Scorpio Tankers Inc.

hello and welcome to Scorpio tankers Inc fourth quarter 2020 conference call I would now like to turn the call over to Brian Lee chief financial officer please go ahead sir okay thank you and thank everyone for joining us today welcome to the Scorpio tankers for fourth quarter earnings conference call on the call our Emanuel Laurel our chief executive officer Robert Bugbee president Cameron Mackey chief operating officer Lars Decker Nelson sorry commercial director and David Morant, Managing Director, and James Doyle, Senior Financial Analysts. Earlier today, we issued our fourth quarter earnings press release, which is available on our website. The information discussed on this call is based on information as of today, February 18, 2021, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For discussions of these risks and uncertainties, you should review the forward-looking statement disclosure and earnings press release that we issued today, as well as the Scorpio Tankers SEC filings, which are available at scorpiotankers.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is being recorded for playback. An archive on the webcast will be made available on the investor relations page of our website for approximately 14 days. There are slides available at scorpiotankers.com on the investor relations page under reports and presentations. If you have any specific modeling questions, you can contact me later and discuss offline. Now, I'd like to introduce Emmanuel Laurel.

Thank you, Brian. Welcome, everybody, to our first call of 2021. Thank you for being with us today. On our last call, we said that the rapid rollout of vaccinations would be potentially a game changer. And this is proving correct. And as we speak, injections are winning against infections. The rebound potential in our business is now significant. It is estimated that COVID has temporarily reduced 6 million barrels per day of global demand, of which two-thirds is in aviation. As we look across the market, many sectors of the economy, like travel and tourism, for example, are already discounting a significant rebound in demand, correctly so in our view. Meanwhile, in large parts of Asia, we are already back through normal levels of demand. So we do expect rates to move upwards from here. While the short-term opportunity exists for our company, we must not lose sight of the longer-term impact of the virus in our industry. The last 12 months have seen a rapid acceleration of global macroeconomic evolution across different segments like renewable energy, technology, medical science and others. In our business, we have experienced a much overlooked but decisive closure of refining capacity in the developed world. Alongside this, we have experienced the opening of major refineries in the Middle East, like Gizan or Al Zor. By the way, we at Scorpio Tankers have lifted the first Gizan cargo three and a half weeks ago on one of our MRs. So long after the crisis has receded, this positive structural impact on ton-mile demand will be felt. As such, the pandemic has served to accelerate the structural changes in demand from which we can benefit well into the future. The supply picture in clean product tankers is still benign. And not only it's benign, but it pre-existed the pandemic. At present, the on-the-water fleet of modern MRs is starting to shrink. The crisis has only served to deepen and prolong the undersupplied markets. And in this process, it is now returning pricing power to incumbent owners with modern vessels like ST&G. the new building ordering continues to remain very low, which is another encouraging factor. Before I conclude, I would like to spend the words and think about our seafarers and our teams around the world. I thank these key workers who, in the most demanding and extraordinary circumstances, have made significant personal sacrifices away from their family, away from their friends, just to keep the world economy supplied. Scorpio is a proud employer, is proud of its record as a responsible company, a responsible employer. Our teams on land and at sea can continue to rely on our unwavering support through this period. We employ about 8,000 seafarers, and we had more than 14,000 crew movements since the start of the pandemic. Finally, I will sum up with the following thoughts about hydrocarbons. Hydrocarbons are here to stay, but as a global community, we will likely produce and consume hydrocarbons in a different way or better, in an evolving way. We believe that the modern clean ecotanker has a pivotal role to play in the future, in this future and in this transition. As such, whilst the crisis has been painful for many and tragic for some, it has given us a window to the future. This future is a huge step up in product anchor tone mile with modern efficient refiners, exporting major volumes of refined products to all corners of our world. With this, I have ended my remarks, and I would like to turn the call to Robert Bugbee.

Thank you very much, Emmanuel. Look, I think this is an absolutely super exciting time for the Sting shareholder and the Sting potential investor. We're past the bottom in terms of rates. We're going to You know, the inventory has been really drawn down. The vessels you can see from our earnings are moving. That means that there's very little surplus capacity, so any increase in demand is going to immediately move into corresponding higher rates just straightaway. And we would expect that over the next couple of weeks that we will start to get significant movements upwards again in the Asian market as Asia comes back from the Lunar New Year. It's a great opportunity in the sense that our stock is still trading, despite the sort of partial sort of run-up from the bottom, is still trading at a significant discount to its net asset value. is trading it at an even further discount to where the company was only 12, 13 months ago, despite all the cash that the company earned last year and the debt that has been paid through that year. We'd expect the NAVs to start to move upwards as well, and they can move up quite sharply. Yard pricing is going upwards across shipping, higher input values, higher interest in areas like containers, LNG, soon to be dry cargo too. Time charter rates have started to firm, strong inquiry and many fixtures, especially of the modern tonnage. And the forward curve has been strengthening too. In addition to that, I can think it's safe to say the last four weeks, investors have come out and shown a lot of interest. And as Emmanuel has pointed out, these vaccinations are a game changer going forward and a game changer to people's psychology and mood. People are believing and are expecting the opposite of last year. Last year, when the rates were high, the stock sold off rapidly because everyone expected the market to fall. Today, people expect... that the vaccines will lead to greater demand and create a move to OPEC. So we're starting to anticipate that improvement. And anybody that's short, and we still have a lot of significant short interest in staying, is really denying the fact that the world is going to get better as a result of COVID. And with that, we have a lot to talk about today. I'd like to open it up to questions. Thank you very much.