Frode Morkedal

Frode Mørkedal with Clarksons Securities inquired about TORM's EBITDA and revenue guidance methodology, specifically asking for the implied spot rate assumptions for LR2 and MR vessels, and whether the guidance uses FFA or time charter rates. He also asked about the impact of crude market strength on product tankers, particularly the potential for further LR2 switching to dirty trades, and TORM's strategy for future vessel acquisitions following the successful Q4 purchases.

Answer

CEO Jacob Meldgaard explained that the guidance is based on Q1 fixed days and the forward curve for unfixed days, stressing the midpoint with an interval that adjusts based on current freight rates. CFO Kim Balle clarified the specific Q1 covered and uncovered day rates used in the calculation. Jacob Meldgaard also noted that the crude market strength provides a clear incentive for LR2s to switch to dirty trades, especially in the Western Hemisphere, due to sanctions reducing vessel availability, and expressed optimism about earning power. Regarding acquisitions, Jacob Meldgaard stated that TORM uses a methodological approach to identify assets with strong free cash flow potential, acknowledging that rising asset prices make new acquisitions challenging but TORM remains open to opportunities meeting their return requirements.

Frode Mørkedal with Clarksons Securities inquired about the spot rate assumptions underpinning TORM's EBITDA and revenue guidance, specifically asking for implied LR2 and MR rates at the high end, and whether the guidance uses FFA market or time charter rates. He also asked about the impact of crude market strength on product tankers, potential for more LR2 switching to dirty trade, and the investment case for the recent 8-ship acquisition, along with future acquisition opportunities.

Answer

CEO Jacob Meldgaard detailed TORM's guidance methodology, combining fixed Q1 days with forward curve rates for unfixed days, noting an average TCE midpoint around $3,400 across the fleet. He explained that crude market strength incentivizes LR2s to switch to dirty trade, supported by sanctions reducing compliant vessel availability, leading to rising term rates. Meldgaard described the Q4 acquisition of 8 ships as well-timed, with assets appreciating by 20%, but acknowledged that rising asset prices make future acquisitions more challenging. CFO Kim Balle provided specific Q1 coverage numbers and clarified the stress test methodology for TCE guidance, which scales with the actual TCE level.

Frode Mørkedal inquired about the repayment of the Golden Ocean bridge facility, specifically how the strong tanker market and VLCC sales contributed to early repayment. He also asked for details on the bridge facility's size, net proceeds from asset sales, the company's target Loan-to-Value (LTV) ratio, dividend payment strategy, and current investment opportunities, particularly in new tanker builds.

Answer

Ludovic Saverys (CFO, CMB.TECH) explained the $1.3 billion bridge facility, its reduction through releveraging and operational cash flow, and the instrumental role of $420 million cash from 8 tanker sales. He noted the LTV was around 55% at year-end, potentially at 50% with increased tanker values, and affirmed the board's ability to balance dividends, deleveraging, and CapEx. Alexander Saverys (CEO, CMB.TECH) stated the company is not actively pursuing new tanker orders, preferring to enjoy the spot market due to long delivery times and potential future cost changes.

Frode Mørkedal from Clarksons Securities inquired about the repayment of the Golden Ocean bridge facility, specifically asking if the strong tanker market and VLCC sales were instrumental, the original size of the facility, and net proceeds from asset sales. He also asked about the company's target Loan-to-Value (LTV) ratio and the timing of increased dividend payments, as well as current investment opportunities in newbuild tankers.

Answer

CFO Ludovic Saverys confirmed that the $1.3 billion bridge facility was largely repaid through a $750 million releveraging of Golden Ocean ships, with the remaining $550 million paid down using operational cash flow, vessel sales (including tankers), and a shift to Chinese leasing. He stated that the $420 million cash from 8 tanker sales significantly strengthened the balance sheet. Saverys noted the LTV was around 55% at year-end, potentially already at the 50% target with increased tanker values. He indicated that the board's decision to pay a $0.16 dividend demonstrates the ability to balance dividends, deleveraging, and newbuild funding. CEO Alexander Saverys clarified that CMB.TECH is not actively pursuing tanker newbuilds, preferring to enjoy the spot market, as orders placed today would deliver in 2029.

Frode Mørkedal, Senior Equity Analyst at Clarksons, inquired about CMB.TECH's perspective on the IMO's delayed carbon pricing, its impact on dual-fuel technology demand, the company's investment philosophy for dry bulk and tankers, and the future flexibility of its dividend policy.

Answer

CEO Alexander Saverys stated that the IMO delay doesn't alter their dual-fuel strategy, which is driven by partnerships and EU legislation, and they remain opportunistic sellers of older vessels while newbuilds are considered pricey. CFO Ludovic Saverys clarified that the dividend policy is fully discretionary, balancing shareholder rewards with balance sheet strengthening for future opportunities.

Frode Mørkedal asked about the impact of the IMO carbon pricing delay on dual-fuel technology demand, CMB.TECH's investment philosophy regarding dry bulk, tankers, and CSOVs, and the flexibility of the company's dividend policy.

Answer

CEO Alexander Saverys stated that the IMO delay doesn't change their dual-fuel strategy, which is based on partner collaboration and EU legislation, and that they are more sellers of older tonnage than buyers of new buildings due to current prices. CFO Ludovic Saverys clarified that the dividend policy is fully discretionary, balancing shareholder rewards with strengthening the balance sheet for future opportunities.

Frode Mørkedal sought clarification on the definition of the 'compliant fleet' and the vessel count associated with aggregators controlling 25% of it. He also questioned if 25% control is sufficient to meaningfully shift market dynamics and how this mechanism would work, and finally, how vessel values are being maintained at current high levels.

Answer

Svein Moxnes Harfjeld, President and CEO, clarified that the 25% figure refers to the 'compliant tramping fleet,' estimated at around 600 ships, after excluding sanctioned and state-owned vessels. He explained that aggregators acquiring ships from smaller owners will lead to different pricing behavior and improved information flow, thereby changing market dynamics. Mr. Harfjeld also noted that other credible buyers exist for both older and modern second-hand ships, with competitive bidding driving prices, and current time charter rates justifying these values.

Frode Mørkedal sought clarification on the estimate that 'aggregators control 25%' of the compliant VLCC fleet, asking for a vessel count and the definition of the compliant fleet, noting his calculation of 120 ships was closer to 18%. He then asked if a 25% market share is sufficient to meaningfully shift market dynamics and how this mechanism would work. Finally, he inquired about the sustainability of current high vessel values, given the consolidator's willingness to buy and other owners' willingness to sell.

Answer

Svein Moxnes Harfjeld (President and CEO, DHT Holdings Inc) explained that the 25% figure refers to the 'compliant tramping fleet,' which excludes sanctioned vessels and state-owned ships (e.g., China Inc., Saudi Arabia, Japan Inc.) that operate shuttle services rather than regularly participating in the open spot market, estimating this tramping fleet at around 600 ships. He stated that aggregators acquiring 10-15 year old ships from smaller owners will lead to different pricing behavior and information flow, thereby changing market dynamics. Mr. Harfjeld confirmed that there are other credible buyers for both older and modern second-hand ships, with competitive bidding driving prices up, indicating a bullish market where current time charter rates justify vessel values.

Frode Morkedal of Clarksons Platou Securities inquired about the market effects of potential U.S. tariffs on India's Russian oil imports and the implications of securing a strong one-year time charter for an 18-year-old vessel.

Answer

President & CEO Svein Moxnes Harfjeld noted that it's early, but Indian imports of Russian oil have already declined by about 20% in July, a trend that favors larger tankers sourcing from further afield. Regarding the vessel charter, he explained that DHT has been successful in securing strong rates for older vessels, which provides earnings stability and excellent returns on capital, a strategy they will continue to pursue.

Frode Morkedal of Clarksons Securities asked about the strategic decision to sell the two Chinese-built vessels and questioned the priority of capital allocation for the incoming proceeds.

Answer

President and CEO Svein Moxnes Harfjeld explained the vessel sale was an opportune moment to refine the fleet profile based on customer preferences and to realize profits from a successful investment. Regarding capital allocation, he clarified that the listed uses—vessel investments, share buybacks, and debt prepayment—are not in a specific order of priority and depend on market opportunities. He noted that share buybacks are unlikely in the current market, as they are reserved for periods of significant dislocation between share price and asset values.

Frode Morkedal asked for commentary on the drivers behind the recent surge in VLCC spot rates and their sustainability, and also questioned DHT's capital allocation priorities, asking if secondhand vessel acquisitions are now more attractive than share buybacks.

Answer

President and CEO Svein Moxnes Harfjeld attributed the rate strength to a very tight market, reduced inventories in China, and strong sentiment around sanctions, suggesting the market may be at a 'tipping point.' Regarding capital allocation, he clarified that the December buybacks were an opportunistic response to a market dislocation. At the current share price, he indicated buybacks are less likely, and proceeds from the recent vessel sale will be allocated to vessel acquisitions, buybacks, or debt prepayments, with a final decision pending.

Frode Morkedal inquired about the current state of the secondhand vessel sale and purchase market, noting that stock prices imply a significant decline in ship values. He also asked for DHT's view on the impact of changing crude oil inventory levels and the market structure shifting from backwardation to potentially contango.

Answer

President and CEO Svein Moxnes Harfjeld responded that secondhand market activity is limited, with owners remaining constructive and hesitant to sell at lower prices. He cited a recent transaction pricing a 5-year-old vessel around $115 million. Regarding inventories, Harfjeld stated that levels in China are not high, and any increase in demand could significantly tighten the market, a dynamic he believes OPEC+ is strategically managing.

Frode Mørkedal inquired about Okeanis Eco Tankers' current time charter strategy, including available durations, achievable rate levels, and the conditions under which the company might shift from its fully spot-exposed position.

Answer

Aristidis Alafouzos (CEO) explained that the market's rapid strengthening has made charters hesitant to meet owner-desired time charter rates, with most activity in the one-to-two-year segment. He noted that oil majors are reducing their time charter fleets but will need to grow them, being selective with established owners. Given OET's attractive outlook for the next 6-12 months, time charter rates would need to be materially higher for the company to consider them. He also asked about the company's broader strategy, specifically regarding investments and ship acquisitions, contrasting the current harvest/dividend focus with the earlier asset play/growth phase post-IPO. Aristidis Alafouzos (CEO) reiterated that OET's main priority is consistent dividend payments. He stated that the most appealing investments are assets with quick delivery, as long-term commitments (3-4 years out) are too capital-intensive for the company at present. Iraklis Sbarounis (CFO) added that equities trading above NAV might make investments more tempting.

Frode Morkedal of Clarksons Platou Securities requested details on the LNG E upgrade program, including completion status, remaining CapEx, and how the $5,000/day premium is derived. He also asked for a timeline on when the LNG demand balance might shift from Europe to Asia and questioned the role of older steam turbine ships in the current spot market.

Answer

CEO Richard Tyrrell clarified that four of five vessel upgrades are complete, costing about $10 million each, with one remaining in Q4. The premium is derived from upside-sharing agreements on three vessels and fixed payments on two others. He noted the market balance is influenced by both short-term volatility and the accelerated exit of older steam vessels in the weak market. He added that these older ships are often idled or underutilized by charterers, making them uncompetitive for new employment.

Frode Morkedal of Clarksons Securities inquired about the rationale for suspending the dividend, the return on investment for vessel upgrades, the economic decision-making behind idling TFDE vessels, and the slow pace of scrapping older steam ships.

Answer

Richard Tyrrell (executive) explained the dividend cut provides a longer financial runway amid market uncertainty, noting the company's balance sheet can withstand current conditions until at least 2029. He highlighted that vessel upgrades are already yielding over $5,000/day in upside. Tyrrell also detailed the high costs and operational reluctance to warm stack vessels, and stated that he views vessel idling as a more immediate and relevant metric than scrapping for tracking effective fleet supply.

Asked for details on the new GAIL charter, including the day rate, returns, and potential leverage. Also inquired about the chartering strategy for the next newbuild, the stability of the dividend policy, and the company's CapEx and required cash position.

Answer

The executives confirmed the estimated day rate yields high-teen equity returns, aided by the vessel's low purchase price. They expect to increase leverage to 92.5% pending approval. A longer-term charter is preferred for the second newbuild as the rate premium for shorter terms is currently not advantageous. The dividend will remain dependent on quarterly performance and market rates. The company's minimum cash requirement is around $90M, with current liquidity at $155M, which can be increased.

Frode Morkedal of Clarksons Securities AS inquired about the new GAIL charter, seeking confirmation of the day rate, details on its high-teen returns and breakeven levels, and plans for leveraging the asset. He also asked about the chartering strategy for the second newbuild, the stability of the dividend, and the company's expected CapEx and target cash position.

Answer

Executive Johannes Boots confirmed that a day rate in the low $90,000s would achieve the stated high-teen equity returns, referencing a breakeven of $69,000/day from a prior presentation. Executive Richard Tyrrell added that the vessel's lower purchase price was key and that the company expects to increase leverage to 92.5% pending approval. Tyrrell also noted that a longer-term charter for the second newbuild is currently more advantageous than a shorter one. Regarding the dividend, he stated it will continue to be determined quarterly based on performance, while Boots outlined a target cash position of around $100 million after accounting for covenants and working capital.

Frode Morkedal asked for Golar's perspective on the proper valuation framework for its extensive contract backlog, focusing on risk and discount rates. He also questioned management's strategy for addressing the gap between the company's intrinsic value and its current stock price.

Answer

CEO Karl Fredrik Staubo suggested that while the market determines the multiple, the biggest mispricing is the upside from commodity exposure, particularly the unique $8/MMBtu profit-share mechanism. He emphasized that management's focus is on running the business effectively but reiterated the Chairman's previous statements that the board would seek other alternatives to crystallize value if the market fails to recognize it. Staubo pointed to recent share buybacks as proof of their belief in the company's value.

Frode Morkedal of Clarksons Platou Securities asked about the drivers for the recent strength in the Capesize spot market, the company's strategy for navigating seasonal weakness in Q1, the market outlook for 2026, and the potential for increased charterer demand for its modern, dual-fuel fleet due to new regulations.

Answer

Contracted CEO Lars-Christian Svensen explained that recent market strength was driven by Panamax performance, increased coal trading, and an early start to the Atlantic iron ore season creating a vessel squeeze. He stated that Himalaya Shipping is maintaining spot exposure for Q4 and beyond to capture anticipated market strength from factors like the Simandou mine, making it too early to take significant fixed cover. Svensen expressed confidence that 2026 would be stronger than 2025, citing new trade flows to India, and asserted that charterers will increasingly seek modern, greener vessels like Himalaya's to manage costs under new environmental regulations.

Frode Morkedal of Clarksons Platou Securities inquired about the drivers of recent Capesize spot market strength and the higher FFA curve. He also asked about the company's strategy for navigating Q1 seasonality, its outlook for 2026, and the potential for higher demand for its modern, dual-fuel fleet given upcoming regulations.

Answer

CEO Lars-Christian Svensen attributed recent market strength to a confluence of Panamax demand, Australian iron ore activity, and an early Atlantic season. He stated that Himalaya is maintaining significant spot exposure for Q4 and beyond, believing the market has further upside from Chinese demand and new Guinean supply, making 2026 potentially stronger than 2025. Svensen also expressed confidence that upcoming environmental regulations will increase charterer demand for their modern, efficient vessels.

Frode Morkedal from Clarksons Securities asked about Hafnia's capital return policy, specifically why share buybacks were excluded from the dividend calculation, and sought an explanation for the market disconnect where rising tonne-mile demand has not translated to proportionally higher charter rates.

Answer

CEO Mikael Opstun Skov clarified that Hafnia will maintain its dividend policy and any future share buybacks will be considered on an ad hoc basis and will be in addition to, not a deduction from, the dividend payout. Søren Winther, VP of Commercial, explained the rate disconnect is due to market 'sentiment,' where charterers are comfortable and owners are content with current earnings, creating a temporary lid on rates despite strong underlying fundamentals like tight vessel supply.

Frode Morkedal inquired about the mechanics of the share buyback program, the company's preference between buybacks and dividends, and sought confirmation on the minimal market impact of a potential Red Sea reopening.

Answer

CFO Perry Van Echtelt confirmed that repurchased shares will be canceled and a new program would require Board approval. CEO Mikael Opstun Skov emphasized that the dividend policy is firm, while buybacks are an opportunistic tool for when shares trade at a deep discount to NAV. VP of Commercial Søren Winther affirmed that a Red Sea reopening would have a marginal net impact on tonnage demand.

Frode Morkedal asked for Hafnia's view on the current market impact of the Panama Canal situation and the tonne-mile improvements resulting from the Russia-Ukraine conflict. He also questioned the potential mitigating factors, such as the removal of a 'shadow fleet,' if Russian sanctions were to end.

Answer

EVP Commercial, Jens Christophersen, explained that the Panama Canal delays have abated and the market has already factored in the return to normal transit levels. Regarding Russia, he stated that Russian CPP volumes on the water have doubled compared to pre-sanction levels, increasing demand by approximately 5-6%. He acknowledged that lifting sanctions would impact demand but deemed it too difficult to speculate on the subsequent market dynamics.

Frode Morkedal asked for feedback on the new New York Stock Exchange listing, inquired about a fair earnings multiple for the pool and bunker business, and sought views on the impact of the Dangote refinery and other global refinery changes.

Answer

CEO Mikael Opstun Skov reported positive investor interest and increased liquidity from the U.S. listing. CFO Perry Van Echtelt noted that while a specific multiple for the pool business is hard to define, some analysts have valued it around $100 million. EVP, Commercial, Jens Christophersen, expressed a positive outlook on the Dangote refinery, expecting its high-spec products to be exported to premium markets like Europe.

Frode Morkedal followed up on the USTR tariff discussion, asking specifically about potential triangulation routes for LR2s and Aframaxes involving the U.S. Gulf and whether Scorpio's high proportion of Korean-built vessels could offer a competitive advantage.

Answer

Chief Commercial Officer Lars Nielsen clarified that the LR2 market's exposure to the U.S. is insignificant, making the tariffs a non-issue for that vessel class. He further stated that given Scorpio's specific fleet composition, which is not heavily reliant on Chinese-built vessels, the proposed tariffs do not present a problem for the company.

Frode Mørkedal from Clarksons Securities inquired about the mechanics of newbuild LR2s entering the crude trade and if a Red Sea reopening could boost East-to-West product arbitrage.

Answer

Chief Commercial Officer Lars Nielsen emphasized the fungibility between the LR2 and Aframax markets, stating they must be analyzed in unison. Executive James Doyle added that new LR2s are needed to replace aging tonnage in both markets. Regarding the Red Sea, Nielsen noted that with Middle East refinery turnarounds completing, product flows to Europe are set to increase regardless of the route.

Frode Morkedal asked if carbon regulations will necessitate more slow steaming for product tankers and what the potential impact could be. He also inquired about the drivers behind the relative weakness in Handymax earnings compared to MRs.

Answer

President Robert Bugbee acknowledged that environmental regulations will have a significant impact but argued that the effect of the aging fleet, particularly the large number of MRs approaching 20 years of age, will be an even greater factor in tightening effective supply. CFO Chris Avella addressed the Handymax market, attributing recent weakness to refinery maintenance, a cap from the weaker MR market, and specific cargo disruptions. He noted the market is poised for a Q4 recovery and benefits from a very old global fleet profile.

Frode Morkedal referenced a chart showing 56% of LR2s trading clean and asked for data on how many crude tankers are currently trading clean, suggesting this crossover might be capping rates.

Answer

President Robert Bugbee provided estimates of 12 to 20 crude tankers trading clean, based on vessel tracking and broker reports, but noted it's unclear if this is sustainable. He affirmed that the company is very happy with current LR2 rates of $40,000 per day and is not complaining that they could be higher.