GasLog Partners LP Common Units representing limited partnership interests

Good morning, my name is Livia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gaslock Partners' fourth quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. As a reminder, this conference call is being recorded. On today's call are Paolo Ennoizzi, Chief Executive Officer, and Ahilea Socioles, Chief Financial Officer. And now, Robert Greenberg from Rosen Company will begin your conference.

good morning or good afternoon and thank you for joining the gas blog partners fourth quarter 2022 earnings conference call for your convenience this webcast and presentation are available on the investor relations section of our website www.gaslogmlp.com where a replay will also be available if you're participating via webcast Please note that the slide presentation is user controlled, and we encourage you to advance through the presentation as you're prompted to. Please now turn to slide two of the presentation. Many of our remarks contain forward-looking statements. For factors that could cause actual results to differ materially from these forward-looking statements, please refer to our fourth quarter earnings press release. In addition, some of our remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these measures is included in the appendix to this presentation. Paolo will now begin today's call with a review of the partnership's fourth quarter and full year highlights and market updates following which Achilles will walk you through the partnership's financials. With that, I will now turn the call over to Paolo Inoizzi, CEO of Gaslight Partners.

Thank you, Rob, and welcome everyone to our four-quarter conference call. Before I get started, I would like to acknowledge that as by yesterday's press release, the partnership received an unsolicited proposal from GasLog LTD, which our board and conflict committee are currently reviewing. This presentation, however, does not touch upon the proposal as this process is currently underway. We therefore deem it appropriate that no Q&A session is held today. Please turn to slide four for GasLog Partners' four-quarter highlights. Thanks to increased energy flow throughout the year, Europe managed to replace Russian gas, achieving seasonally high inventories, and ensuring that Europe will be able to get through this winter. In the process, energy prices and spot shipping rates increased to record highs. Both prices and rates softened during the fourth quarter as warmer-than-average weather in Europe resulted in decreased consumption. Prices fell nearly 80 percent from their August peak, and inventories are currently nearly 20% above the seasonal average. Although the RNG shipping spot market has come off significantly, the partnership managed to fix its remaining open days in the term market at attractive rates. This leaves the partnership with 87% of days in 2023 fixed, while the remaining ones are heavily weighted towards the seasonally strong fourth quarter. The term market has remained tight, leading to the declaration of charter options for two of our vessels and the new charter fixture for Gas Block Seattle, as I will discuss shortly. Overall, our contractor revenue backlog rose to $729 million, an increase of 18% since our last update, and approximately 30% compared to the fourth quarter of 2021. Our capital allocation strategy and disciplined use of cash has allowed us to continue working towards our gross debt to cap target, while our prep buyback have increased our free cash flow per unit by 11 cents. We also de-risk our fleet through the well-timed direct sale and sale and leaseback transactions in 2022. Please turn to slide five. In this slide, we'll focus on the impact that the Russian-Ukrainian conflict has had on the energy commodity market. You can see the monthly pipeline flow from Russia has fallen nearly 90% since the start of 2022. Despite this, and thanks to the flexibility of the LNG supply chain, Europe managed to fill its inventories to seasonally high levels. Thankfully, competition from Asia importers was notably absent due to a combination of high LNG prices, moderate weather, and continuing COVID restrictions in China. This has created two dynamics that are of interest. Firstly, higher LNG flows into Europe are likely to continue in 2023. Secondly, increased global demand for LNG has both exacerbated an overall scarcity of energy supply and specifically an energy supply deficit, which is likely to remain until new import and export capacity comes online. In response to this, we've seen about 25 million tons of new projects being sanctioned and expect this figure to double in 2023. creating additional demand for LNG carriers to match the robust new building order book. Slide six focuses on the impact of these dynamics in the shipping market. The spot market saw significant volatility in the last quarter of 2022, driven primarily by the conditions I discussed. The spot market peaked at nearly $450,000 per day, as congestion and floating storage heavily restricted availability of vessels, while charters were mostly unwilling to sublet their vessels. Since rates peaked, above average temperatures have reduced the constant need for the fill inventories, resulting in falling LNG prices and easing on floating storage. Additionally, The continuing free port outage and persistent low exports from Nigeria have resulted in reduced LNG exports and increased the number of spot vessels available in the Atlantic. Increased volumes have balanced with the shorter trips reflecting the higher flow from U.S. to Europe, rather than Asia, to keep top-mile demand flat in 2022. Regardless, the term market remains strong. Thanks to the charter's continued interest for multi-year coverage, we can only be met with independently owned vessels while the number of uncommitted vessels keeps falling. In the next slide, you can see more details on the charter as referenced earlier, namely the two extensions and the one new charter, adding and combined 167 millions of EBITDA. The extensions also have reaffirmed the attitude of charters to focus on term business. As mentioned in our previous calls, the work with Venice Energy has progressed. And although still under negotiation, we have agreed in principle that the partnership will convert one of its 145,000 cubic steam and energy carriers to an FSAU, which will be chartered to Venice Energy as effective returns. Further information on the project FID are expected mid-2023. Such conversion is expected to cost in excess of $100 million and take between 8 to 10 months. Finally, in slide 8, we would like to give an update on environmental-related regulations affecting our business. There are several regulatory bodies that have issued and are developing dedicated regulations aimed at decarbonizing worldwide shipping. Late 2022, the European Union has moved on two fronts under the Fit for 55 umbrella. Gratifying the entry of shipping into the European Emission Trading Scheme, EU ETS, and launching the fuel EU in order to promote a transition to green fuel in a stepped approach. These regulations will gradually enter into force in the next years and add to the IMO framework in order to drive the industry net zero targets. As we seek further qualifications on the application of such rules, the partnership is developing dedicated plans to improve ship's efficiency and reduce emissions, as well as cooperating with our customers and investing in digital tools to improve the efficient use of our ships. Further updates in the months to come and in our 2022 ESG report. Before I hand over to Achilles, I'm delighted to report that the partnership vessels have another year of particularly good safety score in 2022 with zero LTIs, achieving the ever-needed goal zero.