FLEX LNG Ltd. Price & Performance (FLNG)

This is for the account of our charters. So we received 1,400,000 from our charters in compensation for EUVTS. And then we also surrender those to the EU, and we have a corresponding cost of $1,400,000 in our voyage expenses. So net [indiscernible] as mentioned, in line with the guidance. Net income was driven by a sharp increase in interest rate in the Q4 after the election of Donald Trump, So we had derivative income of SEK20.1 million, SEK5.1 million of the derivatives was realized during the quarter as a positive carry. Resulting in adjusted net income €30,800,000 where we only include the realized gains and losses, not the unrealized gain and losses. That means our earnings per share came in at a healthy $0.84 or €0.57 on the adjusted basis. Recent events we were reporting back in November we informed you then about the extension of 2 of our ships, FlexResolute Flex Courageous. They were at the beginning of 2024, these ships were extended from 2025 to 2027 where there were charter has the option to extend those ships to 2029 and in November, we announced that the charter has amended the charter where they have a new firm period for 2029 to 2,032 with options all the way to 2,009.

So we are pretty sure these ships are at least gone for to 2,032, possibly a bit longer. Following our Q3 presentation in November, we also announced end of November, our new 15 year time charter for Flex Constellation. So the start up of this charter is in Q1 or Q2 2026, given where the rates are today, which is more probable that start up will be Q1 as this is in all option 15 year takes the ship to 2,041. So we're adding a lot of backlog through this recent new charters at a very good time, I would say, given the how the market has experienced the last couple of months. We also done some refinancing, as we mentioned in our presentation in November, adding more attractive debt €430,000,000 releasing €97,000,000 in cash, while extending our debt maturities and lowering the interest costs. We also provide a guiding today for 2025. So despite the slump in freight rates, we are very well covered with our backlog. So we do expect that revenues will come in line with the number for 2024, the time charter equivalent earnings, it's expected to be somewhere in the mid-70s. Giving revenues of €340,000,000 to €360,000,000 You should note that we have 4 ships where we are planning to do the special 5 year survey in 2025, while we only took 2 ships out of operations last year.

EBITDA, we also expect this number to be fairly in line with last year, EUR 250,000,000 to EUR 270,000,000 So it's pretty good and steady sailing from FLEX LNG. So once again, we are declaring then our dividend of €0.75 per share, taking the dividend for 2024 to 3 point implying a running yield of about 12%. And this we can do given the fact that we have a fortress balance sheet and backlog, EUR 437,000,000 and I will touch upon minimum 62 years of backlog, which is about 5 year each ship. Just a kind of summary of the 2024 results. TC74 point 9, so this is the time charter equivalent earnings. So it's like the average rate you have on obtained on your ships, 74.9 percent, which we were guiding about $75,000 Revenue, 355,000 dollars We were guiding €353,000,000 to 355,000,000 our narrow range. And then adjusted EBITDA, SMAC in the middle of the range, CHF274,000,000,000 We're delivering CHF273,000,000 And I think for the first time here, we do see a Q4 numbers below Q3, given the slump in rates from end of September into Q4 and into 2025 for that matter. Just to touch upon our contract coverage.

We have FLEX Constellation, which was pictured on the front slide. She is on 3 12 days time charter. We expect to get her redelivered end of February, early March. She will then have a 12 month gap, where we'll have to trade her in the spot market, which will be a bit challenging and reflected in the guidance. But once she come into Q1 2026, she will commence a 15 year charter to 2,041 where the charter also have the option to extend that ship to 2,043. We also have some ships with other ships with long duration charters. Fekshainbow all the way to 20 33. As I mentioned, the resolution and Courageous, we extended in November all the way to 2,032. Where the charter can extend those ships to 2,030 9. And then we have 2 ships with Cheniere, which we have we extended back in all the way back in November 2022. Where those ships have been extended to 2,0322,031. We have 2 ships coming open 2029 so leaving us with FLEX Freedom fixed until Q1 2027, which we think is a good window where the market will be much tighter than it is today. And then Flexvolunteer and Aurora also with 10 year fixed until Q1 26, where they have the option to take those ships to 2028.

FlexRanger again, I think it's a good window of re delivery. This ship is with Cheniere to 2027. And then we have 1 ship on FLEX. She's getting close to her firm period She was fixed from delivery of yard on a variable time charter for 5 year with Gunbo that is maturing in Q3 when we are planning to do the 5 year special survey for this ship. And then we will see whether the charter utilized their options. They can extend the ship by 5 single 1 years, Those options are also on FLEX, which makes it probably our mid a bit more possible that they utilize the extension options since they are not fixed rate higher. So altogether, 62 years of minimum firm backlog which then might grow to 96 years if the charters utilize all the extension options. Guiding for 2025, I already touched upon it. It's going to be Desjardins all over again. We expect numbers to be very much in line with the numbers we delivered in 2024 and with stable business, stable outlook, are also having stable dividends paying now $0.75 again, dollars 41,000,000 in total dividend. The last 14 quarters, we paid this ordinary dividend of $0.75 per share.

We also topped up from time to time with some special dividends. And altogether, this number is now €610,000,000 of dividends the last 3.5 years, which I think gives our investors a stable and good income being invested FLEX. So before giving over to Knut, just a reminder of our kind of decision factors for putting the appropriate dividend level. We had €0.57 of adjusted earnings per share We are paying slightly higher dividend given the fact we have as Knut will tell you more about, we are flushed with cash. We think that we can pay out slightly higher than the earnings per share. The decision factors mostly here are green lights except for the market outlook. Where short term outlook is poor. Medium term is slightly below average, I would say. And then when we are looking at the market from 2027 onwards where we get most of our ships open, It's still compelling with long term charter rates in the mid-80s, which is above the level we are delivering today. So it means that we should be able then to reach out to those ships at better rates in the future. So with that, I think it I hand it over to Knut before just to remind you about one number you will not find in this report, and it's actually the most impressive number It's our lost time injury frequency.

So this is our main safety KPI. Where 0 is the theoretical minimum. Given the fact that you have had no incidents and the number we delivered in 2024 was 0. So no loss injuries, lost time injuries, frequency, for 2024, which I think is impressive and shows that we are delivering superb service to our customers. So with that, Knut, hand it over to you and I come back with the market update.

So let's start off since it's Q4 with a bit of a review of the full year and in particular here the operational days. As you may recall, in 2023, we had 4 dry dockings, and this year, we have had 2. 33 days of dry docking, which is a 7 days below our budget. And net of the off hire days for drydocking. We are delivering 99.7% technical uptime which is a very strong performance. On the TC, you see here stable TC. 75,300 for the 4th quarter, and close to 75,000,000 for the full year. This shows also the stable revenue streams that we have. On OpEx, we are for the year and also for Q4 delivering slightly below our our budgets and guiding, which is [indiscernible] testament to our cost discipline for 2025, we are seeing that a number of our ships coming close to their schedule and maintenance on running hours. In particular for the auxiliary engine and main engines. So in combination with higher crew costs, and that is crew cost for crew changes, in particular, crude changes in Asia. Are now guiding an OpEx per day of 15,500 for the year. If we look at the revenues, as I mentioned, we have revenues of SEK90.9 million, of which $1,400,000 is related to EU ETS.

And as a reminder, we are subject to EU ETS when our ships are in Europe and having port calls to Europe. This is a cost for the ship owner, but under our time charter agreements, we can reimburse and get that reclaimed from our charters. Revenues received there from the charters will be booked as operate revenues, while correspondingly will book the same amount as voyage expenses.

EBITDA, we are delivering Smack on guidance. And one of our important numbers is the adjusted net income. Where we adjust for non cash items. And for the Q4, we are adjusting €15,000,000 for unrealized gains on the in interest derivative portfolio and $500,000 loss of FX portion we have. And as we present [indiscernible] refinancing in Q3 that refinanced 3 ships leaving the flex endeavor unencumbered. So therefore, you would also see a lower debt balance and also cash balance on the Q3 numbers. The long term lease for FLEX Endeavor was concluded on 3rd of October and then releasing the full amount of 160,000,000 [indiscernible] So during the quarter, we had €52,000,000 on cash flow from operations. Then the scheduled debt amortizations and then then close to NOK 41,000,000 we paid out in dividends. That leaves us with a very strong cash balance of $437,000,000 This is a reminder that how we keep our balance sheet. It's fairly clean. It's ships and cash. And then we have debt on the other side and the book equity. And as you show here, our book values are more or less reflecting all time low values. But we still maintain a fairly decent book equity ratio of 30 percent given our backlog.

And most importantly, our debt funding portfolio very attractive mix of both the bank debt and leases. Where we also include RCF to manage our cash position. During the quarter, we converted a term loan, a bullet term loan for 1 of our with one of our banks during RCF and thereby increasing our RCF capacity to about SEK 414,000,000. That we use in between quarters for cash management and reduced interest rate cost. And net of the RCF, we see here the our net debt balance. And what on our interest rate exposure, the €530,000,000 in the dark blue is basically our net debt exposed to the floating rate market. Remaining here is fixed rate debt and hedged debt which I will cover in the next slide. Also on the debt maturity profile, our first debt maturity is in December 2028. That's related to flexresolute. And given that she was we announced a contract extension for her on the Q3 presentation. That is a very manageable residual to refinance. We see a gone fishing sticker. You see 3 hooks. We did announce 3 contracts contracts for 3 ships on last quarter. Even though we have a very attractive debt funding portfolio, we will consider refinancing of these 3 ships in particular, given the long duration of those contracts.

We have been managing our interest rate risk very actively. Last quarter, we did some amendments and added more duration to secure coverage during these high interest rate environments. So we have extended duration, which is also yielded very well. Which is shown in the both realized and unrealized gains during the Q4. This is a mix of traditional interest rate swaps and also fixed rate leases and fixed rate portions of our leases, which is primarily in our Japanese operating leases. So in conclusion, and also this we get a lot of questions about dividend sustainability. This slide can be read in conjunctions with the decision factors for our dividend. We have stable cash flow We have a very healthy balance sheet with €437,000,000 in cash. We We have barely non CapEx liabilities and 1st debt matures 28. So that is what is said to support both our commercial and financial FLEX. And dividend story. So with that, I hand it back to you, Ersteyn.

Okay. Thank you, Carlos. Let's dig into the market a bit. Yes, 2024 was a year with record low growth in export volumes. We put in a recent history, we on our capital platform, we couldn't find any year with less growth than 2024, but I can't rule out that this could have happened sometimes in the 70s or 80s. So I just put in recent history. Actually, growth in the market was lower than 2020 when you had this wave of U. S. Cargo cancellation. 2020. The export market actually grew 1%. It's only 0.2% this year. It's a combination of factors. It's been some delays on liquefaction plants. And then as of course, there's been the sanction on the expansion of Russian capacities, particularly the Arctic LNG, too, which I will come back to later. But despite the sanction on Russian LNG plants, Russia managed to grow their exports 4%, last year and Europe was one of the big takers of Russian LNG U. S. Only 1% growth in 2024. Nigeria have resolved some other issues with the feed gas problems. And managed to show a healthy growth both in in Q4 'twenty four and for the full year.

On the import side, it's been a year where Europe has stepped back. Europe has had the benefit of 2 very mild winters in a row prior to this winter. So [indiscernible] very high inventory levels and they stepped back from the market giving more room for Asian countries, particularly then China. Which grew healthy last year, getting close to the record levels they had prior to the invasion of Ukraine. So I believe they ended up at 78 point or 79,000,000, the record high is 80,000,000 tons. And then India up actually 14% This has changed a bit in the past with the cold winter and the big inventory doors in in Europe. Europe has been making a comeback in the market as we've shown on this graph. Before the invasion of Ukraine by Russia, Europe imported around 80,000,000 tons and then during this energy crisis of 2022, they really were the buyer of first and last resort increasing their import all the way to 127,000,000 tons primarily sourcing a lot of spot U. S. LNG at that time. Imports stayed stable in 2023. But then given the 2 mile winter, they came out of last winter season with high inventory.

So imports in 'twenty four slumped to 103,000,000 tons. But this is changing now with a colder winter, less renewable output especially in Germany. We see that the inventories Europe are well below the last couple of years and we do expect with a big need for restocking during the summer months. And this is also reflected in the price of LNG. So we have this graph here showing the 3 main indices for natural gas prices. It's the Henry Hub in the U. S, which is the main benchmark price for natural gas. Hovering around $3 to $4 1 of the cheapest gas sources you can have. Then JKM meaning Japan, Korea market, so this is more like the spot LNG price in Asia, although most of the Asian players, the big nations like Japan, China, Korea, they have a lot of LNG. They buy on long term but this is the spot price. And then you have the more like deregulated European market. Where the main benchmark for North West Europe is TTF, title transfer facility which is our virtual pricing hub in the Netherlands. So generally, what we have seen now is that prices have been picking up and picking up to a level where LNG becomes expensive for 15,000,000 dollars per 1,000,000 BTU, meaning oil price at above $80 resulting in more of the Asian Nations turning to more affordable energy like coal.

So we see here that the pull from Europe is pushing up prices where the kind of killing off the arbitrage, meaning it's more profitable to send the U. S. Cargoes to Europe rather than Asia despite actually shipping being now more or less for free. So this change in trading pattern in the part of 'twenty four and into 'twenty five have resulted in a big slump in the freight market, which I will also cover later [indiscernible] Looking at looking at Asia, had a good start of the year, pulling a lot of cargoes, up at record high levels and then we see a bit lower growth from Asia at the end of the year as as Europe came for full force into the market. Stable market in the kind of mature markets being JKT, meaning Japan, Korea, Taiwan, Taiwan did grow their imports quite a lot, but Japan and Korea are fairly stable. China, as I mentioned, growing fairly steady and the same goes with South Central Asia. Then going turning back to Russia and the sanctions, there are a couple of big LNG export plants in Russia. 2 of them are not sanctioned. This is Sakhalin, primarily exporting to Japan, Korea, China and then Yamal, which generally can export cargoes to Asia via the Northern Sea route with specialized LNG tankers.

But when the ice is tick, they like to export those cargoes into Europe. And Europe has been our willing buyer As you can see on the graph on the left hand side there, Europe record high import of Russian LNG last year. Some of the newer projects, as I mentioned, been sanctioned, particularly then Arctic LNG 2. It's a big plant. The first train is up and running, but they have not been successful in placing those cargoes in the market. And the second train is also ready for commissioning. So we'll see how this develops. Whether there will be a grand bargain with EU Trump Russia, Ukraine and whether this part of the deal will be a lifting of the sanction on Russian gas and LNG. Then some of these cargoes might come back into the market at least seems to be some signals from part of the EU that they are willing to make certain concession in order to leave this war behind us. Then looking at the export market, there is a lot of volume coming to the market, a lot of volume which were already sanctioned or given the green light prior to Biden putting in the moratorium on new export licenses January 2024.

And of course, as we expected and mentioned when we had our Q3 presentation in November, we did expect that President Trump would remove these limitations very quickly, which he did. So there is a lot of new projects in the U. S. Already. To be FID. We see on this lower on the right hand side here, we have picked out as some of the key contenders to get FID either this year or next year. Being Lake Charles, Delfin LNG, Sabine Pass expansion, Woodside, Louisiana, CP2 and possibly as well as Alaska LNG. However, there's a lot of trade disputes going on. We saw overnight China coming in putting a tariff on U. S. LNG similar to what they did back in 20 18, 'nineteen. When we had a period of time with 13 months without China sourcing any LNG from U. S. So the Chinese have made contracts with a lot of these U. S. Expansion projects. And in case this tariff stays in place, we would expect them to resale those cargoes possibly to European buyers. And rather source more LNG from Qatar Australia Russia, West Africa. So this is still up in the air a bit.

These trade wars are volatile. Certainly, there is tariffs and then there are 30 days grace. So we just have to monitor the development. But in any case, there is a lot of LNGs coming to the market. And unless there is a really big trade war here, we do expect a lot of new U. S. Projects to come in to the Piper. Also given the fact that Europe also is expected to have some trade conflict with the U. S. Where President Trump is really forcing Europe to be buying more LNG from a U. S. Touching upon the freight market, which is the market which we are active in. As I mentioned, the market was behaving quite normal during 2024, actually a bit firmer during the summer months that than we expected. And but once we came into the winter season, rather than the market or the freight rates shooting up, which is usually the case, they slumped and they have continued to slump throughout 2025 where they are now at rock bottom level at around $10,000 per day, which makes it very uneconomically, especially for the older tonnage. What are the drivers? It's caused the change in trading pattern where most cargoes are going to Europe, cutting down the sailing distance.

And this is freeing up a lot of ships as you can see here on the West left hand side of the graph, a lot of ships in the around 35 ships available in the market. This is softening than the freight rates. We also saw during last year a big grow in spot fixtures as kind of the cargo prices have come down. The panic has been alleviated. More of the charters are tapping into the spot market given the vessel availability. Fixing their ships on spot voyages rather than fixing them on longer term contracts. So in that regard, I think we have done well. We have been utilized that window during 2021, 2022, 2020 3 and also into 2024 fixing a lot of ships. On longer term contracts rather than just playing spot. Looking at the most inefficient ships, the steam tonnage, generally, we could say there are 3 type of ships. It's the older steam ships. There's still around 200 of these ships in the market. And then there are high fuel or dual fuel diesel electric ships and then we have the modern ships, the 2 stroke, which has, of course, better economics given that they are larger and has a much more efficient propulsion system.

Rates for steam tonnage we pegged the tariff on the Affinity and Clarkson numbers at $2,500 per day. If we look at the further number today, the number for the rate for steam tonnage, it's actually 0. So we have been talking about this for a long time. It's an overdue scrapping cycle for steam tonnage. These ships have been surviving because you have had generally quite good markets [indiscernible] at least the 3 Q1 of 2024. So given the slump in the market and making these ships unattractive, do expect to see a big uptick in scrapping this year, next year and the coming years. Driven not only by economics, but also by environmental rules, which put a disadvantage on these ships except for the fuel EU Maritime, which I'm going to cover also lately. In terms of newbuilding prices, they have stabilized at around $255,000,000 per [indiscernible] delivery window now generally being 2028 elevated newbuilding prices and also fairly high interest rate in recent history is also then driving up long term charter rates in order to invest in new ships. You need a rate at least in the mid-eighty thousand to get a reasonable return on such an investment.

So longer term rates are holding up. For those contracting ships for delivery 2028 and onwards. Looking at the order book, it's a big wall of new buildings hitting the market and is one of the reasons why we try to fix our ships until 20 7, 20 8 where we think the market looks better balanced. For 'twenty four, we were expecting 68 ships for delivery given the soft market There's been some slippage, which usually happen in a soft market. So only 60 ships for delivery last year, meaning there will be more ships for delivery in 25, 93 we expect and then 83 ships for delivery 2627. As you should note here, most of the ships or almost all of them [indiscernible] built towards long term charters. Given the elevated newbuilding prices and given the size of the order book, there's hardly any speculative ordering left. There are a few ships which are uncommitted for delivery in 2025, 20 6, 20 7, And then from 28 onwards, all those ships are either for long term projects and also the Katarri, which has expanded the fleet by more than 120 ships. In order to renew their fleet and also to have more ships for the big expansion going on in Qatar.

So if you look at the market there, we have been in our phase with limited growth now the last 2 years, and then the growth will pick up in 'twenty five. Continued to grow in 'twenty six, 'twenty seven onwards. Which will rebalance the market together with scrapping of older ships. So when it comes to older ships, we put out the different types of ships here. As I mentioned, our less efficient ships being the steam turbine ships And that's why they have a big penalty on the EU emission trading system cost per day for our steam ship, $7,200 per €7,200 per day This tax is paid in euro. Euro1 dollar is more or less the same today. So you don't really need to be have a FX conversion to calculate the dollar amount. Other generation, the high fuel or the dual fuel diesel electric, €5,600 a day and then the more modern ships, the Maggie and the XDF, which our fleet consists entirely of. We have 9 MEGI ships and and 4 XDF ships. They have a smaller kind of EU ETS drag, 4,600 euros per day. However, Here, they don't like to make things simple.

So while I think most ship owners support this system, we generally like predictable carbon tax, which is penalizing the less efficient ships. EU has also implemented this year they call the fuel EU Maritime, which is a system for decarbonizing maritime fuel. Since LNG is cleaner burning fuel, you will get kind of reward for burning LNG compared to very low sulfur oil or heavy fuel oil with a scrubber. There is a huge penalty if you are not complying with the fuel EU Maritime Regulation. The penalty being €2,400 per metric tonne VLSFO equivalent. It's a complicated world. So we've taken the numbers from the ship Affinity and calculated what will that benefit be So you can see on our ships, we will get the benefit from pretty big benefit on the fuel leaving maritime, more so on the mega, which we have 9 off. Because they have hardly any methane slip. Slightly less benefit on the XDF because of they have a higher methane slips than the mega ships, And then a further penalizing of the dual fuel diesel electric or high fuel diesel electric due to the high methane slip. However, the steam ship, which doesn't have any mid and slip, they do, however, have a huge fuel consumption.

That's why they are being penalized by the EU ETS. But they also get a huge benefit from the fuel EU maritime. I don't really think that they can it's inconceivable that they will be able to sell these kind of rewards to other but they can enter into certain pooling arrangements where they can reduce the penalty or kind of swap in costs for other parts of the fleet. For example, if you have all the container ships, bulkers or tankers. So in general, we think this system is unnecessary. And given how it's structured today, it's actually favoring the steam ships because they are burning a lot of LNG, which is a clean fuel. So we just put up a good old quote from Ronald Reagan and modified it to 2025. The 9 most terrifying was in English language in 2025 is not the government, but I'm from the EU, and I'm here to help. So more about the EU, they like to make a lot of rules. Some of these rules are also driving business costs. Most recent now the CSTR. We have also gone through the corporate sustainability reporting directive. We are listed 2 places in Oslo and in New York, and then we have to comply with both sets of rules, both the U. S. Rules and European Union rules. [indiscernible] is driving up cost for us.

It's not like we want to avoid reporting on sustainability. We actually have provided our ESG report every year since 2018. Where we give full disclosures on a lot of numbers according to the Sustainability Accounting Standard Board. On top of that, we have added the global reporting initiative And based on feedback from investors, we also added the carbon disclosure projects and our ranking will come out on Thursday. Last year, we had a B ranking on the carbon disclosure project reporting. Annual ESG report for 2024 will also be available probably around April. However, having to deal with 2 sorts of regulation which is quite costly in terms of consultants, auditors and such, And given the fact that 95% of our trading today is on New York Stock Exchange, and the fact that New York Stock Exchange is planning to widen the opening hours or trading hours to 22 hours a day, We have decided to propose to the Board for the approval of the Annual General Meeting May, to delist in Oslo and rather save that money so we can rather spend that on focusing on one set of report requirements instead of having to deal with 2 conflicting sets of reporting requirements.

So with that, I just think we're going to to run through the summary before going for our Q and A session. As mentioned, revenues in line with guiding. We are delivering very strong results, 45% or €31,000,000 depending on whether it's the net income or adjusted net income, giving EPS of $0.84 or $0.57 We have added a lot of new backlog during 4, putting us in a very good position to deal with the slump in the freight market during 2025. As we are guiding very similar results for 2025 as we achieved in 2024. And with our big backlog, our big cash position, once again, we are paying out €0.75 giving you guys $3 in dividend per share. Or a yield of 12%. With that, I think we head over to the Q and A session. And Knut, you probably have some questions ready.

All ready.

So So maybe we should start taking 2 steps back and looking at the natural gas market, and we use abbreviation for certain pricing hubs. JKM, TTF, also Henry Hub. There's a question here if we can explain more. What these hubs are and the interlinks between them.

I think I did it in the slide with the gas prices with Henrikho being the main index in U. S. JKM being the spot price for LNG in Asia, meaning jet Japan Korea market and then TTF being the virtual gas hub in Netherlands, which is a big import and a kind of a central hub in the pipeline network in Northwest Europe. Of course, there are a lot of other gas hubs. Last year, 2024, the average price on the Baja gas turbine U. S, which is West Texas, the average price was 0. So actually they were producing more gas than they could export so they have to give it away. A price of 0. So this kind of in U. K. For example, you have the national balancing point, but these three [indiscernible] [indiscernible] TTF, JCM are the most [indiscernible] Do you see pricing on TTF and JKM? When do you see cargo moving the other way around?

Yes. We had a good question earlier today about that. What is the sweet spot for these kind of prices? In general, if you're doing shipping, you would like to have sailing distances as long as possible because that is driving our demand for shipping. So I think in a sweet spot scenario, we would have Henrik Hubbets around where it is today, dollars 3 or so. [indiscernible] you need to have a certain margin to move that cargo to Europe. So if Henry Hub is $3, we'd probably like to have $7, dollars8 in in Europe and then maybe $8 to $9 in Asia because then you would incentivize people to send the cargoes to Asia. Rather than sending them all the cargoes to Europe. And at the same time, you would like to have gas pricing coming down $15 is at a level where people would rather like to burn coal. If we are to replace coal with natural gas, we need to get prices lower. If you have $10 a barrel of oil is 5,800,000 btu, meaning that $10 Gas price means $58 per barrel of oil. So then it's also cheap comparable to oil. So that's the level where we want to have it, where not destroying demand, but actually stimulating demand.

And stimulating substitution away from coal. [indiscernible] We touched upon in the presentations with the new President, Mr. Trump, in office. Day 1 scrapping the moratorium. Do you see any movement in new FIDs or when do you expect to see These FIDs being taken and new products can [indiscernible] the people who have these projects, they have not been idling now for 13 months since the Biden moratorium. So while this moratorium has been in place, I think everybody understood that this moratorium would be removed whether or not Trump won. Even with Kamala Harris, we would expect the moratorium to be lifted, although probably it would take a bit more time. With Trump, it was removed immediately. So while these pauses have been ongoing, those projects have been signing off new SPAs or sale and purchase agreements for LNG what you call the offtake agreement. So typically, if you have a big LNG it's quite capital intensive. You would probably like to have contracts for 80%, 90% of that volume in order to make that investment. So a lot of these projects now have a very high level of contracted LNG. Which means that a lot of the projects are also ready to push the button this year on green light for expansion and then typically it takes 3, 4 years for 1st cargo to be produced. [indiscernible] which is owned by Venture Global, which recently did the IPO in the U. S. Market, They managed to do the 1st cargo after 30 months after the FID.

On the previous project, Calceus Pass, it was also something similar. I believe it was 28 months. So although it's not like 30 months and you get full production, then you need to ramp it up over a period of time. So in general, I think 3 to 4 years is a good. So if they do the FID this year, you could see those volumes coming from 20 8, 29 as we also shown in the graph where we expect the growth to come from those projects. So first, we will have growth from the pipeline of projects already under construction. Being mostly Qatar and U. S. And then there's a new wave of FIDs. However, it's not very constructive with the trade rhetoric from Trump. Which tend to scare away buyers because if certainly there are tariffs, that might make it uneconomically to take those LNG cargoes to those import nations who have acquired them. So So we would like to see a toning down of the trade rhetoric That would be very helpful for LNG market for sure.

Yes, that leads into the next question because there push forward one week and Trump introduces tariffs and is a lot of question on geopolitical risk. But in [indiscernible] play out?

Yes. This time, there is no big surprise Chinese has been preparing for this. So they have the playbook ready. So once in put on that new tariff, they had ready playbook for what to do and not so like they did last time. They are slapping on tariff 50 percent on LNG. Last time this happened 2018, 2019. They started with 10% tariff, increasing it to 25%, and you had this 13 months window where they didn't import a single LNG cargo from the U. S. And then finally, they had like a trade phase 1 where China again started to import a lot of LNG and actually committed to import a lot more LNG from U. S. Together with soybeans and oil. So I'm not surprised that they're coming with this retaliation As I understand, Trump will talk to Xi Jinping this week already. But I think it's not going to be sorted out very quickly China has a huge trade surplus. Donald Trump is a very mercantilist in terms of trade. He thinks that the trade deficit there with every country should be more or less 0. Which doesn't really make sense from an economic perspective.

So we would expect this to to last for some time, whether there will be a grand bargain maybe a trade agreement, Phase 2, Let's see. I think for Trump, his favorite president is Reagan. And he made certain similar agreements with the Japanese in the 80s. And I think that is the plan and we'll see how that develops. I think in general anyway, the cargoes, they will be produced and it's just where they will end up. So in case China import less LNG from U. S. Than Japan and South Korea Thailand, other countries will import more, also Europe and then China will just have to substitute the U. S. LNG with other LNG. And very soon, they will also have the alternative of sourcing LNG from Canada from the LNG Canada project.

And that moves us over to the fleet and the fleet balance. There are sort of 2 questions here. Starting off, with opportunities, there are uncommitted ships in the newbuilding fleet and there are also existing modern ships in the fleet. You see that open up opportunities in this market for attractive acquisitions or M and A opportunities. [indiscernible] handful of uncommitted ships. There's very few and we know certainly know who the owners are of those ships. In general, we've been saying this for years. I don't want to repeat myself too much, but we have very good company. We have very happy customers who are repeating customer comes back and extend the ships with us for longer periods. As I mentioned, we delivered very good operations. You saw the technical off hire, 99.7% uptime. As I mentioned, lost time injury frequency, our key health and safety measure was 0, which is the theoretical minimum in 20 24. So we have a good operation. We have a good set up. We have good access to financing being bought equity capital markets and debt markets. So we could easily scale this company more. We're always open if if somebody who have modern ships who would like to consolidate and be part of a bigger company, then we are open to to grow our company and we can do that easily without adding much cost.

So So we are open to consolidation. Buying ships is very easy. You just pay the highest highest price, the higher than anybody else, then you will be able to grow your fleet. What we try to be disciplined, so we are paying the right price enough price that makes sense for FLEX Flex LNG shareholders.

Then on FLEX balance [indiscernible] we've talked about the steam tankers and scrapping. And the question here relates more to you see conversion projects to import terminals. Either for the steam tankers or the trifuels. Will that help the fleet balance in the short term?

It's not enough. It's like 200 steamships. So you can't have 200 with FSRU. So I think really a lot of these older ships typically they were put on a 20, 25 year charter. When they were built. And we have shown in the past we have had certain graphs about this on the role of of steam tonnage on existing legacy contracts. So there's lot of steam ships coming open. They will find a very hard time in the in the spot market. Nobody wants to fix those ships. As I mentioned, Fernley is quoting rate for steam ships today at 0 So we do think that scrapping will certainly pick up. Steel prices are still pretty well. At a well level. So you get $15,000,000 or so for scrapping that ship, which has no future. So we think that some are a lot of these ships will be scrapped. Some might be converted to EFS as a floating storage ships, some maybe FSRUs, [indiscernible] Actually will drive demand for LNG as those needs to be fueled by LNG. And actually the trifills are better candidates for FSRU conversions, but we do expect some of the 1st generation of dual fuel diesel electric.

We will also find a difficult time in the market because they are subscale And as I mentioned on this environmental metrics, both the EUV and the fuel maritime days go very poorly.

On the steam tankers, we talked about scrapping due to high cost for the 25 year special surveys. And they are earning 0 today. So Claire Pannington asks so the cash burn now, what kind of OpEx levels are there for either coal storage or in operations? For how long will they survive? The OpEx is quite similar. So our steam ship let's call it $15,000 a day in OpEx. Of course, you can put a ship in layup, then you can either do it a coal layup or a warm layup, warm layup being that you have a crew on board. If you have a crew on board, basically you will have those running costs. Then there is a cost of layup that really depends on where you're laying up the cost.

The ship if there are certain port costs or not, this varies. You rather want to have cold weather, so you don't get too much barnacles on the hull. But in general, these ships have lived out their life They are not economically. So of course, you can put a ship in warm layer for a short period of time with given the numerous ships coming here, the wall of ships [indiscernible] don't really see that the market turning up very quickly. And that's why we built the backlog. So I think that it's better probably to retire those ships time value of money is quite high today even after the has cut our interest rates. The interest rates is like 4.5%. So if you are delaying that kind of if you scrap the ship, you get a $15,000,000 payout. If you are instead waiting, and are incurring costs And then if you're incurring those costs with the layup, they will also have other implications. You will lose your certificates [indiscernible] [indiscernible] You might have extra costs for rebooting the ship. Will drive also the cost of reactivation. So in general, I think the steam ships really aren't layup candidates.

There are scrapping candidates today, which going to be helpful in terms of bringing back the the market balance to 2027. I believe last quarter in November, we had a graph showing how we and SSY expect the market balance to develop where we see that the market going back to a better balance in 2027. And where they then are assuming 53 steam ships to be scrapped within that timeframe. Last year, it was 8 ships. Market was okay last year. No market is not okay. So we do think that this number of steam ships 50 or so ships to be scrapped seems actually a bit low now. Given the outlook. Then moving over to our fleet and there are basically questions related to 2 of our ships. It's Flex Constellation and [indiscernible] related to or linked to a particular liquefaction projects or an SBA.

Now it's really linked to our portfolio. So we haven't disclosed the charter. I think trade wins have done that for us. But what we have said is a huge Asian industrial LNG buyer or agglomerator. So they buy a lot of LNG. It's one of the biggest LNG buyers out there. They buy LNG from a lot of different projects and and they need to renew their fleet of ships, finding the most efficient ships And this ship will go into their portfolio where they source LNG worldwide from various projects. And then following up on 15 year contract in this in this period, other and other or a lot of other 10 year opportunities or similar tenders out there?

Right now, it's a pretty slow market. [indiscernible] ships they want given where the rates are today most people are doing as I shown on the graph earlier today, spot fixtures gone up a lot. That typically happen when there is too many ships in the market. Nobody really are in any rush. To fix ships on longer term contracts. They rather just tap into this spot market whenever they have a need. For a ship. I expect that to continue until the market tightens. And also then when people expect it to tighten. So typically what happens is that of course, people are dynamic here. So once you see that the market is gradually tightening, Somebody wants to be smarter than other and kind of jump on the wagon before it leaves and try to fix some ship on longer term charters before the rates picks up. That is something that not sure that's going to happen this year, but probably when we are getting into 'twenty six and 'twenty seven.

Another ship is believe the question is more of a reminder, how does this variable hire contract work?

Yes. We fixed that ship on a variable hire contract back. It was the first term deal we did. We did that end of 2019. We announced it was with Gunvor, which is one of the big LNG traders. Initial period, firm period was 5 years. For home delivery that ship was delivered August 17 from DSME, which is now called Hanva. 2020. So as you see going on a variable charter, where the rate is set for each voyage with a certain floor. So the rate cannot be lower than a certain floor and it cannot be higher than a certain ceiling. So in that range, we will get a rate and the rate will be pegged depending on the spot rates observed for modern tonnage, meaning Maggie, XDF, Mega, the 2 Stork ships. This firm period is coming to our end then in August 2025. The charters do have 5 single year options. All of those options are also at a similar FLEX. So meaning that if they declare the option at the floor, maybe not too surprisingly. And once we're getting closer to August, we will know whether they will extend that ship. If not, we will do the 5 year special survey of that ship and and have it ready for the winter market.

It's a very attractive ship. It's together with Resolute and the Freedom, the most efficiency we have with a so called full real liquefaction plant. So they have 2 compressor where they can take the boil off down to 3%, 5%, meaning that we can kind of form a ship which is a thermos minus 162centigrades. You always have a heating up of that cargo and that heat creates gas vapor. We utilize that gas vapor to burn as fuel on the ship. On these [indiscernible] basically reliquefy almost all of the boil of gas. So in case you are waiting or you have to take down speed, you can regulate that with these compressors. We also have 4 ships with a partial Helix system. So it's one of the best ships. So hopefully, they will continue with the ship as a happy customer, but we will know once we get in close to the final maturity of that contract.

I think that concludes the Q and A session. So it's time to announce a winner. Okay. Do you have an idea? We have received a lot of good questions from Claire Pannington from Independent Commodity Intelligence Services. ISIS, yes. So okay. Thank you then, Claire. You have been now [indiscernible] as I mentioned, cold cargo, but you will keep your warm fit. I will send you 2 of these pairs And that concludes today's presentation. It's my 3rd quarterly presentation. So I'm looking forward to presentation 31 in May. So thank you everybody for listening in. And hope to see you soon again.