Capital Clean Energy Carriers - Q1 2024

Transcript

Operator (participant)

Thank you for standing by, and welcome to the Capital Product Partners first quarter 2024 financial results conference call. We have with us Mr. Jerry Kalogiratos, Chief Executive Officer, Mr. Spyros Leoussis, Chief Commercial Officer, and Mr. Nikos Kalapotharakos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. I must advise you this conference is being recorded today, April 30, 2024.

The statements in today's conference call that are not historical facts, including our expectations regarding acquisition transactions and their expected effect on us, cash generation, equity returns on future debt levels, our ability to pursue growth opportunities, our expectations or objectives regarding future distribution amounts or unit buyback amounts, capital reserve amounts, distribution coverage, future earnings, capital allocation, as well as our expectations regarding market fundamentals and the employment of our vessels, including redelivery dates and charter rates, may also be forward-looking statements as best defined in Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve risks and uncertainties that could cause these stated or forecasted results to be materially different from those anticipated.

Unless required by law, we expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations to conform to actual results or otherwise. We make no prediction or statement about the performance of our common unit. I would now like to hand over to your speaker today, Mr. Kalogiratos. Please go, please go ahead, sir.

Jerry Kalogiratos (CEO)

Thank you, Paul, and thank you all for joining us today. As a reminder, we'll be referring to the supporting slides available on our website as we go through today's presentation. The first quarter of 2024, we took delivery of the LNG carrier Axios II, the second delivery under our agreement to acquire 11 latest generation two-stroke LNG carriers. Moreover, we concluded the sale of 2 container vessels, recognizing a gain on sale of $16.4 million. Furthermore, we announced the sale of three 10,000 TEU container vessels and 2 Panamax container vessels. Turning to the partnership's financial performance, net income for the first quarter of 2024 was $33.9 million or $17.5 million, excluding the gain on sale of vessels.

Our board of directors has declared a cash distribution of $0.15 per common unit for the first quarter of 2024. The first quarter cash distribution will be paid on May 14th to common unit holders of record on May 7th. Finally, the partnership's current fleet charter coverage for 2024 and 2025 stands at 100% and 82% respectively, with a remaining charter duration corresponding to 7.3 years and contracted revenue backlog of $2.8 billion. Turning to Slide three. Total revenue for the first quarter of 2024 was $104.5 million, compared to $81 million during the first quarter of 2023.

The increase in revenue was primarily attributable to the revenue contributed by the new building vessels we acquired between February 2023 and January 2024, partly offset by the sales of our sole Capesize vessel in the fourth quarter of last year and the two containers during the first quarter of this year. Total expenses for the first quarter of 2024 were $54.9 million, compared to $45.1 million in the first quarter of last year. Total vessel operating expenses during the first quarter of 2024 amounted $22.7 million, compared to $19.3 million during the first quarter of 2023, and were higher mainly due to the net increase in the average size of our fleet.

Total expenses for the first quarter of 2024 also include vessel depreciation amortization of $24 million, compared to $19.2 million in the first quarter of last year. The increase in depreciation amortization during the first quarter of 2024 was mainly attributable to the net increase in the average size of our fleet. General administrative expenses for the first quarter of this year increased to $4.4 million from $2.8 million in the same quarter last year, mainly attributable to certain one-off costs we recognized in connection to our equity incentive plan. Interest expense and finance costs increased to $34 million for the first quarter of 2024, compared to $23.7 million for the first quarter of last year.

The increase was mainly attributable to the increase in the partnership's average indebtedness and the increase in the weighted average interest rate compared to the first quarter of 2023. Average interest rate for the quarter amounted to seven million, sorry, to 7%. The partnership recorded net income of $33.9 million, or $17.5 million, excluding the gain on sale of vessels for the quarter, compared to net income of $10 million in the same quarter of last year. Net income per common unit for the quarter was $0.61 or $0.32, excluding gain on vessel sales, compared to $0.49 per common unit in the first quarter of last year. On slide four, you can see the details of our balance sheet.

As of the end of the first quarter, the partners' capital amounted to $1,204 million, an increase of $29 million compared to $1,175 million as of the end of 2023. The increase reflects net income for the first quarter of this year, other comprehensive income and the amortization associated with the equity incentive plan of $2.6 million, partly offset by distributions declared and paid during the period in a total amount of $8.3 million. Total debt increased by $156 million to $1,944 million, compared to $1,788 million as of year-end 2023.

The increase is attributable to the assumption of $190 million of bank debt and $92.6 million of seller's credit in connection with the acquisition of the LNG carrier Axios II in January of this year, partly offset by the $7.2 million decrease in the US dollar equivalent of the Euro-denominated bonds issued by the partnership, the scheduled principal payments for the period of $28.5 million, the early repayment in full of the facility we entered into to partly finance the acquisition of Akadimos, and the partial prepayment of $52.8 million of the seller's credit used to partly finance the acquisition of LNG carrier Axios II.

Total cash as of the end of the quarter amounted to $157.7 million, including received cash of $11.2 million, which represents the minimum liquidity requirement under our financing arrangements. On slide five, you can find an update on the progress of container vessel sales. As mentioned earlier, during the first quarter of 2024, we successfully sold and delivered the containers Long Beach Express and Akadimos. In April 2024, we also completed the sale of the container vessels Athos, Athenian, and Seattle Express. Finally, we expect to complete the sales of the Aristomenis and the Fos Express in early May. From the sale of these seven container vessels, we expect net proceeds after debt repayment of approximately $182.5 million.

So far, from the net proceeds of approximately $144 million received from the vessels delivered already to their new owners, we have used $92.6 million to repay in full the amount we drew under the seller's credit for the acquisition of the LNG carrier Axios II. Under the umbrella agreement and the provisions of the seller's credit, any sale proceeds net of debt repayment are applied first towards repayment of any balance outstanding under the facility. Moving to slide six. The partnership's contracted revenue backlog stands at $2.8 billion, with over 85% of contracted revenue coming from LNG vessels, with a highly diversified and high-quality customer base of 10 charterers. This is excluding the 7 container vessels we have sold or agreed to sell. On slide seven, you can see the charterer profile of our LNG fleet.

We have a contracted backlog of 76 years at an average daily rate of $88,500, which could increase to 111 years if all options were to be exercised. I should stress that we have no open vessels between now and the first quarter of 2026. In total, we have four LNG carriers coming up for delivery from the shipyard and one being redelivered from its charterers in the fourth quarter of 2026. In 2027, we have an additional two vessels being delivered from the shipyard in the first quarter of the year, and potentially one additional vessel coming up for renewal in the fourth quarter of 2027 if its charterers do not exercise certain options.

These vessels are expected to be seeking employment when the new wave of about 170 MTPA of additional new liquefaction capacity is expected to come online between 2026 and 2028. We estimate that these projects alone, which have taken FID and export permits, will require between 190 and 220 additional vessels, with only 156 vessels due for delivery during that period. This is without taking into account the replacement of older technology vessels, and in particular, steam turbine vessels, which are expected to generate substantial incremental demand for two-stroke vessels like ours. Currently, we count only 31 vessels in the order book between now and 2028 that are not committed to a certain project, with us controlling six or about 20% of these uncommitted vessels.

On slide eight, you can see the charter expiration of the container fleet. Once all agreed sales are complete, we will have sold a total of seven container vessels, leaving us with a fleet of eight vessels. Our contracted backlog on the container fleet spans 32 years at a weighted average daily rate of $38,200 and could increase to 51 years if all options are exercised. We continue to seek to divest opportunistically from containers, provided we deem the sale price reasonable in view of the contracted cash flows, our market views, and our expectations with regard to residual value. With this, I will pass on the floor to our Chief Commercial Officer, Mr. Leoussis.

Spyros Leoussis (Chief Commercial Officer)

Thank you, Jerry. So turning to slide nine, we review the LNG market. After a period of historically high rates following the start of the Russia-Ukraine conflict, rates are normalizing towards pre-war levels. Warm weather and high gas storage levels in Europe and Asia have led to decreased demand for LNG, causing spot rates to weaken. This, combined with prolonged availability of vessels throughout the year, has kept charter rates lower competitively this year. Spot rates for two-stroke vessels averaged at $58,370 per day, it's dollars per day in Q1 2024, with the average one-year time charter, charter rate hovered around $76,000 per day.

On the other hand, the 3-year time charter stands today at $85,000 per day, while for longer periods, as for example for five years, rates are even higher, indicating that the market is pricing in and anticipating tightening from 2026 onwards... Geopolitical disruptions are key for the LNG carrier sector, and while we are yet to see any major upside movement for day rate, we expect high volatility rate later in the year. LNG carrier transit through the Panama Canal remains highly limited, with just 4 ships having transited since start of February. At the same time, no LNG vessels have crossed the Suez Canal since January 16. Overall, it is fair to say that the LNG shipping market appears more balanced for 2024 and 2025, with multiple new buildings being delivered and only incremental new LNG volumes coming online.

Charterer markets for two-stroke vessels are expected to remain generally healthy in 2024 and 2025 due to the attractive unit freight cost they offer compared to DFDE and steam turbine vessels, as well as the environmental benefits they deliver to charterers. As EU ETS, CII and other regulations start to have an economic and reputational impact on LNG charterers. Global LNG import remains strong at both basins, with China continuing to import at seasonal records. Overall, ton miles have been higher in Q1 this year versus last year due to a closed Suez Canal and limited use of the Panama Canal. Total gas in storage also remains high, and with the recent mild climate conditions putting further downward pressure on gas demand, Europe has finished the winter period with near-record levels of inventories.

Russian gas supply to the EU is now at less than 2 million per ton, 2 million tons per month. Finally, the LNG fleet order book currently stands at approximately 50% of the total fleet, encompassing 332 vessels on order. Shipyards, responding to heightened demand, find themselves mostly full, mostly fully booked throughout 2027. Appetite remains high for LNG carrier new builds, following elevated contracting activity across 2021 and 2023, with 44 new building orders being placed in Q1 2024. Thirty-five orders were part of the second phase of ordering for the Qatar expansion, and with Qatar-related orders now complete, the pace of ordering for the remainder of the year is expected to be slower.

Looking at liquefaction projects, in March, NextDecade announced plans to take FID on a fourth train for Rio Grande LNG in the second half of 2024. The company took FID on phase one of the project last year, comprising 3 trains of 5.4 MTPA each, which is currently expected to come online in 2027. And with this, I'll pass back to Jerry.

Jerry Kalogiratos (CEO)

Thank you, Spyros. Now to the final slide, slide 10. You can see an updated timeline of the transaction we closed in the fourth quarter of 2023 for the acquisition of the 11 LNG carriers. We have so far taken delivery of two LNG carriers, the Amore Mio I and the Axios II. We have sold five container vessels and agreed to sell another two, while we continue with our LNG carrier shipbuilding program. Looking ahead, we are focused on taking delivery of the next three LNG carriers, which are expected at the end of May, early June and July. And of course, we continue to make progress with the conversion of the partnership into a corporation as previously communicated, which we expect to conclude over the coming months. And with that, I'm happy to answer any questions you may have.

Operator (participant)

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we call for questions. Thank you. Our first question is from Omar Nokta with Jefferies. Please proceed with your question.

Omar Nokta (Managing Director and Senior Equity Analyst)

Thank you. Hi, Jerry and Spyros. Good afternoon. Thanks for the update.

Jerry Kalogiratos (CEO)

Hi, Omar.

Omar Nokta (Managing Director and Senior Equity Analyst)

Just a couple for me. Maybe just one on the first. Firstly, on the last comment you made, Jerry, just regarding the corporate conversion. You still making progress, expecting that in the coming months. Just wanted to check in, sort of timing of that. I know you had put a target of, I think June 20th or 21st. Is that still feasible? Is that still realistic, or you think it's going to be pushed out a little bit?

Jerry Kalogiratos (CEO)

It feels... Thank you, Omar. It feels that we should be able to be done by that date or at least communicate the outline of the new corporate governance and the conversion. There are still a few things to iron out, including whether we will need a unitholder shareholder vote for the approval of the conversion, which seems quite likely. So I would expect that we will be able to announce our plan sometime in June or thereabout, maybe slip by a few weeks, but nothing material, and then go into the shareholder vote.

Omar Nokta (Managing Director and Senior Equity Analyst)

Okay. Thank you. And maybe just a couple more just kind of on the vessel specific, I just wanted to ask on the Axios II, you took delivery of that earlier this year. That's going to go on a contract long term, but before it starts that, it's doing a 12-month on a spot-linked contract or index link. Just wanted to ask: How, what are the mechanics of that contract? You know, is that the, is it spot linked, or is it linked to, like, the time charter assessments? And is there a collar, like a, you know, a base and a ceiling? Any color you can give on that?

Jerry Kalogiratos (CEO)

...Sure. The it's a 12-month index related charter. It's fully floating, so it is based on two Baltic the average of two Baltic indices. Axios in the first quarter has earned a Cash TC which is slightly lower than the market. That was around $45,000 per day because under the charter party, the first 12 days of the quarter she did not earn any higher until she was delivered to its charterers. For April, she has recorded on average around $49,000 per day always on the on the back of the the two average indices. But as you know, the spot market for LNG carrier is highly volatile and highly seasonal.

Today, if you look at the second, third and fourth quarter forward rates for the same indices, you would be around $55,000, $78,000, $140,000 per day, respectively. So we are going through now the seasonal low, but the market has feels already tighter, and we expect that it will start picking up as we go into the summer months.

Omar Nokta (Managing Director and Senior Equity Analyst)

Okay, thanks, Jerry. And then just to double-check, you know that those indices, not saying that we're going to go there again, but, you know, they have been showing 200,000, 300,000, you know, back when things were on fire, you know, in 2021 and 2022. If we were to see that type of index rate, is that still achievable for you guys?

Jerry Kalogiratos (CEO)

No. No. No, I think, look, going forward, I mean, for the other vessels, we would be looking at fixed rates like the floating rate. I think it was kind of a bit opportunistic play from us, you know, because we had only one-year opening. But the priority for the other vessels is to fix at longer-term rates, as we have with all the fleet, including Axios, from January, starting next year.

Omar Nokta (Managing Director and Senior Equity Analyst)

No, no, I appreciate that. I was just checking just on the Axios itself specifically, if the index were to hit, say, 200,000, would that basically translate into the TC for the ship?

Jerry Kalogiratos (CEO)

Yes, of course. Yeah, yeah. Sorry. Yeah.

Omar Nokta (Managing Director and Senior Equity Analyst)

Okay.

Jerry Kalogiratos (CEO)

That's, of course. Yeah, that's a ... It's a fully floating, as Jerry said, I mean, that's a fully floating index, so that's, that's the way it would work.

Omar Nokta (Managing Director and Senior Equity Analyst)

Okay. All right. Thank you. And then maybe just a final one on the remaining container ship vessels. You know, what's the liquidity look like in the S&P market for those? Clearly, you've been fairly active and you were able to move a bunch of vessels already. What does it look like or what's the appetite look like, you think, for the remainder?

Jerry Kalogiratos (CEO)

The container market, as you know, has been feeling also quite tight as of late. Charterer rates have been moving up, and especially for Panamax and Post-Panamax container vessels. As a result, you have seen this momentum also being reflected in asset values and also an appetite of buyers, be it tramp owners or liners, to acquire more tonnage. We have seen increasingly higher period rates, I mean, longer period rates and higher period rates and as well as asset values. We have, I think so far, taken advantage of this momentum with all our container charterers. They have long-term charterers, so it's either a bet on the residual or more of a momentum buying.

So, I think we have been quite, quite good in taking advantage of that. In terms of the remaining vessels, now, these are all, very high-quality assets. We have the five 5,000 TEU wide-beam container vessels. Effectively, if you were to order ships today, you would get the same design. So these are actually quite, quite, attractive, assets, for charterers and buyers alike. And, I should also say here that these five 5,000 TEU vessels do not have any debt, so they are debt-free. And then, we also have the three 13,000 TEU brand-new, again, eco wide-beam, ULC-ready, LNG carriers that have a long-term charter to, Hapag-Lloyd. They have another, you know, 9 years or so.

You know, given the tenure of the remaining charter, I think these are, this is more of a cash flow transaction and less of a, you know, kind of, your typical, second-hand, container transaction. So, there is no lack of interest, for sure. You know, we are not in a hurry. We do see people approaching us on these assets, but I think we are going to be quite patient until we see what we think we should be realizing in a market like this, given both our market expectations, the charterers in place, as well as our view on the residual. So I think we have done the bulk of it.

Now we will be looking for good opportunities to divest from the remaining assets.

Omar Nokta (Managing Director and Senior Equity Analyst)

...Thank you. Thanks for the update. Thanks, Jerry. Thanks, Dimitrios.

Jerry Kalogiratos (CEO)

Thank you, Omar.

Operator (participant)

Our next question is from Ben Nolan with Stifel. Please proceed with your question.

Ben Nolan (Managing Director and Senior Equity Analyst)

Hey, guys. Going back, I think maybe to Omar's first question about the timing of transition and so forth. Appreciate the color that you did give, but, as you guys have gotten closer, is there anything more that you can let me know about how you're thinking on the, on the dividend or the capital return policy, just as we're sort of getting close to that time?

Jerry Kalogiratos (CEO)

Thank you, Ben. That's a fair question. The truth is that I think we will leave this decision for after the conversion. What I can say, and I think that echoes the overall view of the board, is that the idea is to move at some point in a more flexible type of payout and a slightly different capital allocation policy that could involve a fixed dividend plus some share of the net income or free cash flow generation.

But, with regard to the exact structure of the payout, when it will start, and those details, I'm afraid I cannot give more detail right now. I think we'll wait for a final decision from the board, which I presume will be definitely within this year and post conversion.

Ben Nolan (Managing Director and Senior Equity Analyst)

Okay. And then secondly, on the container sales, just the three 13,000-TEU ships have super long contracts on them. Are those... I don't know. I guess I'm curious if you view those as sort of also for sale, or given the, you know, contracted nature of the assets, that, you know, maybe they are still a fine fit within the broader portfolio.

Jerry Kalogiratos (CEO)

I think just like the other vessels, we are perfectly happy to sit with those vessels going forward. You know, we know those are good assets, and there will be an opportunity to at some point reach out or divest. So we are... I mean, the decision is, that was taken, was not to enter into the container segment. Strategy is to focus on LNG and energy transition gas, right? So ammonia, LPG, liquid CO2, and so on and so forth. So no more containers. However, I think that the timing of a potential sale is contingent 100% on whether we believe that the valuation we are getting is a reasonable price.

And as you say, especially for these 13,000 new containers with the long-term charterers, the contracted cash flows, and maybe where the valuation is maybe more, a little more contingent on movement of interest rates rather than anything else. You know, I think we would be also perfectly happy to have them in the background and generate cash if we don't find a reasonable bid.

Ben Nolan (Managing Director and Senior Equity Analyst)

Okay. And then lastly for me, as it relates to, you just mentioned the ammonia carriers on the private side, the multi-gas or CO2 carriers. Curious if you have contracts in place on those or if you can, if not, or maybe even if you do, if you can give a little bit of color on sort of what you're seeing in the market in terms of customer appetite to put assets like that on long-term charter, or is it still, you know, in development stage and probably have to get closer to delivery to know what sort of a business those assets will have?

Jerry Kalogiratos (CEO)

In terms of the overall exposure of Capital Maritime, as far as the other gas sectors are concerned, that comprises 6 MGCs, so medium gas carriers, LPG ammonia carriers, that is, and the 4 liquid CO2 carriers. So which are effectively handy multi-gas, or in a more generic way, LPG carriers that can also carry liquid CO2 because of their separate cargo system and strengthened tanks and then other functionalities. And then there is also the 2 very large ammonia carriers. So overall we have had dozens of discussions around the world, and literally, I mean, around the world, from the U.S. to Europe to the Asia Pacific region. Regarding let's say, the new trade.

So apart from the usual LPG ammonia trade, both in terms of how the maritime transportation of liquid CO2 carrier, of liquid CO2, is going to be done in the different regions, on what is dependent, what are the drivers, who are the customers, and about... And we had similar discussions for the ammonia, that is especially the transportation of green and blue ammonia. Overall, there are dozens of projects on both sides that are moving ahead and are materializing at different levels of maturity. Overall, I would say that the timeline for those would be 2027, 2028 onwards.

And then you can see almost a snowball effect from there. The very interesting thing is that some of these projects are led by independent operators or investors, but the bulk of these projects are being moved along by existing clients of ours. So that is energy companies, utilities, traders, and so forth. So, and also this is very much part of the strategy that we have going forward. You know, the ability to sit at the table and have a discussion with an energy company or a utility across all these different segments. So we would discuss an LNG carrier and then move on to the liquid CO2 or the carriage of blue or green ammonia.

This has happened multiple times. It is still early to say whether we can, I mean, we can fix today long-term charterers for these type of trades, although we have had and we continue to have discussions. I think the demand will, as I said, will be much higher from 2027, 2028 onwards. But because of the fact that some of these customers have multiple trades, including, for example, LPG, current gray ammonia trades, they might be able to, for example, to charter in a vessel long-term in 2026, and then use it in one trade for a while, and then move it to another trade.

So, right now, I would say that the base case is that this, this, let's say, multi-gas carriers, LPG carriers, or ammonia carriers, will start with the conventional trades and start moving into the, for the lack of a better word, energy transition trades from 2027, 2028 onwards.

Ben Nolan (Managing Director and Senior Equity Analyst)

Appreciate it. Thanks, Jerry.

Jerry Kalogiratos (CEO)

Thanks.

Operator (participant)

Our next question is from Liam Burke with B. Riley Securities. Please proceed with your question.

Liam Burke (Managing Director and Senior Analyst)

Thank you. Hi, Jerry. Hi, Spyros.

Jerry Kalogiratos (CEO)

Hi, Liam.

Liam Burke (Managing Director and Senior Analyst)

Jerry, as you go through the conversion from an MLP to a corporate, is there any hiccups with the lenders, or are they comfortable with the transition?

Jerry Kalogiratos (CEO)

No, in reality, there is no material change to the company other than the, let's say, the corporate structure. So we don't foresee any issues with the lenders or our bondholders going forward.

Liam Burke (Managing Director and Senior Analyst)

Great. And on the six new builds, ... does there seem to be an appetite for longer-term contracts there, especially when you're looking at, a significant amount of the fleet being, less efficient steam turbine?

Spyros Leoussis (Chief Commercial Officer)

Yeah, I think, as you said, I mean, we see some activity now. Obviously, the current market doesn't help, but we still have a lot of time. If we had to guess, I would say that our vessels will probably go to a fleet replacement project. As we see, we see that there will be significant demand, as you said, from replacing steam turbines to ... with newer fleet, especially as people start to realize the effect of EU ETS and CII and the relevant schemes.

Liam Burke (Managing Director and Senior Analyst)

Great. Thank you.

Jerry Kalogiratos (CEO)

Thank you, Liam.

Operator (participant)

Our next question is from Clement Molins with Value Investor Edge. Please proceed with your question.

Climent Molins (Equity Research Analyst)

Good afternoon. Thank you for taking my questions.

Jerry Kalogiratos (CEO)

Hello.

Climent Molins (Equity Research Analyst)

Following up on Liam's question on the unfixed new builds, could you talk a bit about the terms currently being offered? And secondly, is there any appetite to potentially forward-fix some of them over the next year?

Jerry Kalogiratos (CEO)

Yes. Let me pass this on to Spyros.

Spyros Leoussis (Chief Commercial Officer)

Hi. So I think the strategy is, you know, we are always open to discussions. I don't think we can actually discuss specific terms, as we, you know, the discussions are a bit premature at this stage. We foresee that there should be some activity during the next year, but for sure, the target is to fix the vessels before we get delivery.

Pass to Jerry.

Jerry Kalogiratos (CEO)

I think the important thing is what we said during the call, that in reality, there are very few available ships for longer-term period. And you see today, one year or three year or some three-year deals that are done at lower levels, but these are all relets from existing charterers as they wait for their projects to take off. But in reality, when you look at five years or longer, there are effectively no relets because their current charterers know that they will need the vessels going forward. And so your competition, if it's not available ships, is going to be new builds.

And then you look at new building prices at $260 million plus for a basic spec. Often, today's shipyards will require you to pay 15%-20% upfront for delivery at the end of 2027, early 2028. And then, and then the additional milestones, which, will end up resulting in a delivered cost together with supervision of close to $300 million.

If you look at, let's say, a financing of 75, 80, 85% on a vessel like that, and then you bake in a decent, even a single-digit return on your equity, then you will find that the guys that will be ordering vessels in order to fulfill new requirements as they come up, be it replacement or inquiries related to new projects, they will have, let's say, a breakeven for single-digit equity returns in the $90,000-$95,000 per day area. This, I think, will kind of create a natural floor to the long-term market, because this is going to set the rate, the long-term rate going forward.

That is the lowest common denominator in terms of cost of capital, if they order a new building for a new project. So that's a long way to say that, we see that there's going to be a floor in the mid- to low 90s for the long-term market. And if our expectations with regard to vessel demand materialize, that is, we expect the demand for new projects, FID projects, to be much more than the ordered ships, plus, of course, the replacements of older technology vessels, then we can see a much tighter market, which of course will be well above $100,000. You know, that... I hope that kind of gives you an indirect answer.

Climent Molins (Equity Research Analyst)

It does, it does. That's helpful. Thank you. Most has already been covered, but I also had a question more on the modeling side. Could you provide some commentary on the remaining CapEx you had outstanding for the LNGCs as of the end of the quarter?

Jerry Kalogiratos (CEO)

So effectively, we have a remaining 9 LNG carriers, with three of these to come until July, so May, June, July. In terms of the total CapEx, let me give you a number offline. It should be around $2.5 billion, but let me also... Drop me a line, I'm happy to confirm the exact number.

Climent Molins (Equity Research Analyst)

Sounds good. Sounds good. I'll do that. Thank you for taking my questions.

Jerry Kalogiratos (CEO)

Thank you, Clement.

Operator (participant)

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr. Jerry Kalogiratos for any closing comments.

Jerry Kalogiratos (CEO)

Great. Thank you, Paul, and thank you all for joining us today.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.