Q4 2020 GasLog Ltd and GasLog Partners LP Earnings Call Monaco Feb 22, 2021 (Thomson StreetEvents) — Edited Transcript of GasLog Ltd earnings conference call or presentation Monday, February 22, 2021 at 1:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Achilleas Tasioulas GasLog Ltd. – CFO * Joseph E. Nelson GasLog Ltd. – Head of IR * Paul A. Wogan GasLog Ltd. – CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Benjamin Joel Nolan Stifel, Nicolaus & Company, Incorporated, Research Division – MD * Christian F. Wetherbee Citigroup Inc., Research Division – MD & Lead Analyst * Gregory Robert Lewis BTIG, LLC, Research Division – MD and Energy & Shipping Analyst * Michael Webber Webber Research & Advisory LLC – Managing Partner * Omar Mostafa Nokta Clarksons Platou Securities, Inc., Research Division – Head of Shipping Research & Analyst * Randall Giveans Jefferies LLC, Research Division – VP,Senior Analyst & Group Head of Energy Maritime Shipping ================================================================================ Presentation ——————————————————————————– Operator  ——————————————————————————– Good morning. My name is Michelle, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the GasLog Ltd. and GasLog Partners’ Fourth Quarter 2020 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. On today’s call are Paul Wogan, Chief Executive Officer of GasLog Ltd. and GasLog Partners; Achilleas Tasioulas, Chief Financial Officer; and Alexandros Laios, General Counsel. Joseph Nelson, Head of Investor Relations, will begin your conference. ——————————————————————————– Joseph E. Nelson, GasLog Ltd. – Head of IR  ——————————————————————————– Good morning or good afternoon, and thank you for joining the GasLog Ltd. and GasLog Partners’ Fourth Quarter 2020 Earnings Conference Call. For your convenience, this webcast and presentation are available on the Investor Relations section of our websites, www.gaslogltd.com and www.gaslogmlp.com, where a replay will also be available. Please now turn to Slide 2 of the presentation. Many of our remarks contain forward-looking statements. For factors that could cause actual results to differ materially from these forward-looking statements, please refer to our fourth quarter earnings press releases. In addition, some of our remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these measures is included in the appendix to this presentation. The agenda for today’s call is shown on Slide 3. Paul will begin with a brief discussion of today’s transaction with BlackRock’s Global Energy & Power Infrastructure Fund, following which, Achilleas will then walk you through Gaslog’s fourth quarter financials. Paul will then review the partnership’s fourth quarter results and outlook, and Achilleas will present its financial position. The call will conclude with Paul providing an update on the LNG shipping and LNG commodity markets. There will be no question-and-answer session following GasLog Limited’s presentation today. However, we will take questions on the partnership’s fourth quarter following the prepared remarks. With that, I will now turn it over to Paul Wogan, CEO of GasLog Ltd. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Thank you, Joe, and welcome to everyone on the call. Turning to Slide 5. We announced today that GasLog has entered into a private transaction with BlackRock’s Global Energy & Power Infrastructure Fund. They will acquire approximately 45% of our common shares, representing all the outstanding common shares that are not held by certain wholly-owned affiliates of the Livanos family and the Onassis Foundation, collectively referred to as the rolling shareholders. The rolling shareholders will continue to hold approximately 55% of our outstanding common shares. The highlights of the transaction are as follows: BlackRock has agreed to pay $5.80 per common share or a 17% premium to Friday’s closing price. And a 22% premium to the 30-day volume-weighted average share price. Acting on the recommendation of a special committee comprised solely of independent and disinterested board members, GasLog’s Board of Directors unanimously approved the merger agreement and the transaction and, recommended non-rolling shareholders vote in favor of the transaction. Closing is expected in the second quarter of 2021, subject to the approval of the transaction by GasLog shareholders at a special meeting, including by a majority of the shares held by the non-rolling shareholders present at that meeting, and the satisfaction or waiver of certain customary closing conditions. Promptly after completion of the transaction, GasLog’s common shares will be delisted from the New York Stock Exchange. GasLog’s preference shares are expected to remain outstanding and to continue to trade on the New York Stock Exchange immediately following the completion of the transaction. GasLog Partners common and preference units will remain listed on the New York Stock Exchange. For additional details on today’s announcement, I refer you to this morning’s press release, which is available on our website. Given the nature of this morning’s announcement, we will not be taking questions on today’s call with respect to this transaction of GasLog Ltd.’s fourth quarter. With that, I’ll turn it over to Achilleas to discuss GasLog’s fourth quarter financial performance. ——————————————————————————– Achilleas Tasioulas, GasLog Ltd. – CFO  ——————————————————————————– Thank you, Paul. Turning to Slide 7 for a review of GasLog’s fourth quarter and fiscal year. As you can see from the table on this slide, our fleet platform was approximately 100% uptime during 2020 despite the challenges presented by COVID-19. Our revenues and adjusted EBITDA for the fourth quarter, excluding those attributable to GasLog Partners vessels were approximately $108 million and $78 million, respectively. For the full year, revenues and adjusted EBITDA, again, excluding contributions from the partnership vessels were approximately $340 million and $235 million, respectively. Adjusted earnings per share for the fourth quarter were $0.24 per share, taking the total for 2020 to $0.40 per share. Our dividend was maintained at $0.05 per share for the fourth quarter and for the full year, we retain $0.30 per share as a cash dividend. Operating expenses were $14,975 per vessel per day, in line with our guidance for 2020. Slide 8 presents our consolidated balance. We ended the year with $367 million of cash, which includes approximately $148 million related to the drawdown of our Newbuilding Facility ahead of the delivery of the GasLog Galveston in early January. Our leverage, as measured by net debt to trailing 12-month adjusted EBITDA, was 7.7x at the end of 2020, while our net debt-to-capital was 62%. With that, I will turn it over to Paul to review the partnership strategy and outlook. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Thank you, Achilleas. On Slide 10, I’ll discuss GasLog Partners’ fourth quarter highlights. It’s been an active several months since our last call. And during that time, the strategic review was completed, and the Board concluded that the partnership’s existing corporate structure and strategy is in the best interest of unitholders. We concluded a new 2-year charter for the Methane Alison Victoria with Cheniere, increasing our 2021 charter coverage to approximately 80%. We repaid $19 million of debt, bringing our total debt repayments in 2020 to approximately $107 million. And finally, we expect our capital allocation this year to focus on debt repayment to reduce our financial leverage and improve our fleet’s breakeven and cash flow capacity over time. Turning to Slide 11. Following a thorough review of the partnership’s corporate structure, assets, financial position, competitive environment and current and expected LNG shipping market, the Board, with the assistance of an independent financial adviser, determined that maintaining our existing corporate structure and strategy is in the best interest of the unitholders. The LNG market is commoditizing as it matures. As a result, the trading of LNG on a spot and short-term basis is growing much faster than the overall demand for LNG. The top right-hand graph shows that more than 20% of all LNG movements last year were traded on vessels with a charter duration of less than 3 years. Similarly, the number of spot and short-term fixtures for LNG carriers has grown by over 130% since 2015, a 19% compound annual growth rate. We expect continued growth in the short-term activity in the years ahead. With a leading commercial and operational platform through our relationship with GasLog Ltd., along with our scaled fleet of 15 LNG carriers, we believe the partnership can become a leading operator in the spot and short-term transportation of LNG. For example, last year, the partnership and parent combined concluded the highest number of spot and short-term fixtures of all independent ship owners according to the data from shipbrokers brokers Fearnleys. In addition, the partnership has no debt maturities until 2024 and no corporate level debt. With our focus on debt repayment this year, we expect to continue to strengthen our financial position. Taken together, we believe our financial stability, operational and commercial leadership and a growing market for our services present a compelling investment proposition. Turning to Slide 12 and a review of our financial performance in 2020. 2020 revenues were $334 million. 2020 revenues were $334 million; adjusted EBITDA, $230 million; and adjusted earnings per unit were $1.29 per unit. Compared to 2019, these results were adversely impacted by the conclusion of the initial multiyear charters for our steam vessels. Whilst we have successfully rechartered vessels as they ended their initial shell charters, some for multiple years, these have generally been at lower rates. Looking ahead, we have 5 vessels available for recharter this year. 2 steam vessels and 1 TFDE vessel currently trading in the short-term market as well as 2 TFDE vessels, the GasLog Seattle and the Solaris, that will end their initial shell charters later this year. We will look for longer-term employment for these vessels, whilst also aiming to maximize their utilization in the growing spot and short-term market. Slide 13 sets out our charter coverage and operational leverage. As you can see from the chart on the far left, we have approximately $237 million of contracted revenues for 2021 thus far, representing nearly 80% charter coverage for the year. This is a significant improvement over the same period last year and the result of 3 multiyear charters signed over the last 12 months. While we have taken steps to secure our revenue and cash flow visibility, the partnership maintains meaningful exposure to a recovery in the LNG carrier spot market. Specifically, each $10,000 per day increase above our operating and overhead expenses generate approximately $12 million of incremental EBITDA in 2021. With that, I’ll hand over to Achilleas to take you through the partnership’s financials for the fourth quarter. ——————————————————————————– Achilleas Tasioulas, GasLog Ltd. – CFO  ——————————————————————————– Thank you, Paul. Turning to Slide 15 and the partnership’s financial results for the fourth quarter. Revenues for the fourth quarter were $85 million, adjusted EBITDA was $59 million and adjusted earnings per unit was $0.38 per unit, 12%, 13% and 17% declines, respectively, compared with the fourth quarter of 2019. Financial results for the fourth quarter of 2020 compared with the fourth quarter of 2019 were impacted by the expiration of the initial multiyear charters of 4 of the partnerships in turbine vessels. However, revenues, adjusted EBITDA and adjusted EPU show increases of 16%, 26% and $0.27 (sic) [27%] per unit, respectively, compared to the third quarter of 2020, primarily due to a recovery in the LNG carriage spot rates, as Paul will discuss later. Looking forward, the partnership has 5 vessels scheduled for dry-docking in 2021, one of which we anticipate will take 40 days as the vessel is having a ballast water treatment system installed, a regulatory requirement. See the appendix to this presentation for an estimated dry-docking schedule for this year. Slide 16 shows that the partnership’s credit profile continues to be resilient with net debt-to-capital at 51%. It is important to note that GasLog Partners has not committed growth CapEx, but we will have 5 scheduled dry-docking in 2021, as I previously mentioned. We expect to continue strengthening our balance sheet, beginning with a retirement of approximately $110 million of debt in 2021. Reducing the balances will reduce the partnership’s cash flow breakeven levels over time, improving the competitiveness of our fleet. With that, I will turn it over to Paul to discuss the LNG commodity and LNG shipping markets. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Thank you, Achilleas. Turning to Slide 18. Poten reported 113 spot fixtures in the fourth quarter and a total of 450 million for 2020, an increase of approximately 50% over 2019. The increased spot market liquidity was underpinned by the increasing volumes of spot LNG, aided by the growing participation of traders in this market and by resilient LNG demand. Rising spot market liquidity should create opportunities for us to maximize the utilization of our fleet, whilst looking to use periods of market strength to fix our vessels on term charters, a strategy we successfully used this winter. The chart on the right shows the decline in headline spot rates in recent weeks as the northern hemisphere winter subsides, and we entered the seasonally slow shoulder months. Further ahead, should the global economy continues to recover with the rollout of COVID-19 vaccines, we expect the LNG carrier spot market to improve in 2021 relative to 2020. In particular, we expect many less U.S. cargoes to be shut in during the upcoming summer months. European gas storage levels are presently at around 40% compared to a 5-year average of 46% and 64.5% at this time last year. We expect European restocking to create opportunities for U.S. LNG, and hence, for LNG shipping throughout the coming months. However, we must caution that the order book for LNG carriers remains high with deliveries peaking this year, which may offset an increase in LNG demand or tonne-mile growth. Slide 19 shows LNG demand during 2020 and early 2021. Despite the COVID pandemic, LNG demand proved resilient and increased 1% in 2020 according to Poten. This is in stark contrast to the absolute demand destruction for oil last year. Demand in Asia was robust for much of the second half of 2020 as COVID restrictions in that region began to ease. However, European demand declined sharply, particularly in the fourth quarter when cold weather in Asia sent gas prices to record levels, diverting much of the available LNG supply towards Asia. Consequently, Europe has been drawing down inventories, which are now below their 5-year average, as I recently mentioned. For 2021, Wood Mackenzie forecast LNG demand to grow by 4% with growth most pronounced in the second and third quarters. Slide 20 shows the average monthly U.S. exports per quarter during 2020. U.S. exports are among the most shipping intensive as the distance to most major discharge destinations is above the global average. For example, during the fourth quarter, approximately 2 ships were needed for every 1 million tonnes of LNG exported, nearly twice the global average. Therefore, U.S. exports growing approximately 20 million tonnes this year should be a positive for shipping demand. Slide 21 shows a gas price differential between export and import markets. As I noted earlier, cold weather in Northern Asia rapidly increased LNG prices. In particular, the differential between export prices in North America and import prices in Asia hit a record earlier this year. And similarly, LNG shipping spot rates hit record highs, a charter will sought any available vessel to capture these arbitrage trades. The future’s market presently implies a steady and widening differential between U.S. gas prices and Asian import prices, which is a positive for shipping demand as this should keep liquefaction terminals operating at high levels of utilization. Slide 22 shows Wood Mackenzie’s forecast LNG demand growth over the next 5 years. They expect LNG demand to grow by 88 million tonnes between 2021 and 2026 or 4% per annum. Nearly 75% of this demand growth comes from outside China, demonstrating LNG’s broad-based appeal and versatility in meeting the world’s energy needs. Slide 23 illustrates the scale of the infrastructure currently under construction, both to consume and produce LNG. Import terminals can be built much more quickly than production facilities. And so the data on the right only goes out to 2024. There are many more planned additions for both production and regasification, and we expect these numbers to continue to increase. Following the sanctioning of new liquefaction trains in Qatar earlier this year, there’s presently 133 million tonnes per annum of LNG production under construction, 56 million tonnes of which is in North America. On the right, you’ll note there’s 126 million tonnes per annum of regasification capacity being built today, 2/3 of which is in Asia. We, therefore, believe that much of this new production will be shipping-intensive, a positive for our business. Turning to Slide 24 and in summary. With the strategic review completed, we are wholly focused on delivering on our strategy of becoming a preeminent player in the rapidly increasing short-term LNG shipping market. Our large fleet of vessels and our leading operating and commercial platform positions us well to deliver on this strategic objective. The partnership’s financial position is solid, and we expect to further strengthen it this year as we plan to retire an additional $110 million of debt. This will continue to improve our competitiveness through lower cash breakevens, and over time, increase our free cash flow capacity. In addition, as our financial position improves, we expect to opportunistically modernize and grow our fleet through the purchase of new assets and the disposal of older assets. And finally, we are fortunate to be operating under a backdrop of continued demand for LNG as a complement to renewables in the decades to come as the world transitions to a carbon-free future. Before I hand the call for any questions, I’d like to remind our listeners that we ask you to focus your questions on GasLog Partners and its fourth quarter only. We will not be addressing any questions related to GasLog Ltd. or the merger agreement with BlackRock we announced earlier today. With that, I’d like to open the call for questions. Please, operator. ================================================================================ Questions and Answers ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) Our first question comes from Greg Lewis with BTIG. ——————————————————————————– Gregory Robert Lewis, BTIG, LLC, Research Division – MD and Energy & Shipping Analyst  ——————————————————————————– Paul, I guess some of my questions might be related to GasLog. So I guess, I apologize for that in advance. But so — and you touched on it. Clearly, the GasLog fleet, or we’ll call it, GLOP is — eventually, there will be times to renew it. And so as we think about that and knowing that — I believe Gas will — the parent will still own shares in the distribution ownership part of GLOP. How should we think about the ability for GLOP to acquire assets? And just really — yes, I’m kind of curious about that because like — and just bouncing around here, like should we expect GasLog Partners to be ordering new builds as well? I guess that would be my first kind of question. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Yes. Thanks, Greg. I think we’ve been on somewhat of a divergent strategy between GasLog Ltd. and GasLog Partners for some time now. And GasLog Partners, I think, is more and more standing on its own as a company. I think we see opportunities for the purchase of secondhand vessels, opportunities through GasLog Partners for consolidation. And of course, I wouldn’t rule out because it’s open to it. It could place orders itself for new buildings. What’s interesting, I think, right now, though, when we look at the new building spaces, 2 things, I think. One, we’re not really seeing the returns that we would like to see there. We’ve seen a couple of shipowners being willing to fix at rate which wouldn’t make sense, I don’t think for the partnership. And I think for us to order new buildings, we’ll be very focused on the potential life of those new buildings. Historically, writing down ships over 30, 35 years. I think if you order a ship in 2025, 25 years later, we’re at the IMO 2050 regulation. So whilst I think the partnership would definitely look at new buildings, I think we would have to be, one, writing the ships down over a reasonable period of time; and two, making sure that we were making returns on those vessels, which were commensurate with our requirements. But certainly, that’s an option for GasLog Partners in the future. ——————————————————————————– Gregory Robert Lewis, BTIG, LLC, Research Division – MD and Energy & Shipping Analyst  ——————————————————————————– Okay. And then a question on the market. Thank you for the slide deck, always very helpful. Clearly, there was an uptick in spot activity this year. I guess what I’m wondering is, were the cancellations that were widespread in the middle of the year, did that kind of overinflate the actual percentage of the market that is going to spot and, I mean, on multiple levels, was there a vessel that traditionally moves the cargo that did not and then that cargo. Just kind of how we should be thinking about — realizing that the spot market is going great, gaining in depth — or breadth and depth every year, how should we — was this year a little bit of an anomaly? Or do we think this is kind of the new normal? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Yes. So a really good question, Greg. We took a look at that in the commercial team. And regionally, we felt it may have been due to the fact that we were seeing some cancellations shut-ins in the U.S. But we kind of came out at the end of it thinking, actually, no, I don’t — we don’t think that was necessarily a major factor that we just are seeing with the growing production in both Australia and the U.S. more cargoes, which are not contracted in and which are open to be fixed. And more trader activity coming in, buying cargoes and then trading those cargoes. So I think sort of the depth of liquidity we saw this year, we don’t think is a one-off or anomaly. We think it continues. And in fact, we think it increases. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from Ben Nolan with Stifel. ——————————————————————————– Benjamin Joel Nolan, Stifel, Nicolaus & Company, Incorporated, Research Division – MD  ——————————————————————————– Big day here. I wanted to — I’ve got a few things, and I know I don’t want to monopolize time. But the one thing, and again, apologizing, I don’t want to overstep into the GasLog Ltd. territory. But as you do think about, let’s say, things about like FSRU projects, for instance, the Alexandroupolis or whatever. And where, let’s say, conversion vessels are appropriate? Does this transaction at all? Or does the public versus private or whatever, does it change how that process works in terms of what vessels go where? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– I don’t believe it does, Ben, because apart from the transaction we talked about, GasLog — the relationship between GasLog and GasLog Partners remains the same. So if you like, we’ve had those issues around which ships, et cetera, get allocated previously. You’re keeping the same management team in place who, I think, are focused on doing the best service for both companies. And it’s very rare that you have a situation where you have 1 vessel — you have 2 vessels, which are exactly the same position and exactly in the same place to do a cargo or to do a conversion. There’s always a reason why one is better than the other. And so we will do that. And of course, the conflicts committee of GasLog Partners will continue to operate and make sure that everything is done in the correct way. So I don’t see that the transaction that we’ve announced today would change that in any meaningful way. ——————————————————————————– Benjamin Joel Nolan, Stifel, Nicolaus & Company, Incorporated, Research Division – MD  ——————————————————————————– Okay. That’s helpful. And I appreciate you answering that. Now I guess I got a — maybe I’ll smash 2 into 1 here. As — well, first of all, let’s do it this way. Knowing that you don’t usually give much color around specific rates with the Methane Jane Elizabeth with a 2-year contract. Any at least rough context just because we don’t see a lot of steam — 2-year steam contracts. And again, a completely separate question, but we’ll merge them here. As we look into the summer months and last year, as Greg was talking about, with downtime. But this year, it potentially could be a little bit different or at least we saw differences with respect to Asian demand and the limitations around the Panama Canal. Could you maybe talk through sort of what you would envision that ratio of number of ships per cargo to look like over the course of this summer, assuming that we don’t have massive shut-ins or whatever out of U.S. liquefaction and whether ships go through the Panama Canal or Africa or whatever? So I appreciate there’s a lot in that. But if you could maybe shed some light on those 2 things. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Yes. I think, first of all, in terms of the steam vessels in GasLog Partners, we can’t really talk about commercial terms because we do it privately with the charterers. I think what I would say is that what we have been focused on with those ships is as we look at kind of the portfolio for GasLog Partners, is making sure that we cover our kind of costs, OpEx and financing costs on those vessels and then leave a couple open that were open to the market where we can hopefully do quite well as we did with a couple of ships in the quarter. So that’s as we focus on it. If you think about making sure that we’re above breakeven on those vessels that kind of can give you sort of a view to the pricing on the last ship that we did. In terms of Asian demand in Panama, to be honest, Panama are trying to increase the amount of availability slots for LNG ships. They’re also going to be moving to ships going through nighttime, et cetera. And I think that’s really positive because in a sense that the Panama Canal contributed to the strength in the market. There were points in the winter when there were 10, 12 days delay for LNG ships going through. But LNG ships going through Panama is still double the average duration — distance than for ships generally in the LNG trade. And so what I wouldn’t like to do is for the problems in the Panama Canal to start to crimp demand in Asia. So yes, if a ship goes via Cape of Good Hope, it’s a lot longer, 3,000 miles longer, it takes longer time. But I think having a well-functioning Panama Canal for LNG is really quite important for the long term. And we have been, I think, heartened by the fact that the Panama Canal are looking to make these changes to increase capacity through there because I think having it — the ability to be more ratable, I think, will be helpful to the flow of cargoes to the Far East in the longer term. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from Randy Giveans with Jefferies. ——————————————————————————– Randall Giveans, Jefferies LLC, Research Division – VP,Senior Analyst & Group Head of Energy Maritime Shipping  ——————————————————————————– So I guess quickly on that follow-up for the Jane Elizabeth. Is that a fixed or floating rate charter? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– A fixed rate. ——————————————————————————– Randall Giveans, Jefferies LLC, Research Division – VP,Senior Analyst & Group Head of Energy Maritime Shipping  ——————————————————————————– Fixed rate. Okay. Just confirming that. And then I know it kind of touches onto GasLog, but was there any kind of bid for GLOP as well from BlackRock? And then it sounds like there’s still some open options for future strategies at GLOP. Is it plan to remain an MLP, even with the relatively small distribution payout? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– First, on the first question, Randy, unfortunately, I can’t talk about the deal and what was discussed and what wasn’t on that part of it. But in terms of GasLog Partners remaining an MLP, at the moment, I think the intention is that we will maintain as an MLP. We already do our tax filings in such a way that it’s not disadvantageous. It’s tax filings as a C-corp. And we still believe that, that is — could be opportunities in the MLP market in the future as a way to raise money. So to keep that optionality, I think, is fine. We have brought down the cost there for GasLog Partners quite considerably. And also, we’ve taken out the IDRs. So all those things, I think, at the moment, make us believe that maintaining as an MLP is the right thing to do for GasLog Partners. ——————————————————————————– Randall Giveans, Jefferies LLC, Research Division – VP,Senior Analyst & Group Head of Energy Maritime Shipping  ——————————————————————————– Got it. All right. Is there going to be a call on the BlackRock deal and GasLog, to ask questions on that? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– We don’t plan for that at the moment, Randy. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from Chris Wetherbee with Citi. ——————————————————————————– Christian F. Wetherbee, Citigroup Inc., Research Division – MD & Lead Analyst  ——————————————————————————– Listen, I think we kind of need to understand a little bit better sort of the differentiation between the 2 companies and sort of the strategic process that was run to kind of get a clear picture why sort of GLOP is on the outside while GLOG is sort of on the inside with this transaction. So maybe you can avoid talking about GLOG to some degree, but I think it would be really helpful to kind of understand the strategic process for GasLog Partners. And sort of why it sort of ended in a sort of kind of a scenario without progress? I guess we’re kind of just trying to understand what the differences were here. We understand the ownership differences. But outside of that, is there something we should be thinking about between the 2 companies? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Yes. I think in terms of progress, Chris, I would say, I think GLOP has been making quite a lot of progress over the last couple of years as it’s been deleveraging, bringing down its costs, putting itself into a position where it can be competitive in what we see as an interesting spot market going forward. I think the strategic review was pretty complete. We took — the Board worked with independent company advisers to look at that and determine that given the nature of the fleet and the structure of the business that actually, there was a very good future for GasLog Partners as a stand-alone entity, taking advantage of what we think in the longer run will be a stronger market for the spot fleet, slightly different. In a sense, the 2 companies have changed traditionally, a lot more fixed rate business in GasLog Ltd. and more open exposure, but a lot less debt, et cetera, in GasLog Partners. So as I talked about earlier, we’ve seen those 2 companies sort of diverging virgin. We don’t think that the right thing to do right now with GasLog Partners is to take it out of the capital market. ——————————————————————————– Christian F. Wetherbee, Citigroup Inc., Research Division – MD & Lead Analyst  ——————————————————————————– Okay. Okay. All right. And I guess in terms of the progress in terms of deleveraging further, I know you have just north of $100 million of annual amortization over the course of the next 3 years, I think, which will continue to sort of move that leverage number down. Where do you think you need to get to before it makes sense to start sort of maybe pivoting more to a more of an offensive position, whether it be sort of acquisitions either in the second-hand market or potentially new builds like you talked about a little bit earlier. But sort of what’s that trigger point for you, where is the threshold do you feel more comfortable? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– I maybe ask Achilleas to answer that one. ——————————————————————————– Achilleas Tasioulas, GasLog Ltd. – CFO  ——————————————————————————– I think, Chris, we have a plan to follow our scheduled debt amortizations that is about $330 million from 2021 to 2023. This is a significant amount of debt being paid down, that will reduce the net debt-to-EBITDA. Of course, this also depends on how the spot market will develop. I think as we move on, we implement our plan, we deliver, we reduce our breakevens, we become very competitive, there will be opportunities out there. And depending upon the market and the nature of these opportunities, we will be able to act fast and take advantage of them, either accelerating the leverage even further or taking opportunities on the growth side. So it remains to be seen. I think how the spot market will develop as we examine our strategic options going forward. ——————————————————————————– Christian F. Wetherbee, Citigroup Inc., Research Division – MD & Lead Analyst  ——————————————————————————– Okay. Okay. That’s helpful. And one last quick one. Obviously, GasLog owns a large chunk of GasLog Partners. Is there an expectation of what that ownership might look like going forward? Is this something that they’re going to continue to own? Or should we expect that to come to the market at some point? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– No. I think we’re very happy with our ownership in GasLog Partners right now. ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) Our next question comes from Omar Nokta with Clarksons Platou. ——————————————————————————– Omar Mostafa Nokta, Clarksons Platou Securities, Inc., Research Division – Head of Shipping Research & Analyst  ——————————————————————————– Paul, I’ll stick with GasLog Partners. And you did talk about this quite a bit in your comments and obviously in the Q&A. Your strategy is, I think, very key. And one of the options that you discussed or one of the items is kind of the idea of entertaining all value-enhancing options for the MLP. And so obviously, the main focus for now is deleveraging. But in terms of strategy, what do you think is in store for the partnership from an asset-based perspective? Do you still view GasLog Partners as being an LNG shipping company? Or does it potentially change into other sectors or other assets? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Yes. Thanks, Omar. Good question. I think for right now, where we see our core competencies around the movement of LNG. So I think for the foreseeable future, we see that. But I also think we have a core competence within GasLog as a whole, which is around moving very difficult, dangerous cargoes around the world. And I think as we see LNG as a long-term complement to renewables. But I think as the world changes towards potentially hydrogen economy, carbon capture, et cetera. I think there will be opportunities for GasLog Partners within that area. I think the operating platform gives us the opportunity to look at those. But certainly, for now, the focus is very much on LNG. I think there are some great opportunities, which will present itself for us to create value for the unitholders, be that secondhand opportunities, consolidation opportunities and just remodernizing the fleet at the right time with the potential sale of some of our existing ships. So that’s where the focus will be, but I think we have a very good platform on which to continue to develop GasLog Partners in the future. ——————————————————————————– Omar Mostafa Nokta, Clarksons Platou Securities, Inc., Research Division – Head of Shipping Research & Analyst  ——————————————————————————– And just a follow-up. This has been a question that you’ve addressed in the past, and I think it came up on the last call, which is the residual value of the steam vessels, or in general, whether it’s for GasLog or for the industry. The steamships still make up a pretty significant piece of the overall fleet. And my question is based off of what we saw this past winter and the spikes that we saw, have you seen any new developments with potentially what the residual value could look like for this sector over — or the segment of the vessel pie? But is the residual value you think improves from here? Or is it still kind of wishy-washy from — based off what you talked about in the past? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– That’s a really good question, Omar. I mean what’s interesting, of course, is when you see reports of steamships earning in excess of $100,000 a day for 2 or 3 months, you can do the math and work out very quickly the earnings capacity of those ships. But certainly, on the other side of that, as we do transition towards sort of the IMO regulations and things, there is going to be, I think, a finite life for those vessels as well. So I think we have probably some of the — well, we have the most modern steamships out there. We’ve shown that we have the ability to put those ships away on longer-term contracts and secure the utilization of them. But I think a strengthening market will be helpful for the residual value. But of course, we have to be mindful of there will be a finite life for those vessels as well. So I think balancing those 2 things up, we feel very comfortable with them at the moment. But it is going to be dependent, I think, on us making sure that or on the spot market developing in the way that we believe it will. ——————————————————————————– Operator  ——————————————————————————– Next question comes from Mike Webber with Webber Research. ——————————————————————————– Michael Webber, Webber Research & Advisory LLC – Managing Partner  ——————————————————————————– So just a couple of quick ones. First, Paul, along the lines of the previous question, you guys have started doing a little bit more work downstream at GasLog prior to the deal. Obviously, it’s a pretty small market. We’ve obviously seen some consolidation there already. None of that work has been incubated thus for at GasLog Partners. So it might be a little bit — not putting the cart a little bit ahead of the course here, but I’m just curious as you think about that market specifically and potential opportunity set there, is there any indication at all as whether that work would continue at the parent or whether that would be something you could potentially look at with — at least within the public sphere? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– I think we have — it will remain, of course, that the commercial, operational, technical service for GasLog Partners will remain with GasLog Ltd. But I think what’s interesting, of course, is that you look at the fleet of vessels which GasLog Partners have, as we look at those infrastructure-type projects, that’s a very interesting — the assets which GasLog Partners have, makes it a very interesting place. So I think it could — we could — we continue to see us working on projects using those GasLog Partners’ assets. And an example, a couple of steamships we’ve got now are really not operating in the LNG carrier market as such, but operating in LNG carriers and operating as mother ships and offloading and things like that. Those types of projects are really well suited to the GasLog ships — GasLog Partners ships. And those will continue to be a big focus for us as we look to maximize the returns. So no big changes there, Mike. ——————————————————————————– Michael Webber, Webber Research & Advisory LLC – Managing Partner  ——————————————————————————– Okay. Fair enough. And just one more on the nuts and bolts of the transaction and the equity rollover. Is it fair to say the existing holdings of the entities listed in the deck, it’s the entirety of those existing holdings? Or is it just a portion of those existing holdings that are going to be rolling over? ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– So as we put in the press release, what it would be is 55% will be rolled over, and 45% will be offered to be taken out by backlog. ——————————————————————————– Operator  ——————————————————————————– There are no further questions. I’d like to turn the call back over to Paul Wogan for any closing remarks. ——————————————————————————– Paul A. Wogan, GasLog Ltd. – CEO & Director  ——————————————————————————– Thank you, Michelle, and thank you to everyone today for listening and for your continued interest in GasLog Ltd. and GasLog Partners. We certainly appreciate it, and we look forward to speaking to you in next quarter. And in the meantime, if you have any questions, please contact Joe Nelson. Thank you very much. Bye-bye. ——————————————————————————– Operator  ——————————————————————————– Ladies and gentlemen, this does conclude the program. You may all disconnect. Everyone, have a great day.