%, while our market adjusted net LTV is around 40%. On slide 7, we recap our main driver behind our operational and commercial success, and one of our key competitive advantages, our fleet. Our 14 vessels have an average age of 5.6 years. That is the youngest crude oil tanker fleet amongst listed tiers, and the only pure eco and fully scrubber treated fleet. This gives us an advantage, allowing us to set a benchmark about the spot market, established by conventional or mixed fleet. All our vessels are built at first class yards in Korea and Japan, making us resilient to risks around implementation of the USTR policies. We're also pleased to have behind this an extensive DHSR drydough program from last year, and in 2025, we only have two shoes max drydoughs, expected to take place likely within Q3. Slide 8, moving on to our capital structure. After our refinancing cycle in 2023 and 2024, we're already reaping the benefits of improved pricing. Our interest expense for the quarter has decreased meaningfully, and this does not take into account the most recent financials announced, which will take effect in Q2 and Q3 of this year. We have successfully set a robust balance sheet, we added flexibility, and the spending maturity. That flexibility came in handy in April when we declared the purchase options to buy back our three Chinese lead vessels, the NISOS Anathri, NISOS Mikugia, and NISOS KIA. We're paying no penalties for the exercise of these options, as we have dropped this when we amended the lease a year and a half ago. The Nikugia and the KIA are expected to be delivered back to us in early and late June respectively, while the Anathri in early August. We have already announced our plans to finance the Nikugia and the Anathri by a new 130 million bank loan with a great tank, tied to the 140 basis points over shopper, maturing in seven years with competitive amortization programs. We're actively working on firming up the financing for the KIA. I expect we'll be in a position to announce this later in the quarter, and we're targeting terms that are at least in line with the other terms. The terms achieved make us very optimistic, in anticipation also of the two refinancings of the NISOS Rinia and the NISOS Deskotikon next year, a great opportunity for further improving our breakeven costs. The financing market remains very competitive, the capital structure of the company is very stable, the time to market out is positive. All this combined with the strong relationship with financiers, both existing and going way back, as well as new ones, bring us great opportunities. I will now pass on the presentation to Aris Tidis for the commercial market.

Thank you, Aris. Q1 that progressively strengthened and market fundamentals were better than in Q4. There were both major drivers for this, such as increased sanctions pressure on the shadow fleet, and the US trying to impact Chinese imports of Iranian oil, as well as more localized drivers, like the Kazakhsandis increasing their production. This crude usually sailed into Europe, and volumes were so high, in addition with European maintenance season, that forced some of this crude to be sold in Egypt. So this created a stretched Suezmax fleet, and helped the Suezmax race to firm. In Q1, we achieved a fleet-wide PC of $38,500 for operating day, with the utilization at 100%. We earned $38,000 on the BLTCs, and $39,200 for operating day on the Suezmax respectively. Moving on to Q2 guidance, the market has continued to trend higher, OPEC plus surprised the market, and began unwinding their cuts at a faster than expected pace. And the expectation is that this unwinding will continue at a similar pace, a lot faster than the plan from OPEC. This, along with continued focus on Iranian exports, have given support to the already healthy market. On the back of this, the SIFs have consistently improved in their market fundamentals, and we've seen rates trend higher over the course of the quarter. We discussed previously in many of our quarterly presentations our preference to triangulate and optimize our BLTC trade, and we continue to focus on this generally. But this quarter we also picked some AGEs, round voyage cargoes, when we felt that the earnings or the time charter equivalents were attractive, and the markets didn't have much room left for further improvement, based on our triangulated averages. This week, the BLTCs are coming off their short-term low in the spot market. What's encouraging about this is that it was a short-term weakness, and more so that it was the highest low point of the year, and we consider that quite a positive signal. Suezmaxes also came off quite a bit in the past week, but they've also bottomed, and we see the spot market stabilizing and slowly affirming, and we've seen steady increases on the paper market as well. Our Q2 guidance stands at 72% of BLTC spot days at $46,700 per day, and 64% of Suezmax spot days at $60,600 per day. Moving on to slide 12. We continue to outperform the market with our superior fleet and strong chartering departments. You can see from the charts that the delta really grows when the market firms, and we can make use of our nimble fleet to position aggressively and take advantage of our short-term tactics. This is an advantage that much larger companies with 50 ship fleets don't have that we do. Moving on to slide 13. I apologize for keep showing you different iterations of this slide, but we want to express our opinion again and again on this, and that the fleet development isn't only about age, but it's also about what percentage of the shadow fleet is of the total fleet, and the difficulty that this segment will have in reintegrating itself in any potential peace field between Ukraine and Russia or an Iran deal. Because we do expect that in a potential peace or potential Iran deal, that the flows will normalize on normal ships, and this shadow fleet being over-aged, under-maintained, and to a decent degree sanctioned, will have a very difficult process to reintegrate, and we expect internally that there will just be extremely low utilization on this segment and growing in large segments of the fleet. And then just looking at the age profile a bit closer, again, we've said this in the previous call, that it's hard to even have a bearish medium-term view when 50% of the fleet of VLTCs is over the age of 20 years old in 2028, which also coincides when you can have a new building delivered if you place the order today. And the tightening supply side is one part of the equation, and we can split the size, look at the oil fundamentals a bit as well. Over the past years, we've seen a period of tightening balances and reducing inventories, and now we may see some slight inventory builds or a flat market. This potential near-term surplus is driven by rising production, both from OPEC, as they unwind the cuts faster than we expected, as I mentioned earlier, and also from growth in non-OPEC producers. Geopolitical uncertainties continue to affect the short- to medium-term outlook, particularly around trade flows and sanction dynamics, and the longer-term setup looks really constructive. Demand is expected to grow, led by emerging markets, especially India, and we also see the possibility for strategic stockpiling, which is held by a low oil price, and it's favorable for a weaker dollar, and the requirement to refill the FPR in the United States as well. This surplus in the market, which is potentially coming, will need to be cleared, and this will be done on long-haul voyages, which means that ton-mile demand continues to rise. Moving on to slide 15, the current supply side story is increasingly supported for tankers. OPEC is actively adding barrels back, which the market didn't expect and wouldn't have assumed if you had discussed with oil analysts at the beginning of this year. We've already seen 800,000 barrels per day returned between May and June, and with more expected through 2026, until they reach their 2.2 million barrel projected unwind capacity. At the same time, we have offshore and unconventional projects from non-OPEC producers, particularly in the US, Brazil, Guyana, and Norway, wrapping up and projected to bring over 2 million barrels per day of incremental production. Importantly, the latter are long-haul barrels moving from the Atlantic Basin to Asia, adding significant ton-mile demand and supporting VLTC utilization. Looking at utilization a bit more closely, we can see that it is already quite high. VLTC utilization, according to sources, has recently hit around 90 percent, and with higher Middle Eastern volumes over the summer, we can see that number rise even more. Last time we saw utilization levels around this percentage was 2015, and VLTC rates were trading close to $70,000 today. At the same time, and as discussed previously, we have structural constraints. The shadow fleet that is growing older and less compliant, while the mainstream fleet isn't growing meaningfully to offset this. So we're in a situation where rising supply and trade demand are being met by a fleet that is already at near full employment. This is the type of setup where we think that the rates can move sharply and sustainably high. One focus we want for this quarter is Iran, which remains the key wild card. We think that the recent developments have been particularly interesting, and perhaps one of the scenarios which may be an outcome hasn't been as widely considered. We discussed over the previous quarter the positive drivers of a maximum pressure campaign, and that would require replacement of non-Iranian barrels to the market, and primarily to the Chinese market. And this would increase rates because there would be demand for the normal fleet rather than the shadow fleet. But we haven't really discussed why a potential Iranian deal may be even more bullish, because to be honest, we didn't think that Iranian deal would be possible, and the progress has been actually surprisingly quick so far. But obviously it's not a finished deal yet. I think an Iran deal would bring back the most important export of Iran, which is oil and gas, into a U.S. denominated trade, and this would immediately engage the normal fleet. So the shadow fleet will no longer be used for this trade, because it wouldn't be compliant due to sanctions, due to insurance, due to flagging, due to classification. And they would have to substitute the normal fleet for this. Iran is currently exporting slightly over one and a half million barrels, and we assume that in the potential deal, and due to the increased efficiency of the trade, and also the higher demand for Iranian crude, we could see this production increase. And that's one deal to see per day. This is an additional catalyst that will be very positive for the trade market. But we also think that the Iranian national fleet will also have to renew their vessels. I mean, the average age on their vessels is very high. The ships are under maintained, and they must be near the end of their economic life. So we really think that the replacement of the NITC fleet will give a lot of support to modern asset values, especially for VLTCs like this and Suismac that we have in our fleet. And for sure, they're going to want a portion of these ships to have immediate delivery and not be new buildings. So, you know, owners and companies that have ships available for sale will obviously see the most interest from this type of purchasing. But, you know, if we look at, if this doesn't materialize and we see an opposite scenario, it's also supportive where we see stronger secondary sanctions. For the first time, the U.S. is focused on sanctioning Chinese refiners and Chinese tank farms. And if this continues, it could limit the Iranian ability to export to China due to logistical problems. And again, that would boost VLTC employment. So these two new, this one new scenario is interesting. And, you know, I think either a maximum pressure scenario or a deal scenario are the most likely. And kind of forgetting about the Iranian problem and the status quo remaining to me seems at least likely. That's all for me. And thank you for listening to our Q1 presentation. And we're happy to answer any questions.

Thank you. If you have any questions today, please submit them through the webcast.

So we already have a few questions coming in. Let me try and organize this. The first one comes from Liam Berg at Bir Aili. So three different questions. Maybe the first one is for me. You expect the same terms on the refinancing of the third VLTC out of state and leasebacks? Yeah, we are. We're actively working on securing the financing for the care. I expect it to be in similar, if not better terms than the ones we have announced. Then a couple of other questions. Are serious max rates benefiting from the increase in non-OPEC class crew production?

Hi,

Liam.

Thanks for the question. I think that the main driver of the Sui Max rates, which we touched upon, was that the Kazakhstanis have been previously cheating on their OPEC class production, but currently, I guess, producing it within their guidelines. But this increased production of Kazakhstanis crewed, which usually sells into Europe, was able to be arbitraged into Asia. And this happened, I think, mostly in February and March and a little bit of April. So you saw a lot of Sui Maxes taking this CPC crewed that usually sells into Europe and taking it much further to Asia. And because the Suez Canal is still closed for this trade, you saw Sui Maxes having to sail from the Black Sea through the Mediterranean around Africa and to Asia. So it really stretched ton miles as opposed to the similar voyage that was going to Italy or France. And it displaced a lot of ships. And I think that was one of the main drivers for why the Suez Maxes had a big jump late in Q1 and early in Q2. I think the OPEC plus increasing production quite quickly and dropping the OSP distorted a bit these arbitrages. So currently, this arbitrage from the Kazakhstanis crewed to go east is closed. But I think that once the local pricing of different crews balances out, we'll see that our pre-pack open again if two more ships going that way. So that'll be supportive on ton miles.

One more follow up from Liam. Although rates were lower year over year, they still remain elevated. Understanding geopolitics remains a risk. How do you see the rate environment, the balance of 2025?

Overall, we're optimistic on the balance of 2025. I think that we've seen the markets are slowly beginning to simmer and we're going towards a boil. So I think that we don't need much more momentum to really push us into a stronger bull market. And I consider that quite a likely outcome. So, you know, you can see from our fleet that we remain 100% spot focused. And we think that there's potential for us to capture more upside and we're waiting to do it, hopefully, in the second half of this year.

We have one more question from Ben Dick for the Nightingale's at Taksim. So, besides the management of geopolitics, there is quite a meaningful reduction in margin on the new financing. Are there other facilities where you can refinance at this term without penalties? Are these the kind of terms we should expect for the ocean yield refinancings as well? I'll take that one. Well, to answer simply, other than the two, the ring and the Spotico, we have no penalties to refinance anywhere other vessels earlier. So, you know, these two vessels, the purchase options kick in about a year from now. And the what we see today with the current financing is it encourages a lot that this, you know, what we can achieve is very, very meaningful with regards to the ocean yield refinances as well. So, if we were to do those transactions today, I would expect that we should be in a position to achieve similar access. We have another question from Frederick Dibuat, an attorney. What would you like to see happen in the term market for you to consider TC coverage?

Hi, Frederick. Thank you for your question. I think that TC coverage at the moment is generally, it's at relatively good levels and there is demand for, you know, both shorter and longer term TC exposure from the Charter. For us, we still think that, you know, asset values and expectations of spot earnings are quite a bit higher and that the TC rates need to move up to cover that gap. I do think we'll get there. And I think there will be opportunities for owners to put on some TC coverage at an attractive rate once Charters are able to really make a really strong profit on that first voyage. I think that that's generally a good driver for longer term TC, you know, one to three year TC business where the first voyage can really be profitable and from the Charter's perspective, decrease the risk for the balance of the TC period. But I think we're quite a bit closer to what we find interesting, but there's still a gap at the moment.

I think we have time for one more. Peter Hogan from ABG. There are reports of stronger prices for older tankers around selling at 2007, built at 48 to 50 million. In the case of an Iran, A, what should we expect for this market and B, how would that impact new retornege?

Hi, Peter. Thank you for the question. There has been, you know, I think where towards the end of last year, it seemed that at least especially for the older size vessels, values had kind of plateaued for the VLCC size and segment. As this year has moved on and with the sanctions placed by the Trump administration on the various Iranian affiliated shipping companies and ships, we've seen that there's been a strong bid for older tonnage and that this price has really moved up. We continue to think that that has more upside as the Iranian fleet is limited by OFAC sanctions and their ability to trade effectively. But in the case of an Iranian deal, I think that the real upside is to newer vessels because, you know, once you're in a compliant business, you need to be able to adhere to all the different rules and regulations. And the value of, you know, having efficient eco tonnage potentially with scrubber will be much bigger. And these are not speculative investments done by, you know, traders that, you know, the Iranian affiliated traders for one or two or three voyages until a ship breaks down and they abandon it somewhere, use it for storage. This is a strategic national reinvestment for the Iranian national Iranian danger fleet. So I think that the big upside would be on on younger tonnage. And there is already quite a bit of interest on younger VLCC tonnage and adding a strong and, you know, immediate buyer like this could really maybe push prices up to levels that you had always been guiding they would reach.

I think that covers it for today. We look forward to touching base again in August. Thank you.

Thank you, everyone, for joining us today. This concludes our call and you may now disconnect your lines.