FLEX LNG Ltd.

Ladies and gentlemen, thank you all for standing by and welcome to this Flex LNG Quarter 2 2020 earnings presentation. At this time, all participants will be on a listen-only mode. There will be a presentation followed by a question and answer session at which time, should you wish to ask a question, you will need to press bar and the number on your telephone and wait for an interview to be announced. I must advise you all that this conference is being recorded today, Wednesday, the 19th of August, 2020. And without any further ado, I would like to hand the conference over to the first speaker of the day, Mr. Øystein Kalliklev, CEO, please go ahead, sir.

Thank you, Gino, and good day and welcome, everyone, to the second quarter 2020 presentation for Flex LNG. My name is Øystein M. Kalliklev, and I'm the CEO of Flex LNG Management, and I will be joined today by our CFO, Harald Gurvin, and we will guide you through today's presentation. A replay of this presentation will also be available at our website, flexlng.com. So, first a disclaimer with regards to, among others, forward-looking statements and completeness of detail. The full disclaimer is available in the presentation and we recommend that the presentation is read together with the interim financial report as well as our 20th annual report. So, the highlights. The spot market for LNG shipping has stayed weak over the spring and summer due to the fallout from the COVID-19 pandemic. A general weak spot market over the summer is not really surprising, and something which we also highlighted in our Q1 presentation in May, as well as in our market webinar in early July. When we presented our numbers in May, we disclosed the fact that we had booked 97% of Q2 days at time charter equivalent earnings, or TCE, of close to 50,000 per day. Earnings on the remaining 3% have been on the soft side, so we are therefore delivering a TCE of $47,000 per day, which is however in line with our current cash back even levels. Our cash back even level is however expected to be reduced a bit when we are scaling our business with the remaining new buildings, which on average also have slightly lower financing costs. In Q1, we achieved a TCE of $68,000 per day, For our fleet, the average TCE for the first half of the year was $57,000. This is a trading result which we are reasonably satisfied with, given the very challenging market environment. Notwithstanding the obstacles posed by the novel coronavirus outbreak, we have managed to operate our ships with 100% uptime and availability. We are pleased that cargoes have been delivered without disruptions or delays to our customers. Furthermore, we have mobilized on new buildings for delivery as planned. Flex Aurora was delivered end of July, while Flex Artemis was delivered on Monday, actually two weeks ahead of her contractual schedule. True rotations have been made particularly difficult for the shipping industry, resulting in a lot of seafarers being effectively stranded on ships. We are, however, pleased that we, on average, have been able to carry out two crew changes per ship in this difficult period, thus minimizing extended stay for our seafarers. So, again, we would like to convey our gratitude to our seafarers and onshore personnel for delivering first-class operational performance, also in trying times for everyone involved. In terms of financials, We delivered a slight adjusted loss of $700,000 for the quarter, or an adjusted loss of about $0.01 per share. This compares to an adjusted net income of $9.3 million in the first quarter, or $0.17 per share. Thus, during the first half of the year, we delivered an adjusted net income of $8.6 million, translating into $0.16 per share. When it comes to financing, we are pleased that we have put in place 920 million of attractive long-term financing for seven new buildings for delivery in second half of 2020 and first half of 2021. Five ships, including Flex Aurora and Flex Artemis, just recently delivered, will be financed under the 629 million ECA facility which we recently increased to a $639 million facility, as we were able to add the $10 million accordion tranche for the Flex Artemis, as she is employed under a long-term charter with a subsidiary of Gunvor. For the remaining two new buildings, Flex Amber and Flex Volunteer, we announced $281 million of financing through a sale leaseback and a bank loan, respectively, in our May presentations. These financing were subject to final documentation, and these financing have now been signed and executed in June, according to plan. Hence, 98% of our remaining capex is covered by long-term debt. The remaining 17 million of capex we can easily finance by our cash at hand, which stood at 116 million at quarter end. We also believe we will be starting to generate positive cash flow again in the fourth quarter, which we could utilize for this purpose. Having all ships financed long-term with no maturities before second half of 2024, as well as having a very comfortable cash position, puts us in a very strong financial position. As we have previously announced, we have been active securing contract coverage for our 2020 new builds, in order to not be too overly exposed to fluctuations and gyrations in the spot market. Hence, Flex Aurora, Flex Amber and Flex Resolute have all been fixed out on TCPs, with periods ranging from 8 up to 12 months. Flex Artemis is already committed on a long-term charter with Gunvor, as explained earlier. With more ships on the water in third quarter, we expect our revenues to continue to grow. Although freight rates are now finally improving ahead of autumn, these rates are typically for voyages in September or October. Hence, we are guiding similar TCE numbers for third quarter as numbers are also being slightly dragged down by the fact that we have certain positioning and mobilization costs for the three or possibly four ships for delivery in third quarter. When it comes to dividend, which we all like, we have to ask for some patience from our shareholders. Right now, the world is facing its sharpest decline in economic activity and energy demand since the Great Depression. In this period of time, and given the state of the LNG shipping market during second and third quarter, we think it's rather in the best interest of our shareholders that we continue to preserve cash for the time being. That said, we will continue to be a very shareholder-oriented company, as our affiliated companies, Frontline, Golden Ocean, and SFL, have evidence both in the past as well as yesterday with the 66 consecutive quarterly dividends paid by SFL. So, before handing over to Harald for a financial review, I will just summarize our fleet composition. As of today, we have three ships on fixed TCs. This is FlexRanger, which commenced a new TC with Spanish utility Endesa at the end of May. During July, ship management for FlexRanger was transferred to FlexLNG Fleet Management, and we thus have all our ships under in-house management. In addition, Flex Aurora and Flex Resolute have been fixed on shorter-term TCs of 8 and 11 months, respectively. These TCs also have a fixed rate higher structure, and these TCPs commence subsequent to deliveries from Yard. We have in total four ships currently operating under variable higher TCs. This provides us with what could be described as utilization insurance, while we keep exposure to the overall freight market. The ships serving these types of contracts are Flex Enterprise, Flex Rainbow, and Flex Artemis, which was recently delivered under a long-term variable TC to Gunvo. Flex Amber will also be operating under a variable TC once she is delivered, either end of September or October. Three of our ships are operating in the spot market. Flex Endeavor, Flex Constellation, and Flex Courageous. So with these ships, we are fully exposed to the ups and downs in the spot market for good or bad. With our contract portfolio, our industry low cashback even levels, our very strong financial position, and the fact that our fleet consists entirely of brand new efficient LNG carriers, which are generally sought after by charters, this is certainly a risk we can manage. Lastly, we have three remaining unfixed new buildings, being Flex Freedom, Flex Volunteer, and Flex Vigilant, which we market towards potential clients now. All in all, we think this gives us a balanced contract mix, where we are keeping exposure to the overall freight market, while also ensuring an adequate level of utilization and fixed earnings for our fleet. For Q3, we are now 94% fully booked, and we also have a fairly high level of income secured for Q4, also with seven ships serving fixed or variable TCs in this quarter. So, I will hand it over then to Harald for our financial review.

Thank you, Einstein. Looking at the income statement, revenues for the quarter came in at 25.8 million, down from 38.2 million in the previous quarter. Revenues in the quarter were affected by the fallout caused by the COVID-19 pandemic, which has resulted in lower gas demand and thus impacting freight demand. Adjusted EBITDA for the quarter was 17.4 million, down from 27.8 million in the previous quarter. The result for the quarter includes a non-cash unrealized loss on the interest rate swap of approximately 6.2 million. At quarter end, we had entered into interest rate swaps totaling 610 million at an average interest rate of approximately 1.3%, and the non-cash market loss was the result of the continued fall in long-term interest rates during the quarter. All our interest rate swaps relate to financing agreements, and we are not required to post any cash collateral under agreements when the mark-to-market is negative. We also recorded a non-cash foreign exchange gain on cash deposits held in the Norwegian crowner of 700,000 in the quarter, due to strengthening of the Norwegian crowner against the US dollar in the quarter. Net loss for the quarter was 6.7 million, And adjusted for the above items, the adjusted net loss was 700,000, or one cent per share. Then moving on to our balance sheet as per June 30th. We had a solid liquidity of 160 million per quarter end, down from 120.8 billion in the previous quarter. The time charge equivalent rate achieved for the quarter is around our cash per key event rate, and the reduction in cash is primarily due to an increase in working capital of 4.3 million in the quarter. As mentioned, we do not have any restricted cash relating to our interest rate swaps, and the very limited restricted cash of $70,000 relates to mandatory deposits required by tax authorities. Our assets at quarter end consisted of six vessels on the water with an aggregate book value of 1.1 billion. In addition, we have booked the vessel purchase prepayments of 349 million, relating to the seven new buildings still to be delivered at quarter end, which represents the advance payment on these. Total debt at quarter end was 762 million, of which approximately 36 million is due over the next 12 months and thus classified as current liabilities. Total equity as per quarter end was 812 million, giving a strong equity ratio of 50%. As I should mention, we have now secured attractive financing for all our vessels, including the seven new buildings still to be delivered at quarter end. In June, we signed two financing agreements announced in the previous quarter. The first is a 156 million 10-year sale and leaseback transaction with an Asian-based leasing house for the new building Flex Amber, which is scheduled for delivery in September or October this year. Their transaction is priced at LIBOR plus a margin of 3.2% per annum and has an 18-year repayment profile. We have annual repurchase options commencing on the first anniversary, and there is a purchase obligation at the end of the 10-year lease period of 69.5 million. The second facility is the 125 million term loan and revolving credit facility for the financing of FlexVolunteer, which is scheduled for delivery in the first quarter of 2021. The five-year facility has a repayment profile of 20 years, in line with our other bank facilities, and will be split into a 100 million term loan and a 25 million revolving facility. We have already entered into interest rate swaps for the full amount of the facility, giving an attractive all-in pricing, including a margin of 3.3% per annum. In July, we also agreed a 10 million accordion increase for Flexa after me under the 629 million ECA facility, based on the long-term charter for the vessel with Gunvor. The vessel was delivered Monday this week, whereby the 135.8 million tranches was drawn. Post quarter end, we also utilized the swap option under the 629 million ECA facility to replace Flex Amber with the sister vessel, Flex Vigilant, which is the final of our new buildings scheduled for delivery in the second quarter of 2021. With 920 million in desk secured for the new buildings, The net downfunded capex is less than 20 million versus 160 million in cash at quarter end. Following these transactions, we will have a very comfortable death maturity profile, with the first maturity due in July 2024. The staggered death maturity profile also mitigates refinancing risk. And with that, I hand the word back to Øystein, who will give an update on the market. Okay, thanks Harald.