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Edited Transcript of GLOG earnings conference call or presentation 14-Feb-19 1:30pm GMT

Q4 2018 GasLog Ltd Earnings Call

Monaco Feb 19, 2019 (Thomson StreetEvents) -- Edited Transcript of GasLog Ltd earnings conference call or presentation Thursday, February 14, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alastair Maxwell

GasLog Ltd. - CFO

* Paul A. Wogan

GasLog Ltd. - CEO & Director

* Phil Corbett

GasLog Ltd. - Head of IR

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Conference Call Participants

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* Christian F. Wetherbee

Citigroup Inc, Research Division - VP

* Christopher M. Snyder

Deutsche Bank AG, Research Division - Research Associate

* Fotis Giannakoulis

Morgan Stanley, Research Division - VP, Research

* Gregory Robert Lewis

BTIG, LLC, Research Division - MD

* Michael Webber

Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst

* Randall Giveans

Jefferies LLC, Research Division - Equity Analyst

* Sean Edmund Morgan

Evercore ISI Institutional Equities, Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, my name is Gigi and I will be your conference operator today. At this time, I would like to welcome everyone to GasLog Ltd.'s Fourth Quarter 2018 Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

Today's speakers are: Paul Wogan, Chief Executive Officer; Alastair Maxwell, Chief Financial Officer; and to commence the call, Phil Corbett, Head of Investor Relations.

Mr. Corbett, you may begin your conference.

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Phil Corbett, GasLog Ltd. - Head of IR [2]

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Good morning or good afternoon to everyone and thank you for joining GasLog Ltd.'s Fourth Quarter 2018 Earnings Conference Call. For your convenience, this webcast and presentation are available on the Investor Relations section of our website, www.gaslogltd.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 release.

In addition, some of these remarks contain non-GAAP financial measures as defined by the SEC. A reconciliation of these is included in the Appendix of the presentation.

I will now hand over to Paul Wogan, CEO of GasLog Ltd.

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Paul A. Wogan, GasLog Ltd. - CEO & Director [3]

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Thank you, Phil. Good morning or good afternoon and thank you for joining our fourth quarter earnings call.

I'll begin with the highlights for 2018 and update you on our strategic progress. Alastair will take you through the financial review and an update on project Alex. I will then review the current trends in the LNG and LNG shipping markets before opening the call for questions.

But before we review the past quarter and year, I would like to share with you the key reasons why we believe that the outlook for GasLog's business is so positive. Firstly, the macro backdrop for gas and LNG consumption continues to improve. Secondly, we are confident that the recent fall in spot LNG shipping rates is seasonal in nature and that the market will recover, particularly given the significant U.S. LNG supply expected to come on stream during 2019 and 2020. And finally, GasLog is delivering on its strategy. Our 9 newbuildings underpin a visible growth runway through at least 2022, and represent substantial progress toward our target of more than doubling consolidated annualized EBITDA by 2022.

Turning now to our results on Slide 3. During the fourth quarter, we delivered record revenues and EBITDA, driven by very strong earnings from our spot ships and a reduction in unit operating costs. These factors, aligned to the fleet growth in 2018, also delivered record annual financial results, demonstrating our platform can translate market tightness into impressive earnings and cash flow.

In December, we announced that we had agreed 2 multiyear contracts with Cheniere and, to service these contracts, we ordered 2 newbuildings at Samsung for delivery in 2021. Our relationship with Cheniere has grown significantly, having secured 5 multiyear charters with them in 2018. These, combined with the 2 Centrica charters, continue to diversify our customer base. Their decisions to partner with GasLog highlight our ability to deliver a differentiated service to our customers, founded upon our core principals of operational excellence and an uncompromising approach to safety.

GasLog Partners continued to meet its distribution growth targets and provide equity for growth of the group. During 2018, we dropped down 2 vessels. In November, we announced an IDR modification, which permanently improved the partnership's expected cost of capital. And also in November, we were able to deliver enhanced returns to shareholders through declaring a special dividend of $0.40 a share, and authorizing a share repurchase program. We also increased the common dividend by 7% year-on-year in 2018.

Finally, as I will highlight later, we've made great progress towards our Investor Day target of more than doubling consolidated run rate EBITDA over the 2017 to '22 period.

Slide 4 illustrates GasLog's significant achievements since our IPO. Our fleet has grown by 3.5x and we have been one of the industry leaders in ordering the latest generation XDF ships with low boil-off rates. We've delivered this growth without a major increase in shore-based staff, demonstrating both the high quality and work ethic of GasLog's employees and the efficiency built into our operational platform.

Through fleet growth, an improving spot market and cost discipline, we have delivered compound EBITDA growth of over 50%. Throughout the period of low spot earnings, we never cut our dividend and since our IPO, we have delivered 5% compound dividend growth, not including the $0.40 special dividend announced in November last year.

Slide 5 shows the progress we have made towards our target of more than doubling consolidated run rate EBITDA over the 2017 to '22 period. The earning power of our spot vessels was clearly demonstrated in the fourth quarter. And I'm confident that a tighter market for the foreseeable future will generate spot earnings we need to deliver on the first pillar of our growth.

We've also seen significant interest in our open newbuilds, which are due for delivery in the third quarter of this year and second quarter of next year. And we are currently in chartering discussions on both these vessels.

Defined newbuilds we have ordered since the Investor Day provide around 60% to 70% of the incremental fleet growth required. Given our track record, I'm confident that we can continue to grow the fleet backed by long-term charters with high quality counterparties.

Now, let me hand over to Alastair.

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Alastair Maxwell, GasLog Ltd. - CFO [4]

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Thank you, Paul, and good morning or good afternoon to you all. Please turn to Slide 6, where I'd like to take you through our fourth quarter and annual 2018 results.

As Paul has mentioned, we reported record results with significant improvements in quarterly and annual revenues, EBITDA and adjusted EPS due to the growth in our fleet, strong results from our spot ships and tight control of both operating costs and G&A. Our leverage to the spot market is demonstrated by the $26 million of incremental spots TCE revenue delivered sequentially in Q4 2018, or $104 million on an annualized basis.

Fourth quarter unit OpEx and unit G&A declined by 28% and 11%, respectively. Overall, 2018 OpEx of $14,306 per vessel per day came in below our previous guidance of being broadly in line with 2017 levels. The fourth quarter of 2018, in particular, saw a number of factors reducing unit OpEx, some of which were one-offs and some of which are recurring. These factors range from: the benefits of fleet growth; a weaker euro impacting the cost of crew wages in U.S. dollar terms; insurance and tax rebates; and a successful initial effort of our cost-reduction program.

In 2019, we anticipate that unit OpEx will be around $15,000 per vessel per day. This reflects our expectation that some of the factors which positively impacted 2018 OpEx were one-off in nature, such as cadet training subsidies and insurance and tax rebates. This guidance also excludes one-off costs associated with tank cleaning activities to comply with IMO 2020. As always, unit OpEx will be subject to movement in FX, particularly, the euro/dollar exchange rate. We expect unit G&A in 2019 to be broadly in line with 2018.

The cost discipline delivered in 2018 demonstrates the operating leverage in our platform as our fleet continues to grow. As a result, while our revenues increased by 39% year-on-year on a quarterly basis and by 18% on an annual basis, our reported EBITDA increased by 62% and 26%, respectively.

As Paul mentioned earlier, our strong financial performance in 2018, GasLog partners' success in accessing new equity and the positive outlook for our business allowed us to reward our shareholders with a special dividend of $0.40 per share in Q4. The strong LNG shipping market we anticipate through at least 2021 and continued execution of our strategy may give us additional scope to enhance returns to shareholders above and beyond the common dividend.

Turning to Slide 7 and our financial position, which continued to improve during 2018, as we repaid a total of $206 million through scheduled amortization and the full repayment of the junior tranche of the 5-vessel debt facility.

On this slide, we show the evolution of net debt to LTM EBITDA and net debt per vessel. While both metrics saw an increase in early 2018 as we drew down new debt on delivery of the 3 newbuildings, the EBITDA contribution from these vessels, scheduled amortization and the strong cash generation of our spot ships in the fourth quarter accelerated the delevering trend, even including the impact of the special dividend. While leverage will rise periodically from debt drawdowns as we receive new vessel deliveries this year and next, we expect the overall trend to remain downwards, primarily due to our amortization schedule.

As concerns our net debt maturity in November this year, which is the GasLog Partners' $450 million facility, we are in advanced discussions with several banks and expect to complete the refinancing within the first half of this year.

Moving to Slide 8. We have updated the chart, illustrating our future capital commitments to incorporate the Cheniere newbuilds announced in December. We currently forecast cumulative cash payments for the equity in the ships, represented by the light blue tranches at the top of each column, to be $350 million, assuming 70% loan-to-value for the financing of our newbuild vessels.

We plan to fund this with unrestricted cash balances at year-end 2018 of $215 billion as shown by the thick green line, free cash flow generation from our growing on-the-water fleet, a stronger spot market and further drop-downs, with the partnership having already secured the equity funding to acquire another vessel from GasLog.

Moreover, scheduled debt amortization continues to free up balance sheet capacity. The funding requirement reduces significantly if we choose to finance our newbuilds at 75% loan-to-value, which is eminently achievable for newbuilds backed by 7-year charters.

Slide 9 illustrates the continued success of GasLog Partners in accessing equity capital and our ability to recycle that to GasLog through accretive drop-downs. Last year, the partnership raised $277 million of equity capital from third-party investors, and recycled over $200 million to GasLog through the 2 drop-downs and the consideration for the IDR modification. In total, GasLog Partners has recycled over $700 million of equity to GasLog in the form of cash and units since the partnership's IPO in 2014.

Slide 10 provides an update on the Alexandroupolis FSRU project in Northern Greece. Gastrade, in which GasLog owns 20%, continued to make good progress on the development of project Alex. The first phase of the market test resulted in 20 companies submitting expressions of interest for up to 12.2 billion cubic meters per year of throughput, significantly more than the 5.5 BCM per year technical capacity of the project. Preparations for the second phase of the market test are well underway.

Good progress is also being made on the FSRU and pipeline tenders. DEPA and Bulgartransgaz, a subsidiary of Bulgarian Energy Holding, continue to work towards formalization of their respective shareholdings in Gastrade.

Gastrade expects a final investment decision in the middle of this year, although this does require meaningful near-term progress on critical path items, including decisions by various regulatory bodies. The project is expected is start up in the second quarter of 2021.

More generally, we are seeing the very early green shoots of recovery in the FSRU market. And we continue to look at projects where we can secure early entry and avoid competitive tenders to increase the likelihood of success.

Now, let me hand back to Paul.

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Paul A. Wogan, GasLog Ltd. - CEO & Director [5]

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Thank you, Alastair. And turning to Slide 11. Both the near and longer-term fundamentals for LNG shipping continue to strengthen, underpinning the positive GasLog equity story.

Natural gas and LNG demand continue to benefit as countries switch from polluting primary fuel sources. For example, several shipping sectors are starting to use LNG as a bunker fuel, largely driven by the requirements of IMO 2020 for ships to use low sulfur fuels. Whilst this is presently not a major market, if LNG supplied the entire bunker fuel requirement, this would create an approximate 200 million tonnes per annum of extra demand or around 2/3 of today's total demand for LNG.

The switch to gas appears to be supporting the notable increase in long-term offtake contracting, which will underpin further liquefaction FIDs. And the LNG market is growing and evolving with more points of supply and demand. Portfolio players and commodity traders continue to increase their market presence. Interbasin trade is increasing as more U.S. liquefaction capacity comes online, adding to tonne-mile demand.

This will all require incremental shipping capacity, creating an opportunity for GasLog to secure charters for new and on-the-water vessels.

Slide 12 shows the annual increase in LNG imports by country. LNG demand grew by 25 million tonnes or 9% year-over-year in 2018. Whilst China posted the largest increase, importing over 15 million tonnes or approximately 40% more LNG year-on-year, LNG growth has been broad-based, particularly in Asia, where demand from South Korea, Pakistan and India has grown by a combined 10 million tonnes or 16% year-on-year.

Slide 13 illustrates the impact of LNG demand growth on tonne miles. According to Poten, tonne miles posted an annual increase of 16% in 2018 compared to overall import growth of 9%, and by 20% in Q4 2018 compared to Q4 2017. We expect tonne-mile demand growth will continue, particularly with the commissioning of significant U.S. liquefaction capacity later this year.

Slide 14 provides detail on both China's historical and predicted LNG demand growth. China's gas market continued to grow and evolve during 2018, with unification of residential and industrial gas pricing, the addition of incremental import capacity and improved third-party access to infrastructure. The government's coal-to-gas switching program, as part of its antipollution drive, provides a strong secular demand growth driver. China is targeting natural gas to comprise 10% of its primary energy mix by 2020. But this still significantly lags global average of 24% in 2017.

Near-term demand growth is expected to remain strong, supported by significant growth in regasification capacity. A recent Bloomberg article reported a Chinese government target of 247 million tonnes per annum of regas capacity by 2035, a near 4-fold increase on today.

However, as shown on Slide 15, WoodMac forecasts growth-based demand between 2018 and 2025, with China only accounting for 19% of the near 150 million tonnes forecast of net demand growth, while Southeast Asia and Europe together account for nearly 70%.

Slide 16 illustrates recent LNG purchasing activity. Building on the Q3 2018 momentum, we have seen -- we have continued to see significant long-term offtake activity by both traditional buyers and commodity traders. In addition, both LNG Canada and Golden Pass took FID with the project partners underwriting their respective equity volumes.

In total, 95 million tonnes per annum of long-term offtake commitments have either been announced or signed since the beginning of 2018 compared to just 25 million tonnes per annum in 2017.

Slide 17 shows how these offtake agreements have supported new liquefaction FIDs. Tortue, LNG Canada and just last week, the 16 million tonnes per annum Golden Pass project were all recently sanctioned. News flow also suggests that further FIDs will be taken this year in Mozambique and Russia. Wood Mackenzie believes that 2019 will be a record year for capacity additions and the new LNG projects sanctions.

Slide 18 shows how U.S. exports have positively impacted shipping demand. Poten reports 318 cargoes were exported from the U.S. in 2018, with 141 delivering into North Asia, a trade route that requires more than 2 ships per million metric tonnes of LNG exported per annum.

The average shipping multiplier implied by U.S. 2018 LNG exports was over 1.9x, significantly above the global average of 1.3x. This is particularly significant given the 36 metric tonnes per -- million tonnes per year of new U.S. liquefaction capacity scheduled to come online by the end of 2020.

Moving to Slide 19. The left panel shows the evolution of headline spot rates during 2018. While the timing of the annual peak and trough in rates was similar to previous years, the amplitude was markedly higher as the markets strengthened significantly during the second half of 2018. This is caused by the front-loading of China's LNG buying, shipping capacity being used as floating storage and an increasing number of multi-month charters being fixed for the winter season, which limited ship availability in the spot market. However, only a small number of vessels were able to capture the Q4 peak headline rates and then for only short period, as shown by the chart on the right.

A relatively warm Northeast Asian winter combined with ample gas inventory levels has recently led to a fall in both spot fixture activity and the average duration of those fixtures. As a result and following normal seasonal trends, utilization and spot rates have fallen in recent weeks, with Clarksons currently reporting headline TFDE rights of 60,000 per day.

However, we anticipate a return to higher LNG shipping activity levels and stronger spot rates as we move through 2019 into the Northern Hemisphere cooling season and new large LNG projects particularly in the U.S. into production.

Slide 20 updates our capture rate analysis, which it tends to explain the relationship between lagged headline spot rates and the time charter equivalent earnings of our spot vessels. The fourth quarter capture rate of around 90% was driven by high utilization of our spot fleet and round-trip economics. However, it is likely that the relationship between lagged headline rates and the spot TCE will weaken in the first quarter, leading to average spot earnings across the fourth quarter of 2018 and the first quarter of 2019 that are broadly in line with mid-cycle levels. I believe average earnings across 2019 and 2020 for our spot ships will be strong and volatility in spot rates will reduce.

Turning to Slide 21. Poten reported that 53 ships delivered last year and 61 were ordered. Many of the 2018 deliveries are intended for projects that have yet to begin production. There are 105 LNG carriers on order today. While there were a number of orders placed in late 2018, Poten's data suggests that pace of speculative orders has slowed significantly, with the majority of LNG carriers due for delivery in late '21 committed to multiyear charters.

It takes between 2.5 years and 3 years to construct an LNG carrier, meaning a vessel ordered today will likely deliver in mid-to late 2021. With this visible supply outlook, we expect demand for LNG shipping to strengthen as we move through 2019 and into 2020.

Slide 22 shows how forecast LNG demand alongside the current order book impacts the supply and demand balance for LNG carriers through the end of 2022 based on Wood Mackenzie and Poten data. The shaded area represents low and high vessel demand scenarios, up slightly from our previous range to more accurately reflect the last 3 years of export data.

As you can see, the market is expected to be tight through at least 2021, based on Wood Mackenzie's latest demand growth estimates and the on-the-water fleet plus order book. An absolute shortage of ships is not required for the spot market to be strong. When fleet utilization rises above 85%, freight rates and cash flows improve considerably as we observed in the spot market during the second half of 2018.

So let me finish on Slide 23. We're very proud of how we continued to execute on our strategy in 2018, which underpins our status as a leading independent LNG carrier owner and operator. Our record financial results demonstrated our ability to capitalize on a tight market. This allowed us to significantly enhance our shareholder returns, which will continue to be an area of focus for us.

We remain confident of a tight spot LNG carrier market through at least 2021, an outcome which should generate significant cash flows from our 6 spot vessels. This backdrop should also allow us to continue growing our fleet and re-charter our open ships as well as diversifying our customer base to include other high-quality counterparties.

With that, I'd like to ask the operator to open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question is from Chris Wetherbee with Citigroup.

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Christian F. Wetherbee, Citigroup Inc, Research Division - VP [2]

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So maybe wanted to start just sort of on the chartering market. Obviously, we've seen a deceleration, typical seasonality here as we moved into early 2019. You have a couple of vessels that could be put away on longer-term charters. Wanted to get a sense, essentially, of what your perception of the market was: the sort of timing of potentially getting some deals signed there; and whether or not you thought you could be adding incremental customers to the portfolio this year.

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Paul A. Wogan, GasLog Ltd. - CEO & Director [3]

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Yes, Chris. It's Paul here. Thanks. Yes, I think in terms of timing, I think what's really interesting is that we were probably taken by surprise as much as anyone else by the real strength of the market in Q4 '18. We expected the winter market to be strong. But I think the fact that China front-loaded its buying of cargoes and then held a little of that on floating storage, taking somewhere 20, 30 ships out of the market, really turbocharged it. And we saw those very high headline spot rates. So I think if you look forward, and our supply and demand, we think that sort of supply and demand picture gets replicated again in the forthcoming winter, but without having to put ships on storage if you like. So we think that we're sort of very -- in the first phases of what is going to be a quite a strong market over the next few years. And so as we look out, what's the right time for us to be putting, rechartering ships, et cetera, we think that we're going to have some opportunities, especially as people look at the forthcoming winter to be able to look at some attractive time charter opportunities. I think with what we've seen with the recent seasonal falls in the market, now is probably not the right time for us to be looking to do that.

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Christian F. Wetherbee, Citigroup Inc, Research Division - VP [4]

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Okay, that makes sense. And in that context though, how do we think about your positioning in the Cool Pool and, sort of, how you want to manage that? I'm guessing, if you're assuming that there's the potential for some good earnings power coming again this year, you're going to want to have leverage to that earnings power. So should we assume sort of a relatively static fleet size dedicated to the Cool Pool?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [5]

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Yes, I mean, I think in terms of both for us in terms of what we see, having those 6 ships in the spot market at present I think is serving us well. And I think we've said as a long-term -- on a long-term basis, we probably would be looking to keep at least 2 or 3 ships in the spot market so that we have visibility on that. But in terms of the number of ships we want to keep in the spot market at the moment, I think we -- given our view of the market, we would like to sort of keep some exposure to that, but also be cognizant of the right time to put some of those ships away. And I think, again, we've been quite clear that as we do that, we would probably look to put some of the ships that GLOG has away on time charter because they have a need for more longer-term fixed -- ratable revenue than we do at the parent.

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Christian F. Wetherbee, Citigroup Inc, Research Division - VP [6]

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Definitely. Okay. And then last question for me, just wanted to kind of touch base on your leverage target. Maybe we can think about them in the context of 2019 and then maybe a little bit longer term than that. Obviously, a nice help from the market has kind of pushed a deleveraging push here over the course of the last several quarters. Just wanted to get a sense of where you think it might go by year-end '19? And then, if you could give us some bigger-picture thoughts on where you'd like to kind of get those numbers over time?

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Alastair Maxwell, GasLog Ltd. - CFO [7]

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Yes, Chris. It's Alastair. So you're right, we're very pleased with where the balance sheet sits today and we did have a following wind in Q3 and Q4 of last year. Obviously, again, as I said in my remarks, leverage tends to move up and down a little bit as we take delivery of newbuildings. And we have 2 in 2019, one shortly and then one in July, and then we have 5 ships delivering in 2020. So 2020's going to be quite a heavy year in terms of taking delivery of new ships and drawing down on debt to finance those ships. And when you look at net debt, on an LTM -- sorry, EBITDA and LTM basis, clearly, it takes some time for that to feed through. So I would expect, looking forward to 2020, that we will probably continue to delever somewhat, partly as a function of where the spot market is, but I would expect as we go beyond that, for leverage to continue to fall. Don't have a hard target for you, but all other things being equal, probably down into the 5x.

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Operator [8]

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Our next question is from Michael Webber from Wells Fargo.

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Michael Webber, Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst [9]

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Paul, just to delve into what we're seeing in Q1. The weakness is a bit more significant than I think we probably expected, the market expected. When you talk to kind of rates, realize Cool Pool rate that's inside of kind of mid cycle. Implied utilization is pretty soft for the Cool Pool, probably softer than what would be implied by kind of the headline rate. Can you talk to specifically where Cool Pool utilization is right now? And then of the factors you listed, in terms of new deliveries and obviously, a pull forward of volumes in Q4, I know there has been some tonnage that's been released on to the market as well. Is there any one factor that's maybe weighing on dedicated spot players like the Cool Pool more than others?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [10]

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Yes, I don't think -- just take the last one first. I don't think there's anything that's sort of dragging particularly on the Cool Pool. I mean I think what we saw was -- as I said a little bit earlier, Mike, we saw that the Chinese having been -- burned is probably the wrong word because they didn't have the gas but having been burned in the first -- in 2017, '18 decided they were going to move very quickly to bring in the LNG they needed. That combined with a sort of fairly mild winter so far in Northeastern Asia, has meant that, that sort of product that was taken in earlier has been drawn down. So that is definitely having an effect in terms of the demand picture there. And that is definitely having an effect on both the headline rates and the utilization of the ships at the moment. I do think, though, it's pretty temporary. As I said, I think as you work through this year, I can't stress enough, the new production coming on is primarily coming out of the U.S, which is very high tonne miles. I think we're something like 40 million tonnes of new production coming on this year, 35 ships are due to deliver. The supply and demand balance comes to play fairly quickly. So I think that's why we are pretty confident as we look forward that we're in for a strong period. I haven't got the exact utilization metrics in front of me for the Cool Pool right now. But I am guessing, we're below sort of -- we're somewhere, I would guess, around sort of 50%, 60% at the moment, something like that.

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Michael Webber, Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst [11]

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Okay. Yes, that would make sense to kind of get to that kind of rate for Q1. Along those lines of maybe the market being weaker than expected in Q1, you mentioned there's a lot of new capacity coming out of the U.S., a lot of commissioning work. Have you seen -- started to see maybe an uptick in inquiry for maybe 12 months to -- maybe 6-month, 12-month term charters, just around people trying to pick off cheap freight, maybe some of them more kind of desk traders in the market trying to step in and trying to pick that off? And how does that -- you mentioned last quarter, kind of really trying to avoid maybe re-let risk in 2022, 2023, has Q1 changed the way you think about your term exposure or what you're willing to take and for how long?

BY

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Paul A. Wogan, GasLog Ltd. - CEO & Director [12]

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I don't -- I wouldn't say it's changed it significantly. As I said, we were surprised to the upside, which is always nice, via the strength of the market. But I still think that we -- I think, going into this next winter, I think having seen that -- the effect on the rates last year and the lack of vessels that are available to move cargoes, I think we will continue to see people wanting to take cover into the winter period. I think the question here, what was interesting when we had a similar situation previously, and I'm talking here 2012, '13, et cetera, was that you had people coming to the market saying they wanted to take tonnage for a year or 2 years and you had owners saying, "Well, actually, if you really want to take my ship, then you have to for a longer period," 3 years, 5 years, et cetera. I would not be surprised to see that happening in the market. I think right now, as I said earlier, would not be the time that we would be looking to fix ships away on a -- so even though, we have a strong view going forward, psychologically, it's never a good time to try and fix when the market is sort of lower or coming down. But certainly, there's interest in a number of traders and portfolio players to make sure that they're covered over the winter period. And there's also -- there continues to be a lot of interest around longer-term charters and in the prepared remarks, I did make reference to the fact that on our 2 newbuildings that are uncommitted, we are in negotiation on those ships for longer-term periods as well.

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Michael Webber, Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst [13]

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Got you. Just to follow up on that. If I think about 2017 and 2018, some of the bigger players in the U.S. Gulf really stepped in to start building out their freight book and, call it, maybe August of 2017, that moved up to June of 2018. Just given the fact that rates are a bit softer than expected and there's a ton of commissioning work this year, do you think it's realistic to think that kind of busy period of people really stepping in early on freight gets pulled into -- properly into the second quarter of this year? Does it keep -- kind of keeps marching in?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [14]

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Yes, I think it's difficult to kind of say how your customers are going to react, but if I was a customer right now, I would not be leaving it too late to step into the market. So I would not be surprised to see that coming sooner rather than later, Mike.

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Michael Webber, Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Analyst [15]

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Got you. Right, just one more for me and then I'll hand it over. Sorry for all the questions. But you mentioned term business. I'm just curious, has there have been any change in which kind of where that term rate will clear right now? I know earlier in the year, you've have had maybe some -- speculators might be the wrong term, but newer players that were chasing new business that maybe kind of weighed on your ability to really push pricing, that might have eased, but now you've got kind of a softer immediate market. Can you maybe talk to where that term rate is now relative to a year ago? And whether you'll be able to push that in the first half of the year?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [16]

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Yes, I think you're correct. I think there were some new entrants that were putting pressure on the rates. We backed away from those charters. We have a very, I think, disciplined view on the rates -- on the returns that we need from our ships. And therefore, if we're not able to get those returns, then we won't do it. So certainly for us is not growth at any means. But I think as we've seen the year progressing, going into this year, there is a general strengthening in those longer-term rates, Mike. And I think especially with us having the good position on the existing ships, I think that gives us the opportunity to capitalize on those near-term positions.

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Operator [17]

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Our next question is from Jon Chapell from Evercore ISI.

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Sean Edmund Morgan, Evercore ISI Institutional Equities, Research Division - Analyst [18]

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This is Sean Morgan on for Jon Chappell. So one question on the newbuilds. Did you -- is it a requirement of Cheniere and Centrica to line up newbuilds on those charters as kind of a condition for us to getting the charter or -- and this is technology-driven? Or was there any thought to using existing tonnage on those?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [19]

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Yes, I mean, it's part of -- it's just part of the general discussion in terms of the requirement of the customer. So I think there's a couple of things. Certainly, in both cases, where they're taking -- 1 exporting cargoes from the U.S. Gulf, the other importing their cargoes, but stemming from the U.S. Gulf, the larger ships certainly have a real advantage in terms of their unit freight costs for those longer voyages. So there's definitely a view that they wanted to take those longer voyage -- larger ships for their longer voyages. The second is really around the timing of when they wanted those ships to deliver. We could have held back and put some of our existing ship -- existing newbuildings into that -- into those charters. But for all those existing newbuildings, we're in a very good position and felt that it was the right move to actually go and order other ships, keeping those ships open for other opportunities that we're seeing in the market. So a little bit of both really in terms of definitely those ships being, I think, good vessels for the U.S. export volumes, which are likely to go long haul.

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Sean Edmund Morgan, Evercore ISI Institutional Equities, Research Division - Analyst [20]

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Okay. And then the timing of the financing for those vessels, is that -- how close can you guys wait until delivery to line up financing? And are we going to just be getting more updates on that as we go through the year?

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Alastair Maxwell, GasLog Ltd. - CFO [21]

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Sean, it's Alastair. So we're working actively on our newbuild financing program. The first vessel which delivers in March is already financed. And then we are someway down the road on putting financing in place for the delivery in July of this year, which is Hull 2212. And then subsequent to that, although work has already started, we'll be looking at the rest of the newbuilds delivering in 2020 and 2021. What we need to do is to get the right balance between putting financing in place in good time for the newbuild ships on the one hand; and on the other hand, making sure we're not paying commitment fees for extended periods of time before their delivery, so getting the balance right between those 2 things.

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Sean Edmund Morgan, Evercore ISI Institutional Equities, Research Division - Analyst [22]

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Okay. And then just finally, the announced merger between Hyundai and Daewoo, how do you guys see that impacting the market for newbuilds on LNG carriers?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [23]

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Yes, I think actually, certainly having 2 major players rather than 3 is probably going to put some pressure on pricing, I think, over time. I don't necessarily see that there's going to be a big rationalization if it goes ahead -- if it goes ahead, be a big rationalization in the number I'll burst. But certainly, I think there's going to be pressure from that combined entity to try to put up prices. And we've been seeing that already in the market. So I think there will be enough capacity around for the overall demand in shipping. I don't think we'll ever work on the fact that there would be less capacity. But I do think it actually probably drives newbuilding prices up, and probably -- which just drives existing asset prices and puts -- which is a good position -- it means we're in a good position with the newbuilding fleet that we've secured at the moment.

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Operator [24]

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Our next question is from Randy Giveans from Jefferies.

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Randall Giveans, Jefferies LLC, Research Division - Equity Analyst [25]

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I have 2 quick questions. So does the recent positive FID of the Golden Pass LNG provide any additional chartering opportunities for GasLog? Or do you think all of those cargoes will be transported by Qatar-owned carriers?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [26]

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My guess is that they will create opportunities for independent owners. I mean, if you look at the -- when they did the original growth in Qatar exports back in sort of 2006, '07, '08, a lot of that went to Qatari companies, but a lot of that went to international companies as well. So I would be -- I would expect that they would probably come with something along a similar playbook, Randy.

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Randall Giveans, Jefferies LLC, Research Division - Equity Analyst [27]

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Okay. And then looking at the Cool Pool, it looks like the vessels earned close to, I don't know, $100,000 a day in 4Q '18. So based on that 45-day lag that you mentioned in the presentation, do you expect this to be higher or lower in 1Q '19?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [28]

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I think we -- as we're trying to show in the presentation, there were sort of a smaller number of fixtures done as the liquidity both for the product and for the ships disappeared towards the end of December. So certainly in terms of our Q1 numbers, I think they are going to be quite a bit lower than we saw in Q4. But as I said, I think if we look at it over the year as a whole, we think this is a tightening market. We think we see quite a lot of strength on the annual numbers that we'll be coming in with.

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Randall Giveans, Jefferies LLC, Research Division - Equity Analyst [29]

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Sure, okay. And then I guess lastly, GLOG shares had quite the ride, I guess, in 4Q '18, starting the quarter below $20, getting above $23 in November, then falling, I don't know, around $16 at Christmastime. However, you didn't purchase any shares last quarter, but opted for that special dividend. Are share repurchases a possibility or even a probability in terms of use of free cash going forward?

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Alastair Maxwell, GasLog Ltd. - CFO [30]

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Randy, so as we said at the time that we announced the repurchase program, which was at the same time that we had financed the special dividend, I think we viewed it as a very useful tool to have in the toolbox, particularly, when you go through times of market dislocations, volatility and dislocations as I think we did see Q4 last year and then -- well, December last year and then into January of this year. I'd say 2 things. I think first of all, that our priority in terms of capital allocation is going to be to fund the continued growth of the business in terms of our existing capital commitments and then if other attractive newbuild opportunities come along, to make sure that we can fund those as well. I think secondly, it's more likely that if we do have significant surplus capital that, that would be distributed by means of further special dividend. But we wanted to have that tool in the toolkit, as I said, and we wanted to be in a position that if we go -- do go through market dislocations, like we did recently, that we're in a position to take advantage of it.

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Operator [31]

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Our next question is from Chris Snyder from Deutsche Bank.

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Christopher M. Snyder, Deutsche Bank AG, Research Division - Research Associate [32]

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So my first question is if you guys kind of talk about the capacity for China to drive further LNG demand growth. Demand there is quite seasonal. However, there seems to be import capacity bottlenecks during these peak seasons. So could you just talk about maybe will we see the demand growth in the summer months? I know there's some things going on there to increase import capacity. Could you just provide some color around that?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [33]

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Yes, I think it's a good point. I think they were importing still 50 million tonnes last year. I think their import capacity was about 65, 67. And of course, if you have high seasonal demand, then that puts a lot of strain on it. So I think there's a huge push right now for more import capacity, which, I think is quite a bit due to come on stream quite quickly. The other thing that's quite interesting is that a lot of the LNG that goes in doesn't actually get regasified. So you have some of the import terminals which operate above the 100% nameplate capacity. And what they're doing is distributing that as -- it comes ashore as LNG and distributed in trucks in LNG. And in fact, when I was in China recently, I went along to one of the facilities there and watched in wonder as truck after truck after truck just lined up to take the stuff away. So there, they've been quite sort of thoughtful in terms of how they make sure that they can get the best use out of what they have. But I think one of the metrics we had is I think the Chinese government recognize certainly that infrastructure shouldn't be a bottleneck here. So they have a view that they want to have something like 235 million tonnes of regas capacity by 2035, which is 4x where they are right now. So both in the short and the long term, they're making quite big moves to make sure that that isn't a bottleneck.

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Christopher M. Snyder, Deutsche Bank AG, Research Division - Research Associate [34]

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Yes. Interesting color. Again, I guess it won't be the worst thing in the world if we see more LNG floating storage demand over the near term. Clearly, we saw how that has a positive impact in Q4. So next question, pre-FID momentum has certainly picked up. While much of this supply's not going to come online until 2022 or 2023, could you speak to any near-term benefits as the market kind of is adding a backlog of demand? Maybe, for example, are charterers feeling more comfortable signing long-term contracts just because there's a more visible demand pipeline?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [35]

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Yes. And I think it's -- I think there's a bit of a combination because what's helping the FIDs to be taken is the fact that we're starting to see a lot more long-term sale and purchase agreements being put in place. I think we said from the start of 2018 through to now, it's about 95 million tonnes as opposed to 24 million tonnes in 2017. And that's not only giving people confidence to go and take FID on the actual new projects themselves, but also I think gives confidence to the projects to take some of their shipping on long-term contracts. So I think it's beneficial both ways. So I think as you see those projects coming on, there will be, I would say, a large number of long-term requirements for shipping. And I think it's one of the good things for us in GasLog right now is we look and say we're one of the few shipping commodity markets -- well, shipping markets, certainly in commodity, which has got a really long-term secular strong growth trend there and I think we can take advantage of that.

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Christopher M. Snyder, Deutsche Bank AG, Research Division - Research Associate [36]

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Okay, fair enough. And then just last one. So clearly, liquefaction capacity is ramping at the fastest rate ever in 2019, 2020. But I think there is a view that we could see a bit of LNG oversupply in 2020, just kind of as demand continues to ramp. So my question is on the one hand, you guys ship production so this is clearly positive. But also, you would imagine if there's oversupply, it weighs on LNG pricing, which could limit trading and arbitrage opportunities. Can you just maybe provide some color on how this could potentially shake out if we were to see, say in mid-2020, we actually have an oversupply of LNG?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [37]

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Yes, it's interesting. I think if you go back a couple of years, Wood Mackenzie were saying that they thought that there was going to be oversupply right now and that there would be shut-ins of U.S. production which we haven't seen. I think what's happened is the strong price signals which are available now through JKM in Asia, NBP in Europe, et cetera and then Henry Hub itself, are allowing those pricing signals to sort of move the cargo to where it's needed. And what we've seen is, each time we've seen a sort of moderation in LNG pricing, it's actually stimulated demand. And the interesting thing is as well once you see people swapping over to gas, it's very rare that they go back to one of the other sort of more polluting primary energy sources. So I think the price mechanism has been what's been able to make the market clear over the last couple of years. And I think we'll probably see that. We're still seeing relatively low, despite a very cold winter in the U.S., relatively low Henry Hub prices. I think the demand in Europe and in Asia is able to react to those prices and absorb the production.

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Operator [38]

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Our next question is from Greg Lewis from BTIG.

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Gregory Robert Lewis, BTIG, LLC, Research Division - MD [39]

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You've clearly talked about the potential merger, inquiry at shipyards, but even beyond that, could you talk a little bit about the progression of newbuild pricing as you've seen it develop since when you first started ordering, what, I guess, a little over a year ago to where we are now in terms of how new -- where newbuild pricing is?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [40]

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Yes, I think -- Greg, it's Paul here. I think a couple of things to say on the newbuilding. One is we were forecasting, I think at this time last year, that we would see an increase in LNG newbuilding prices. And whilst that happened, it probably hasn't been as pronounced as we expected. And I think part of that reason is that you need other shipping areas to also be ordering at the same time because there's a certain amount of flexibility around the berths. And we haven't seen the big orders from container vessels, et cetera, which we may well have expected. But nevertheless, we've seen a slow increase in the values. I think the other thing that's happened though is that as the yards have filled up with LNG capacity, it's actually pushing out the availability of yards, so that you -- we talk about somewhere between 2.5 and 3 years to build an LNG carrier. As you've seen more of this capacity taken, that pushes out when the yards are able to build a ship and also, makes the yards more comfortable. So as they move to 3 years-plus in terms of their order backlog, that again, gives them more confidence to push on the pricing. So I think we'll continue to see that as a factor and I think you'll continue to see the shipyards pushing the pricing up, albeit probably more incremental than a huge step change at this point.

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Gregory Robert Lewis, BTIG, LLC, Research Division - MD [41]

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Okay, great. And then just talking a little bit about the liquidity or the depth of the spot market, we've seen kind of rights -- rates really seesaw over the last couple of months. As you -- if you -- as you characterize the spot market and I know some people characterize it as any vessel rolling off contract in 3 years or maybe as we think about 1 year, is there any color in terms of how you can -- how you would characterize the spot market in terms of size right now, as we think about vessels that are actually up for contract like within the next 12 months?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [42]

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Yes. Actually, it's a really -- it's a good question, but it's a really difficult one to answer in that the spot market is not only ships which haven't got long-term contracts against them, but it may well be ships that have been put on long-term contracts to a portfolio player or to a trader, et cetera, which, from time-to-time, will not be required in the program and therefore, coming to the market. I think what happens in a very tight market is those players tend to hold onto their tonnage because they want to make sure that they have that tonnage available if they have a cargo. So it kind of builds in a little bit of inefficiency into the market. I think what we tend to do is look at what is the -- so that market can kind of be bigger or smaller, depending on what those players are doing. I think what we tend to look at is what's the forward availability of vessels in the market. And I think if you go back to this time last year, you were probably looking at something like 30 or 40 vessels that you would see over the next sort of 2, 3 weeks. At this point in the market, even though we're seeing the market softening, we're looking at around 20 vessels that are sort of available in the market. Usually, that's kind of a bit of a -- kind of an inflection point. So it's not -- it isn't a very oversupplied market right now, even though that we've seen the rates going down, which again, gives me some view that this market could turn quite quickly in terms of the rates.

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Gregory Robert Lewis, BTIG, LLC, Research Division - MD [43]

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Okay, great. That was super helpful. And then just one more from me just because we're getting a fair amount of questions on this lately is clearly, there's been a lot of orders and there's been a lot of contracting of those newbuilds in the order book. Any sort of rough estimate you could give around on the -- as we think about -- obviously, well, we know GasLog's book, but as we think about the total order book out there, any sort of sense for how much of that, of the newbuild order book, is actually already contracted?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [44]

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Yes, we think about -- of the 105 ships, we think about 2/3 of it is contracted, 1/3 isn't. There are ships coming out in '19, I think 30-odd ships, about 5 are uncontracted; and then for the next couple of years, it's about 17. As I said, a couple of those ships, uncontracted ships in our order book belong to us but we're hopeful that we can put those on longer-term charters and those are discussions that are ongoing at the moment. But around 2/3 of it.

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Operator [45]

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(Operator Instructions) And our next question is from Fotis Giannakoulis from Morgan Stanley.

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Fotis Giannakoulis, Morgan Stanley, Research Division - VP, Research [46]

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Paul, I wanted to ask you about the upcoming FIDs. You mentioned Mozambique, you mentioned Russia. And we also saw that the last 3 FIDs, they were without offtake agreements. Is this a new trend? Are we expecting to see more FIDs without end users buying the volume? And how does the decline in LNG prices right now impact the new projects that you are expecting to come online?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [47]

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Yes, good question, Fotis. It is interesting to see some of the majors being willing to underwrite the production themselves. I think it's probably going to continue to be a combination of those things. So I think if you look at Mozambique, for example, where -- the Anadarko project there, they're very much focused on getting the long-term supply contracts in place before they take FID. And some of the other projects in the U.S. Gulf, NextDecade, Tellurian, et cetera would need to do the same things. So I think it's more likely to be a combination of those, but you need -- you have seen BP, for example, stepping into the Eni floating production and taking all that out to allow that to happen. So it's interesting and a number different ways that this could play out I think.

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Fotis Giannakoulis, Morgan Stanley, Research Division - VP, Research [48]

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And about the Alexandroupolis project, I know that there is a line there in your slide that a lot of things have to happen in the near term in order to reach the midyear target. Is there a risk -- a reasonable risk of this deadline is being missed? Can you give us a little bit more color there? And also, if you can comment, some of your peers, they are looking at opportunities related to FSRU, getting into the sale of LNG to end-users in small scale. Is this something that this Alexandroupolis project can give you the opportunity to participate in? Do you have any interest in getting to the small-scale sales of LNG?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [49]

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Yes, so the deadline, I think we were careful as we put it in there because you're absolutely right, Fotis. The -- what's interesting with this project is we -- it's a common -- it's a project of common interest with the EU, and so it has the possibility for EU funding to make it happen. That means that we're actually in the hands of the legislatures, both in Greece and in Europe, in terms of the timing of this. So whilst we can do all we can to push along that timing, what we're saying is we just have to be careful when we're talking about it because if we get a delay from the EU coming back on something that we've submitted them, et cetera, that can push the timing back. So that was why we had to be careful. It's unlike in other areas, the straightforward shipping area where delivery of the ship is very much down to either Samsung or ourselves and we have much more control over it, this is one where there's a little bit of that less control. And so that's why we're cautious on it. I think the Alexandroupolis project itself, what's really interesting is the amount of interest that we got in that for Gastrade got in that first expression of interest. If you look at the project in Croatia, which has just taken FID, they actually got less than half, I think, of what they were the capacity of it and still took FID and here we are with over twice the interest. So I think originally we thought that there would be a lot of opportunities for additional capacity from that to service smaller -- some other areas if you like. So I think we'll just have to wait and see when we get the sort of committed expressions of interest in there. If there's capacity left in that project, then I think for us that would be very interesting how we could use that and something, certainly, that we would look at. And I think over time, we do see that there's going to be an increase in onward movement of LNG and I think that would -- given our sort of capabilities in the marine sector, would be an area that we would certainly be looking at.

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Fotis Giannakoulis, Morgan Stanley, Research Division - VP, Research [50]

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So is this going to be only related to the Alexandroupolis project, if this -- if there is excess capacity for FSRU? Or you might be also look at some point to get into small sales or even bunkering business, buying smaller size asset vessels to serve these kind of customers?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [51]

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I think for us, as we see this sort of move out of the LNG, I think we could be looking at a lot of different areas. I don't think we would have necessarily a lot to add into the bunkering space, for example, but certainly, if we do that in concert with one of our customers, et cetera, then that -- I think that would be of interest to us. I think small scale, again, it would be something that would be interesting but I don't think we would just go into it with -- on a speculative basis. It would be something where we could develop either around it a project or come into a project that was looking to -- for further support.

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Fotis Giannakoulis, Morgan Stanley, Research Division - VP, Research [52]

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And can you comment a little bit more about the potential demand from the small scale or from bunkering? You mentioned that if all those things would convert, they will absorb approximately 2/3 of the current market. That's a significant potential here. But on the other hand, when we see analysts like Wood Mackenzie, this portion of demand looks insignificant in their forecast, at least for the next 5 to 10 years. Is this something that they are missing? Do you think that the market might be underestimating that? And then at where -- which areas do you think that they might be underestimating the potential demand from small scale and bunkering?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [53]

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Yes, I mean, it's interesting. I mean, we just sort of wanted to give some view on the size. It's difficult to kind of do a forecast on what we think that size of the market is. I think Shell in one of their recent presentations were saying that they thought that, that bunker market, for example, could be 50 million metric tonnes by somewhere in 2025 to '30. And you think about that right now where we've all got very excited about China and the size of the Chinese market, that's around that same sort of size. So I think WoodMac may be being conservative, but it's difficult to put a kind -- to put a number on it. I think that market could be a lot stronger than people are allowing for, Fotis.

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Fotis Giannakoulis, Morgan Stanley, Research Division - VP, Research [54]

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One last question about chartering the vessels. I see on Slide #5 that you have -- you're opening a newbuilding, as an assumption, a $70,000 rate. Your existing vessels, you are looking at something like $70,000 to $80,000 given the recent increase. Can -- I understand this is just an illustrate -- for illustrative purposes, but how shall we think about the earning potential over the next year, vessel with a lower boil-off rate and fuel consumption of vessels, a DFD vessel? And also, when you go to your charterers, is it just a matter of pricing when they ask for tonnage the difference between newbuildings and PFT vessels? Or there is also a priority: first, they need to charter the newest vessels; and then they will go to DFD? Is there a discrimination, I guess, at DFD, that's my question?

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Paul A. Wogan, GasLog Ltd. - CEO & Director [55]

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Yes, so I think if we look at the rates, I think we sort of -- I think our view is on the long-term, kind of, average rates of somewhere, kind of, in the 70s, mid-70s something like that, I think that's what we're kind of making assumptions on as we go through this. I think there's -- the market, as we stand at the moment, the prompt market is certainly is a lot stronger than that. So I think your earnings that you -- are potentially stronger than that, the earnings we could get in the next 2 or 3 years on the prompt market I think could be higher than where -- than that sort of mid-cycle rate. And certainly, we would hope that would be the case. There is definitely a difference in sort of the fuel consumptions and therefore, the cost of the vessels. I think there's that though, that it's the delivered cost of the molecule is one thing; the other is where -- how you're going to be using the ships. So certainly for the U.S. production, as I talked about a bit earlier, the larger 174, 180 vessels, I think suit that because a lot of that is expected to go long haul. We have been speaking on existing vessels to charterers, where actually, they wanted much smaller ships because of restrictions into terminals. And so the new modern [once in 4 way GXDFs] simply don't work at that point. And so I think that's the second thing. And then in terms of is it just down to pricing, we haven't seen anybody saying, oh, we really don't want to take a TFDE vessel, we must have the newest XDF. It is, I think, around those vessels are very suitable, work very well, but we would need to have something that's competitive with the other options.

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Operator [56]

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At this time, I'm showing no further questions. I would like to turn the call back over to Paul Wogan, Chief Executive Officer, for closing remarks.

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Paul A. Wogan, GasLog Ltd. - CEO & Director [57]

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Yes, well, thank you to everyone today for listening and for your continued interest in GasLog. We certainly appreciate it. And we look forward to speaking to you in the next quarter. In the meantime, if you've got any questions, please contact the Investor Relations team. Thank you very much.

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Operator [58]

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Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.