DHT Holdings Inc

NYSE:DHT

Earnings Call Transcript 2020-Q1

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to today’s Quarter One 2020 DHT Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. And I would now like to hand the conference over to your first speaker today, Ms. Laila Halvorsen. Please go ahead.

[Laila Halvorsen, Chief Financial Officer]

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holding’s first quarter 2020 earnings call. I am joined by DHT’s, co-CEOs Svein Moxnes Harfjeld and Trygve Munthe.

As usual, we will go through financials and some highlights before we open up for your questions. The links to the slide deck can be found on our website, dhtankers.com. Before we get started with today’s call, I would like to make the following remarks. A replay of this conference call will be available at our website, dhtankers.com, until May 13. In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exhibit to our Form 6-K.

As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events, including DHT’s prospects, dividends, share repurchases and debt repayment; the outlook for the tanker market in general; daily charter rates and vessel utilization; forecast of world economic activity, oil prices and oil trading patterns; anticipated level of new building and scrapping; and projected dry dock schedules.

Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic report available on our website and on the SEC EDGAR system, including the risk factors in these reports for more information regarding risks that we face.

Looking at the P&L highlights. EBITDA for the quarter came in at $128 million and a net income of $72 million or $0.49 per share. Adjusted for a non-cash change in fair value related to interest rate derivatives of $12.6 million, net income was $85 million or $0.58 per share for the quarter. This sets a new record in the company’s 15-year history. OpEx for the quarter was $19.8 million or $8,100 per day average for the fleet compared to average operating cost of $7,900 per day for 2019. The increase was mainly related to upstoring of spares and consumables in relation to IMO 2020. G&A for the quarter was $4.3 million, equal to $1,700 per ship, per day.

Moving over to the balance sheet, the quarter ended with $76 million of cash. During the quarter, we prepaid $58 million under the ABN Amro credit facility, in addition to $14 million related to scheduled installments. The prepayment was made under the revolving credit facility tranche and may be re-borrowed. Current availability under all revolving credit facilities is $136 million, putting total liquidity at $212 million. Financial leverage is still moderate, with interest-bearing debt-to-total assets of 41% based on market values for the ships. Subsequent to the quarter end, we agreed to a $36.4 million financing of DHT Jaguar with our current lender, Danish Ship Finance. The new loan will be in direct continuation of the existing loans with a 5-year tenure and we will have final maturity in November 2025. The new loan has a 20-year repayment profile and will bear an interest rate equal to LIBOR, plus 2%, which compares favorably to current average of 2.37%.

Looking at the cash bridge, we generated $128 million in EBITDA. Ordinary debt repayments and cash interest amounted to $26 million, $47 million was paid in dividends, $3 million was used in scrubber and maintenance CapEx, while $58 million was used for debt prepayment. Changes in working capital amounted to $13 million and the quarter ended with $76 million of cash.

With that, I will turn the call over to Svein.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Thank you, Laila. As you could see from the cash bridge, Laila presented our capital allocation focus on two aspects, one, returning cash to our shareholders and two, investing further in our already healthy balance sheet. We are for the first quarter, returning $51 million to shareholders in the form of cash dividend of $0.35 per share, representing 60% of the adjusted net income or $0.58 per share. The dividend marks 41 consecutive quarters with cash dividends. Our other priority was to invest in our balance sheet by prepaying $58 million of bank debt. This has been applied to a revolving tranche in the credit facility and can as such be reborrowed. Following this, our interest-bearing debt as of May 5, was $808 million. We are not allocating capital towards buying ships. Whilst we appreciate the attraction of the prospective cash return for ships in the 10 to 15-year age bracket, it would not represent the fleet renewal for us.

As for brand new ships or placing orders, we do neither find prices, nor technology to yet present attractive opportunities to invest. In conclusion, you should not expect DHT to employ capital towards fleet investments at this time. The COVID-19 outbreak is impacting our business in several ways. The main operational challenges relate to three areas. Firstly, as a result of quarantine policies and restrictions in ports to embark and disembark crew, our seafarers are staying on board longer than originally planned. Our seafarers are demonstrating, understanding and cooperation, hence our servicing – our services are continuing uninterrupted. We should take this opportunity to thank them for their fantastic efforts and support. Secondly, it could prove challenging to have supplies delivered to ships. As our [indiscernible] for these regularly trade imports, such as Singapore and Fujairah, we have so far experienced very limited impact. We should thank both our seafarers and shore staff for good preparation, allowing our ships to trade as planned. Thirdly, the current reduction in consumption of refined products has caused short storage tanks rapidly filling up. Consequently, delays the discharge to cargo could be experienced. These delays are forced floating storage and paid for, by the clients through the merge rates or pre-agreed rates to store oil.

And now over to the operational highlights of the quarter, following on from a very healthy fourth quarter of 2019, the first quarter of this year continued on a strong note, although, it might be tough getting used to, for our investors, the market during the first quarter was another example of significant volatility. As we have suggested many times, we encourage investors to focus on periodical averages and importantly, on what truly matters, the earnings per share.

Our spot vessels earned $66,400, a day, during the quarter, combined with a good showing from our ships on time charter with $54,000 per day during the period. Our fleet earned on average $64,400 per day in the quarter. We have, as of today, booked 66% of our spot capacity for the second quarter at $110,400 per day, a significant step up from the prior two quarters. Everyone at DHT continued to work hard and efficiently, both onshore and onboard our ships, resulting in stable and what we believe to be very competitive costs. OpEx for the quarter was $8,100 per day, also reflecting a well maintained quality fleet. We have a lean and competent organization, and our G&A was $4.3 million for the quarter.

As we announced subsequent to quarter end, we have entered into fixed time charter contracts for 6 of our ships. It is in line with our strategy to try to secure some level of fixed income when rates are elevated, yet supporting business opportunities for our customers. The average daily hire for these 6 ships is $67,300 per day, generating significant cash flows and being highly profitable. In fact, these 6 time charter contracts are expected to generate an EBITDA contribution of about $121 million during the firm contract periods. 5 of the 6 ships have already delivered into these contracts, with the last ship planned for delivery, later this quarter. You should also note that 5 of these ships are in the mature end of our fleet, thereby, improving the average fuel efficiency for the fleet remaining in the spot markets.

We believe the size of DHT to offer ample opportunities to invest and divest as well as having sufficient size to service clients. Importantly, in the context of the size and the decision to secure these time charters, we believe it demonstrates that the choice like this will have a meaningful impact on the company’s course, over the coming quarters. We wrapped up these contracts over some 10 days, proving that one can swiftly seize opportunities, the weather presents, to turn the boat quickly in anticipation of changing currents. Following this, we now have 10 of our ships on time charter contracts. The other 4 ships have fixed base rates at $31,500 per day, on average, with profit sharing structures. As such, these ships participate in strong markets, demonstrated by their average earnings well north of their base rates during the first quarter.

And with that, over to Trygve.

[Trygve Munthe, Co-Chief Executive Officer]

Thank you, Svein. The past 7 months have been remarkable in the tanker market. We came into the fall of 2019, with a clear and well-founded expectation of a healthy tanker market ahead. Fleet growth was moderate. Oil inventories had been drawn down and the ton-mile was expanding, with the U.S. and other Atlantic exporters going from strength to strength. Freight rates were moving up decently, and by the end of September, had reached $40,000 to $50,000 per day. When rates skyrocketed, following the sanctions of the COSCO vessels and some rumors about blacklisting of ships, having called on Venezuela. Rates cooled off later in the quarter, but DHT still delivered a record-breaking fourth quarter. In the new year, the roller coaster ride continued, with the COVID-19 pandemic, the lifting of COSCO sanctions, the epically ill-timed price war between the Saudis and the Russians. The oil demand meltdown, leading to massive overproduction and a floating storage bonanza.

So far this year, we have seen spot rates under $15,000 per day and over $250,000 per day. No one did or could have predicted this wild sequence of events and incredible swings in the freight rates. And this, in fact, is a huge validation of our strategy at DHT. We operate in a market, that is hard to predict, and we must expect the unexpected, both positive and negative surprises. And that is exactly why we always strive to protect the downside without giving away the upside. We have now had back-to-back record-breaking quarters for DHT. And as you can see from this Slide or from Table 1 in highlight section of the press release, the current quarter looks even stronger. The table shows, that we quarter-to-date have secured revenue from time charters and booked spot business of $164 million. This is $12 million more than we generated for the full first quarter. As you can see from the second last line, we still have 584 spot days to fix. The quarter is looking good, indeed. We do not know what the second half of this year has in-store for us. For once, there is actual divergence amongst the market analysts. As one market outsource, phrased it, we have never had so many factors to try to factor in. In our opinion, the deciding question for the near term will be, if there are more ships leaving the trading fleet to do storage duty, then the reduction in ships required to transport to cut back oil production. A key factor to watch will be the contango and subsequently for further floating storage.

Either way, when the pullback comes, whether that will be – whenever that will be, we expect it to be shorter lived than normal due to the unusually constructive fleet situation. The order book is historically low, with just 61 VLCCs in order, equivalent to 7% of the existing fleet. In the other end, there is a significant number of VLCCs now just waiting for the right time to be phased out. 26% of the VLCC fleet is 15 years or older. So to sum it up, and not that it will come as a great surprise to you, we believe DHT is very well positioned no matter what the next turn of the tanker trade will be. Firstly, we continue to run a very cost-efficient operation. Secondly, quarter-to-date, we have secured more revenue than we had the entire first quarter, and we still have further upside with 584 spot days to fix. Thirdly, we have secured significant fixed income at good levels by chartering out some of our older ships. This gives us a great base to build on, over the coming quarters. The 10 time charter ships are estimated to generate minimum $47 million in quarterly revenue, in the next quarters. So roughly speaking, you can say that a little more than one-third of the fleet will cover about two-third of normalized cost.

Simply put, by taking on these time charters, we have extended the benefit of the strong market and put the company in a great position to continue to generate attractive returns for shareholders. And finally, we expect near-term cash flow will enable us to not only continue to return capital to shareholders, but also to prepay additional debt and, thereby, pave the way for stronger generation of distributable cash flow, even in more normalized freight rate environments.

With that, we’d like to open up for your questions. Operator?

[Operator]

[Operator Instructions] And our first question comes from the line of Randy Giveans from Jefferies. Your line is now open.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Good. Thanks. How are you?

[Randy Giveans, Jefferies]

Good. Yes. Congrats, obviously, on the another record quarter. It looks like 2Q also maybe a third consecutive record quarter here. So also with the derisking of the balance sheet and the income statement for the time charter, it seems like a pretty prudent strategy there. So I wanted to follow-up on those. Of those 6, how many are for floating storage and who are the counterparties on them? And then you mentioned that, 5 of them have already started the charter. Is the 6th one, still operating in the spot market, until it starts that contract, later this quarter?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Yes. So that’s a good question, Randy. For these 6 ships, 3 of them are fixed, within oil company and 3 are with the oil trading OPECs. None of them are actually yet to sit still and store oil, but one could expect that the cargoes that some of these ships have already lifted will be set to store. So time will tell us, as things go forward. The 6th ship is currently completing her existing voyage. And the plan is to deliver her to the client of the completion of that cargo.

[Randy Giveans, Jefferies]

Perfect. Okay, alright. And then I guess, one more question for me. I have a few more, but I’ll ask this later. With your shares trading pretty far below NAV and well below [indiscernible] at the beginning of the year, it doesn’t seem like you’re really getting the premiums, you probably deserve for these large dividend payouts. So going forward, are you open to either changing your return of capital policy of 60% payout, or using more of this cash for share repurchases and dividends, how do you balance this?

[Trygve Munthe, Co-Chief Executive Officer]

I think, you shouldn’t really expect any changes in the capital allocation policy. We’ve had this minimum 60% placed out for 5 years. And we think, it has served the company and its shareholders well. It’s a reasonable split between returns of capital to shareholders and the ability to – at certain times in the cycle to expand the business and in other times, to invest in the balance sheet. And as we’ve responded on the trade-off between dividends and buybacks, our bias, and you can see it from past performance, we tend to focus on the cash dividends. And then, of course, shareholders can increase their stakes with their dividends. We have, certainly, at times done buybacks as well. And when there’s been fantastic opportunities or disconnects between the underlying business and what’s going on in the stock market. So I hope, that answers your questions.

[Randy Giveans, Jefferies]

Yes. It certainly does. I know there were some concerns, that you’d be reducing that 60% payout. So thanks for clarifying that. You clearly have enough for dividends and for debt prepayments as you already showed in the first quarter. So thank you and will talk soon.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from the line of Ben Nolan from Stifel. Your line is now open.

[Ben Nolan, Stifel]

Yes, thanks. Good morning guys. So I had a couple of questions, that, in terms of just where we are at the moment, obviously, VLCC spot rates have fallen, a good bit here, recently. But it seems like in the last few days, they’re based on the spot fixtures. I’ve seen this, there’s been a pretty good floor between $50,000 and $60,000 a day. Is that right? Is that sort of what you’re seeing? And could you maybe talk to – is this just sort of owner resistance? Or is it – does it appear to be pretty good demand at those levels?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

I think, you certainly see the cuts from OPEC+ hitting the market because the shipments are out of the Middle East. The number of cargoes is definitely down from what we’ve seen, over the past quarters. And so I think, that the adjustment in the spot market is very much, sort of, a reflection of that. And I think, the levels are sort of sideways right now, as you say. But I think, given, all the circumstances and turbos, that we’ve almost come to experience now in these past 6 months. It’s very hard to have a very clear view on where things will be next week and so forth, but there is a bit more cargoes coming to the market today. And I think charter start, at least, in the short term that will hold rates at the current levels.

[Ben Nolan, Stifel]

Okay, that’s helpful. And then I was hoping, maybe, with respect to the $110,000 a day that you’ve booked so far, in the second quarter. Could you maybe talk to, if there’s any cadence or sort of lumping of those contracts or a number of them early or more than recently, such that, it might impact what becomes available now, relative to the market here?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

I think, in general, with our fleet, we have sort of ships pretty much all the time to fix in the market. So we don’t really seem to be heavily focused for certain weeks or not, could be some exceptions of that, obviously. I think, what people tend to miss a bit, is the time lag in fixing cargoes, the time lag in the cost of bunkers. How far away are you, when you fix the cargo to when actually a revenue start to come in and all of this. And I think, people tend to look at indexes, way, way too much. I don’t really appreciate how the business operates. So it might be challenging for the people on the outside to understand. But I think we would welcome both the investors and analysts to engage with us and try to learn more and understand how it really works.

[Trygve Munthe, Co-Chief Executive Officer]

And I think, it’s not only sort of when do you book your second quarter voyages if you – when we start building the coverage for any given quarter, it really starts with the tails of the preceding quarters’ voyages, if that makes any sense. So the first sort of known revenue in the second quarter, that was business, that was booked in, maybe, even in December and January, that was doing most of their performance in the first quarter, but they extended into the second quarter. So just as an example, right now, we have at least 3 ships that are fixed on spot voyages that will not complete until way into July. So that’s into the third quarter. So that’s the start of the coverage for the third quarter. So once you take that into mind, I think, it’s a little bit easier to get your head around it. And especially if you then tie it back to what we said about the volatility of freight rates over the past several months. So if you look at the first quarter, in the middle there, there was 6 weeks, that average just over $20,000 a day. Sure, once the price war started, the things were going to skyrocketing again. But it’s been incredibly volatile. So there is definitely a significant period in there, where ships were showing up to be loaded and things were fixed, and the rates were quite different than what we’ve seen in the past few weeks.

[Ben Nolan, Stifel]

Yes. No, that makes sense. And then lastly for me, just curious if – obviously, with the volatility, they’re seeing quite a number of failed fixtures. Is that something that you guys experienced much in – is it still a factor?

[Trygve Munthe, Co-Chief Executive Officer]

Yes, we have experienced it. As I’m sure all the other players have as well. And it’s really a bit of a disgrace for the industry. And the routine is that you agreed for all the payment and the terms for spot voyage, but the charterer has then, typically, 48 hours to clear the ship through the system from a quality assurance perspective. Once the rates skyrocketed, like we saw last fall and also in so far this year. If things were put on subjects at very high rates, and then you saw the rates coming sharply off of that. There was really a threat made to the owners, that, if you are not going to give us a better rate, we’re not going to lift subjects. So this has been a factor from most charterers with a few, very few honorable exceptions, but you see both traders and oil companies from the East to the Europeans to the Americans have been practicing this. So it’s unfortunate, but it’s an issue.

[Ben Nolan, Stifel]

Okay. And there’s no way around it. You just have to live with that, I guess.

[Trygve Munthe, Co-Chief Executive Officer]

I think, it’s very hard to work around it and to sort of demand any earnest money or give no, sort of, time to clear the ship at all. That’s very hard to do. So, some people have been talking about making a shame list and to publicly list the worst offenders, but nothing has really happened, as of yet, at least.

[Ben Nolan, Stifel]

Yes. Okay, alright great. I appreciate it.

[Trygve Munthe, Co-Chief Executive Officer]

Thank you.

[Operator]

Okay. Our next question comes from the line of Mike Webber from Webber Research. Your line is now open.

[Mike Webber, Webber Research]

Hi, good morning guys. How are you?

[Trygve Munthe, Co-Chief Executive Officer]

Good. Thanks.

[Mike Webber, Webber Research]

Just curious, with the burst of the storage inquiry you guys were seeing and are seeing, are you starting to see the period inquiry extend at all, for maybe a 6-month term to something closer to a year? I know, the curve has flattened a bit. So it suggests that you probably haven’t, but I’m just curious what you’re hearing from your customers in terms of their needs? And then specifically, if we think, kind of 6 months out from when we saw the bulk of the DHT initial storage, maybe kind of more closely associated with kind of the pre-OPEC production levels, that should all start rolling off in, call it in middle of – in probably the September, October time frame. How do you think about positioning your fleet or just what the market impact of that rolling off, in terms of charter is looking potentially to extend or looking for more optionality. It looks like we’re got a little bit of a bubble development there. So just curious the dynamic – kind of – mechanics of the storage rate, what you’re seeing, in terms of length and then how you see that kind of fluctuating to the fleet, as we move through 2020?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

I think, it’s fair to say that the vast majority of inquiries for ships to store oil is for sort of tenures of 3 to 6 months. And that is still the case. But then the rates, of course, have been moving, a bit with the contango, sort of charters for 12 months like we have 6 – like we are fixed, we’re really far and few between. And hence, we felt this was a great opportunity, when it was possible to try to put some of this to bed. So we’re obviously, not the only ones who have done 12 months, but then there’s hardly any liquidity sort of beyond that, currently, in the market.

[Mike Webber, Webber Research]

Got it. And then can you talk a little bit about how that originated? Is that a specific relationship that DHT has, like is this an open tendering process, or if not open tendering, was that a competitive process from a rate perspective, but just a little bit of how you were able to grab that much length at such a rate. When we haven’t really seen to your point, that much business done at that kind of term, thus far?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

It’s certainly not a tender business, and it’s really how our trading desk is working in the market and how they work with customers and the brokers and how we sort of do business development. And then we sort of – all of us are involved in this and try to strategize and to see how we can – what we can get out of it, so not as much as we will share with you on that.

[Mike Webber, Webber Research]

Sure. Fair enough. Just one more and I’ll turn it over. I know you don’t have a crystal ball. So I’m not going to hold you to it, but just curious if there’s a bit of a debate around the depth of the storage trade, around exactly how much could we see structurally put on the water. I’m just curious, as you look at the market today, would you anticipate peak floating storage in 2020 being markedly higher than we’re sitting right now?

[Trygve Munthe, Co-Chief Executive Officer]

I would think so. I think, a fair amount of the ships that were fixed for storage haven’t really gone into storage duty yet. Some of them have done spot voyages there, to be followed with another lift or loading. And so my main point, if you say, it’s 70, 80 VLCCs fixed for storage. They’re not 70 or not all of them have gone into storage. So just by the fact that more of them are going to trickle into the storage business. I think, you’ll see a higher number of ships in actual storage, later in the year than what we see right now.

[Mike Webber, Webber Research]

Alright. Thanks for your time guys. I appreciate it.

[Trygve Munthe, Co-Chief Executive Officer]

Thank you.

[Operator]

Okay. Our next question comes from the line of Omar Nokta from Clarksons Platou. Your line is now open.

[Omar Nokta, Clarksons Platou]

Hi, thanks guys. You outlined earlier in the call that the strength that we’re seeing currently underway goes well beyond 2Q, gives you visibility for the rest of the year. And I think, also, with that, with a lot of cash flow spoken for or at least visible, it gives you a chance to be a bit more dynamic, I think, when you think about the fleet makeup. And as Svein, you’re quite clear, I think, in your opening commentary, you talked about investing in the balance sheet and paying back shareholders. I know growth isn’t on the table at the moment, whether buying older ships, just – it may give you good ROE, but it doesn’t help the age profile, and then there’s a lot of questions about new building technology. What about just, say, fleet renewal in general? What are your thoughts on selling, say, an ‘04-built VLCC in today’s market, where we’ve seen a good amount of buying interest and then maybe taking the proceeds and replacing, let’s say, a 2014 built. Some modernizing along the way, but keeping the number of vessels unchanged.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Omar, I will say, as per our fleet it’s 8, correct. And of course, although, some of them are older spectrum of that. But just look at the numbers. These are our 4 ships, 2 of them are on 12 months’ time charter at significant earnings. So the cash flow opportunity for these assets is phenomenal. Hence, as we commented, we understand why people have been looking at buying these ships. So we’ve been sort of more focusing now on making as much money as we possibly could on these assets and trade them for longer. This is not too dissimilar from – for what happened in ‘15, ‘16, that we were always open to divest older ships, and we did, in fact, sell quite a few ships at that point. But we still elected to retain some of them and just earn good money. And I think, the benefit of hiring fleet that was the right decision. That was a better economic decision than letting them go at the time, as asset prices dropped significantly, during ‘16. So if you look at our track record, when we have invested, we have been very aggressive in a short time span when asset prices have been in the trough. And then we stopped investing. We don’t typically sort of invest just throughout – for the sake of it of always picking up ships. So you should expect the more of the same from us, and there will be a time and we will expand again. And exactly when that will happen. It’s a bit hard to say, but

[Trygve Munthe, Co-Chief Executive Officer]

As we said before, it could very well be that we are shrinking the fleet before we’re expanding the fleet. And again, if you look at our track record, at times should be one step back in terms of size of the fleet and then 3 steps forward. So the core is that, we think there’s a buyer’s – part of the cycle, where it’s a buyer’s market, and there’s another one, it’s the sellers market. We don’t want to be sellers in a buyer market – buyer’s market, to put it that way. So to buy a young ship and sell an old ship, at the same time, we much rather prefer to sell the ships in a high market and then wait till it’s low prices and then we’ll buy new units.

[Omar Nokta, Clarksons Platou]

Okay. That’s fair. And then maybe just thinking about then the – because I think, maybe it was on the last call, you did mention being a bit more open to selling some of the older vessels. I’m not be mistaken on that, but it rings a bell. But when you think about – as we get into 2021 and we’re looking outwards, obviously, there’s no new building threat, and you have plenty of flexibility with the deleveraging process, that’s well underway. How do you think about expanding the footprint beyond just the – not saying it’s just 27 VLCC, it’s a sizable fleet you have. But just in general, what do you want to look for? Or what is it, that’s going to change your mind about going beyond your existing footprint? I know, there’s a lot of questions on technology and the propulsion systems that – maybe just some color as to what you’re looking for that will give you – that will change your thought process about growth from here?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

We look at ourselves as a tanker company, and we now look at ourselves as a vis-à-vis focused company. And if sort of that change, we will certainly had rise the market for this in advance.

[Omar Nokta, Clarksons Platou]

Okay. That’s fair. And then maybe just one more, in the interest, where you mentioned, not wanting to be a buyer in the seller’s market and vice versa. How would you characterize the market that we are in today? Is this the buyer’s market or sellers?

[Trygve Munthe, Co-Chief Executive Officer]

This would be – there’s plenty of people I want to buy. So it’s a seller’s market. But as Svein touched upon, whilst the values for the older ships have come up percentage wise, quite significantly, we have also found ourselves in a spot market where in one voyage you can essentially earn the whole delta between the value of the ship and the scrap value of the ship. And then under those circumstances, we have elected to hang on to the ships and collect the cash flow. And then, see what’s – and perhaps do it again.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

So it will be buyer’s rather than sellers because the values haven’t come up as much as they should have in the current freight environment.

[Omar Nokta, Clarksons Platou]

Got it alright thanks for that color. That’s it for me.

[Operator]

Okay, our last question comes from the line of Robert Silvera from R.E. Silvera. And your line is now open.

[Robert Silvera, R.E. Silvera]

Thank you, gentlemen. Congratulations on a very well-run quarter. My question is, what is the status of the one damaged ship?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Yes. So she has been fully repaired, and she is – she then went on some – on a new cryo commitment, and she is set to roll in the next few days. So this repair completed almost 38 days ago. So it’s on the float – afloat, outside Singapore.

[Robert Silvera, R.E. Silvera]

Any news on the claim for lost time, etcetera?

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

There will be a claim percentage, there. So we think that it’s quite clear whose focus is, we were a tanker, and we were hit by a ship, that was steaming. So that’s been presented to the counterparties insurance company, and we’ll see how this develop. These things typically take a long time. So we will report on this in due course when things are more mature.

[Robert Silvera, R.E. Silvera]

I see. I’d like to compliment you on your strategy, totally agree with it, as a shareholder of well over 30,000 shares for my company. And the – as I view it, if I’ve interpreted your press release correctly, you have virtually deleveraged the equivalent of what you’ve paid as a dividend almost 50-50, so to speak. And I love that. I’m looking forward to the days when this market, as it always does, cycles down as far as rates are concerned. And if you continue to aggressively prepay debt, get us way, way down on debt. We will be extremely strong in the marketplace to take advantage of low asset rates, etcetera. And I just want to compliment you guys. I love your strategy, and we, as shareholders, are staying right there.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Thank you very much. Thank you for your support.

[Robert Silvera, R.E. Silvera]

Okay, that’s it for me.

[Svein Moxnes Harfjeld, Co-Chief Executive Officer]

Thank you.

[Operator]

[Operator Instructions]

[Trygve Munthe, Co-Chief Executive Officer]

Okay. If there are no more questions, we thank you all for your interest in DHT and wish you a good day. Thank you.

[Operator]

Okay. That does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers please standby.