Dorian LPG Ltd.

Greetings and welcome to the Dorian LPG second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Additionally, a live audio webcast for today's conference call is available on Dorian LPG's website which is www.dorianlpg.com. I would now like to turn the conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young. Please go ahead.

Thank you, Bikram. Good morning, everyone, and thank you all for joining us for our second quarter 2023 results conference call today. On the line today with me are John Hajibateris, Chairman, President, and CEO of Dorian LPG Limited, John LaCouris, Chief Executive Officer of Dorian LPG USA, and Tim Hanson, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through November 9, 2022. Many of our remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as expect, anticipate, believe, or similar indications of future expectations. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors, as well as general economic conditions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those we express today. Additionally, let me refer you to our unaudited results for the period ended September 30, 2022, that were filed this morning on Form 10-Q. In addition, please refer to our previous filings on Form 10-K, where you'll find risk factors that could cause actual results to differ materially from those forward-looking statements. Finally, you may like to refer to the investor highlights slide posted this morning on our website as we go through our remarks this morning. With that, I'll turn over the call to John Hadjibateris.

Thanks, Ted. Thank you for joining us. Ted and John are in Hamburg. Tim and I are in Houston. I will give a brief introduction and then open immediately for questions when you can access my colleagues directly. Including our recent dollar dividend declared on October 27, we will have returned nearly $500 million to shareholders since our IPO. Our board has focused on returns to shareholders while retaining commercial flexibility and ensuring a strong balance sheet. We've often been asked why we call our dividend irregular. to distinguish it from extraordinary and a regular dividend. That term is not our invention. It was more often used in the past, and Ted can elaborate on its history. We use it because we consider it a more accurate way for a shipping company to describe the prospects for future dividends. Our board prioritizes return to shareholders consistent with a strong balance sheet and value creation. We are confident in our sector's relevance in the energy mix and in our part in the supply chain and returns over the lifetime of our assets. But we acknowledge that even in the best of times, volatility makes it impossible to make reliable medium term predictions of the freight markets. The TCE achieved per calendar quarter was $36,858, and our OPEX, $9,541. Cash G&A was $5.8 million, and cash interest expense, $6.4 million, down from $6.5 million, reflecting favorable hedges and fixed-rate debt. Ted will answer any questions on our financials. Our shoreside teams have continued their hard work to ensure the safety and well-being of our seagoing staff, including our Ukrainian and Russian seafarers and their families, many of whom face extraordinary challenges. Difficulties in handling crew changes continue. China remains unavailable as a location to perform crew changes. Overall, however, the number of ports that allow crew changes has increased in comparison to the previous year. LPG export and import demand increased in the third quarter of 2022. Global exports are up 5.4% year-over-year with support from Canada and the Middle East. North American production continued to increase. A relatively quiet market over the summer and into fall put some pressure on freight rates. Despite the summer doldrums often seen across tanker segments, the VLTC market kept a steady floor above cash break-even level. and the recovery was swift. This indicates a well-balanced market supported by strong underlying fundamentals. The heavy fuel oil, low sulfur oil spread is currently about $260 per ton in Houston, down from $320 at the close of last quarter. We have managed the volatility in bunker price as well, and this has contributed to our strong earnings this quarter. Tim and John will answer any questions regarding our view of the freight and product markets going forward. In the meantime, here are some highlights. Despite lower than expected propane demand in China for olefin production, 2022 is forecasted to have about 4.7 million tons more of incremental NPG consumption compared to 2021. This was achieved in spite of only six out of 10 expected new PDH plants coming online this year. LNG spiking in Japan and South Korea is expected to increase LPG production over the winter. South Korea is expected to import about 800,000 metric tons of LPG additionally to counter the high LNG prices. Meanwhile, Japan has imported 43% more year-on-year during the first half of 2022 for city gas consumption. Similarly, in Europe, We have seen some substitution of LPG for LNG. North European substitution with ship-borne volumes from the U.S. continues to add about four VLGCs a month. Despite the fact that more LNG ships are going to Europe rather than through the canal to Asia, the Panama Canal has remained congested, adding on average... more than 10 days to the voyage both south and northbound, up from five in the last quarter. And while the VLGC order book next year is significant, increased export volumes coupled with canal congestions and the fleet slowdown will likely help absorb most of the new tonnage. Our outlook for the calendar year for the final quarter is positive. Estimates for U.S. exports point to further growth in 23 and 24. In its October short-term energy outlook, the EIA estimated that U.S. LPG exports will grow 8% in 22 and 11.3 in 23, up 1% and 1.3% from July's estimate. U.S. LPG production now is estimated to grow by 6.1% in 22 and 4.8% in 23. The 2023 IMO estimates Emission regulations, EEXI and CII, will come into effect in January 23 and will establish strict power limitation and carbon intensity limits to be complied with annually from then on. Our performance and new technology team have been diligently preparing our fleet and shoreside operations for these regulations, including retrofitting energy-saving devices and developing and harnessing new software to manage emissions. fuel consumptions. As Ted said, you can see more on our investor highlights and also we're here for any questions that you may want to ask. Thank you again.