Good day, ladies and gentlemen, and welcome to the Stolz Nielsen Limited Second Quarter twenty seventeen Results Presentation and Conference Call. For your information, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Niels G. Stolz Nielsen.
Please go ahead, sir.
Thank you. Good afternoon. Thank you for joining us for our second quarter twenty seventeen results presentation. I will be referring to a presentation, which is posted on our website for you to follow if you're not here in Oslo. Moving to Page three.
Together with me today is Jan Kristan Englarsson, also CFO of Stope Nextion. To the agenda on Page four, we will go through the highlights of each of the businesses. Jan will take the financials, and then we will open up at the end for question and answers. Then moving on to Page five. The operating profit for Stolt Tankers, EUR 27,600,000.0, and that's down from EUR 28,000,000.
And that is a reflection of the weakening of the market but also higher bunker prices. Stolthaven Terminal, operating profit, 16,100,000.0, slightly down from $16,700,000 in previous quarter, mainly reflecting lower utilization at our terminal in Singapore. Stolt Tank Containers, the operating profit, 13,700,000.0, and that's up from EUR 9,000,000 in the first quarter, reflecting higher shipment volume. And also the first quarter includes it's usually a slow quarter because of the Chinese New Year. Still Sea Farm operating profit before the fair value adjustment of a new return was 700,000.0 compared to 2,200,000.0 in the previous quarter.
If you include the fair value adjustment, we turned in a EUR 1,700,000.0 compared to a negative of EUR 3,500,000.0. And what happened and we will talk about that later, but what happened at the end of the quarter, the prices started to go up and then you have to write up the whole inventory. Corporate orders and operating loss of 8.2% versus 4.6% in the previous quarter. Jan will talk a little more about that later. Legal expenses in association with the separation or creating a stand alone as we also have tankers, higher A and G expenses and slightly lower earnings from our joint ventures.
We got a profit net profit for the quarter of $15,600,000 compared to 15,200,000.0 in the previous quarter. And moving on to Page six. This is the net profit variance analysis between the first and the second quarter. We had 15.2 in the previous quarter, slightly lower tanker operating profit, lower terminal profit, higher tanker profit, higher C Farm profit after the including the fair value adjustment and a negative higher corporate and other loss mostly due to legal and reorganization expenses. Loss on FX due to the weakening of the dollar compared to the euro, primarily higher tax expenses and others bringing it to EUR 15,600,000.0, very similar to previous quarter.
Then moving on to Page seven, Stolt Tankers. The operating revenue increased by 3.2% from previous quarter, and that's mainly due to increased cargo volume, in line with increased operating days and higher utilization. The increase in operating days in the second quarter reflects more calendar days in the quarter, and that's due to the delivery of new buildings, but it's also offset by some of the recycling that we did and the redelivery of short term time charter. COA renewals during the quarter were on average of the COAs that we renewed in the quarter. The average was down 4.9%.
That compares to 6.1% in the previous quarter. So still down, but you can interpret that maybe the decline is slowing down. Let's hope so. Moving on to Page eight. Previously, is the operating profit variance between the first and the second quarter.
First quarter operating profit was 28.5%, higher trading results offset by higher bond costs, net of focus surcharge, higher equity income from our joint ventures, bunker hedge variance compared to the first quarter of negative 3.8% and lower loss on sale of assets of a positive 1.6%, bringing us to EUR €27,600,000 The bunker costs, a very big part of the Tanker business. Of course, bunker costs, net of surcharge, but excluding bunker hedges, increased by EUR 4,300,000.0. That is both the combination of higher bunker prices but also more operating rates. The average price of IFO consumed increased to SEK $3.16 per tonne, and that's compared to SEK $3.00 6 per tonne in the first quarter. The average price of the bunkers that we purchased in the quarter decreased to SEK $3.11 compared to SEK $3.28.
So actually, going forward, we will burn that lower cost fuel, so that should help. The COA bunker surcharge closed, commerce on average 70% of our total volume year to date. And then in addition to the COA bunker clauses, we have also some paper hedges. We have left some forward contracts and some coal options. If you look at the 70% that is covered by COAs, we have today hedged half of the 30% until the 2019 through these contracts.
And you can see the average price of forward price, the highest being $315 in 2018. Moving on to Page 10. This is the order book as we presented. This consists of 18, I believe, owners that we compare ourselves to. And you can see, as we've been talking about for a long time, it's the order book, which is the challenge.
The order book as it stands is 16.7 of existing fee, which is basically all English steel at this time. You can see that the yellow represent what has been delivered in 2017, blue represent what is going to be delivered the remainder of the year in 2018 and 2019. And as we have said several times, we thought the turnaround was going to come in 2018, but the latest that we have said in tankers that we hope that the turnaround or the improvements is going to come in 2019. And this is very much driven purely by the supply of new tonnage coming in. Rates, I'm on Page 11 now.
Seaway rate cargo increased 74% from 71% in the first quarter. That's due to more assets being lifted in the second quarter. That's the asset that we listed both from Dakar to India and talk about to India, big part of the business. And you can see when you the assets are such high volumes. So when it's high asset movements, usually, you see that the average COA rate for the quarter will also go down.
Compared to previous quarters, COA volume increased and stock volume decreased this quarter. Depreciation per operating days increased by 4% in the second quarter compared to the previous quarter. If you look at the charts, you can see that the STJS, Stoke Tanker Services, sale in time charter index is still pointing downwards or downward trend. But let's be positive here. You can see also on the bottom line, you can see the red line, which I hope is a small sign of the spot market starting to pick up a bit.
Page 12, the first quarter spot rate recovery is seen mostly in commodity rates that has stalled. Some markets show positive trends. We've seen some positive signs in the years ago to the Far So let's hope that at least the slide has stopped and that we have seen a slowdown in the decline. The MR market earnings dropped below $1,000 per day before recovering somewhat in recent weeks. Swing tonnage remains in the chemical trade, which gives a higher earnings than the oil trades.
Stock, so indicating that when the MR market is weak, influence is built over to our market. Stock rates appear to have bottomed out, but weakness continues to pressure the COA renewables. The high order book continues to provide surplus tonnage. And with an uncertain MR market, we expect rates to remain under pressure also in 2018. Now having said that, most of the contracts a lot of the contracts that we will serve in 2018 has already been renewed, and that reflected in the announcements that we say in the first and the second quarter of this year.
We'll go into the first and second quarter of next year, and that's the rates that we will operate on. Installed in the terminals, Page 13. Revenue increased 1.6% in the second quarter. It was mostly due to some cleaning revenues in Houston and Singapore, but that was also offset by lower utility and throughput revenue. Utilization dropped from 91.1% to 87.5% due to the expiry of certain contracts.
Operating expenses increased 4.3% in the second quarter, that's mainly due to higher rail freight activities as Stolt in Houston and higher cleaning costs as Stolt in Singapore. Contribution from joint ventures improved 11.4% at the Lingang Terminal, the one that was closed for almost the year, is now up and running again, and we're ramping up the terminal. Looking very quickly at the variance, the operating profit variance on Page 14. 16.7% in the first quarter, lower gross operating margin by $100,000 higher depreciation due to increased capacity of negative $300,000 higher equity income from the joint venture of $500,000,000 and higher energy expenses of 700,000.0 giving 16,100,000.0 Just to give you some market update on Page 15 for the terminal business. The Brazil market is back and is strong, driven by diesel imbalance.
New tax expansion has been approved to take advantage of that strong market. So we just actually won a contract in the year as 20, a twenty year contract, a solid twenty year contract in Santos. U. S. Remains stable.
Construction of a new jet in Houston has started, and we're implementing a new terminal management system at Houston and New Orleans. The Asian market, especially Singapore, remains challenged, and the utilization drop that you see is very much driven by Singapore. Singapore market, the Singapore economy is a challenge. And we have a utilization there of some 80%, which, of course, we're working on renewing some of the business that we've lost, but it is a bit of a challenge. The Korean market is performing well, both chemical and petroleum products.
Europe is stable. And our global project to improve the sustainable profitability and growth of Stokehead is ongoing with main focus on operational excellence and capital project excellence. Here's a picture of the famous East property. We have cleared it are leveling it. And this is, can see the Houston Ship Channel at the bottom of the tower.
That's where we will build our new jetty. You can see the land there is all available for future expansion. Stall Tank Containers, revenue up on Page 17, revenue up 14.1% in the second quarter due to increased shipments, improved demurrage building and higher additional charges. Shipments increased 7.7% on the back of strong demand in both food grade and chemical sectors in almost all regions versus the previous quarter. So we saw a significant pickup in the tank container business.
Just quickly before we talk about the market. H18 operating profit, 9,000,000 in the first quarter, higher revenue due to increase in shipment of $16,000,000 offset by higher operating costs due to the increased number of shipment of $11,800,000 no depreciation due to one off reduction in residual value in the first quarter, lower equity income from the joint venture and others, bringing it to EUR 13,700,000.0. So a nice pickup in tanker debt. Page 19, strong demand in all regions, working towards increasing both utilization and returns per track, as always. Margin deterioration may have bottomed out.
Price competition continues to limit revenue and margin growth, working towards improving pricing and margins. The key, of course, is to control operating expenses and passing those increases through to our customers focus on system development and implementation of global platforms to increase efficiency and scale of operation while reducing overhead continue to develop and expand our depot network while expanding services in existing locations in order to support global operations. Lease tanks when needed to meet future demands. There are leasing opportunities there. There are quite aggressive competition on the leasing side.
So do we need if we need any more containers, there are leasing deals out there that are quite attractive. Just to the type of tender market is usually a first mover. And it's very encouraging to see that the activity in tank containers has picked up. It's we transport the feedstock for manufacturing. In times of uncertainty, people would like to maybe ship more frequently smaller volumes.
But also, when the market starts picking up, we usually see it first in the tank container market. So the challenge in tankers is not the supply it's not the demand side. The nominations are very much in line. I mean they're not just pre-two thousand and eight level, but the volumes being shipped are normal. It is the supply of new ships coming in.
All of these 19,000 tons and 25,000 tons and some 30,000 tons are now coming in '17. And they're all over place trying to find work. So it's not the demand side, unfortunately, it's the supply side. Moving over to fish. Volume of turbot on Page 20.
Volume of turbot was up 7% while prices were down 10% due to higher seasonal wildcaps entering the market. Volume of salt was up 17%, but prices were down 3% due to some promotions that we did. For caviar, volume prices were down during the quarter due to the continued shift of direct sales. Fair value adjustment of inventory had a positive impact of 1.7% compared to a negative of 3.5% in the previous quarter. Quickly, Page 21.
First quarter was an operating profit of negative 1.2%. Lower gross profit from Turquoise, lower sold gross profit, lower Caviar gross profit, but then towards the end of the quarter, the inventory prices went up when the prices went up, so we had to write up our inflow of 3.2. Same thing for Sol, same thing for Caviar, slightly higher depreciation and higher energy, brings the gross operating profit for the quarter to 2,400,000,000.0. Last slide before I give the presentation to Jan. Did just the subjects on these two ships, the 7,500.
Just to remind the strategy here is there are so many projects out there that need this type of ships. We are being we are we are in discussion with many companies. Our strategy is really not just to time charter out the ship. That's not really no. It's a backup.
We can do it, and we have several interest parties to take the full ship and capture. But our idea is to there's so many of these projects that don't need a full ship, a whole ship. So our job is to see if we can help say that, you know, you could take part of a ship. So we kind of partial out an LNG carrier. So in in the start phase, when when companies are switching to LNG, you start up with low volume.
That low volume doesn't justify a whole ship, but we will then put a package together. And through that, I think that we will be able to get, based on the numbers and based on the discussions that we are having now, superior and very, very good return. If we're not able to get a satisfactory rotation of that package, I think the timing of these ships coming in, in 2019, based on the commitments a lot of oil companies and other companies have power companies have in supplying LNG to the cruise line and to the ferries in the Mediterranean, I think the timing is very, very good, combined with the very good price. And that completes my part of the presentation. I will be back later in regard to question and answer.
But now I give it to Jan for financials. Thank you, Nils. I will, as normal, go through and give a little bit more comments to some of the figures that we have reported today. And I also wanted to just say that we have filed with the Oslo Stock Exchange our interim financials for the entire six month period from December 1 through May 31. That's with the Oslo Stock Exchange.
And in addition, you will find the press release, you will find the green financials plus this investor presentation on our website. Going now to the next slide, the net profit slide. You can see here that operating profit before one offs is 53,700,000.0, which is from JPY 51,800,000.0. And it's worth then, that's before one offs. If we look at the one offs, you see here that we have loss on sale of assets is significantly down from what we reported in the first quarter.
And in the first quarter, we did the recycling of Stout Hilli. And on that, we actually took a hit of 2,100,000.0. The 600,000.0 in the second quarter is just a combination of a number of smaller transactions. Next worth mentioning here is the reorganization cost. Maybe it should rather say restructuring cost.
And this is related to an effort that we have going, which is to separate out stock tankers into its own legal structure. And that's that's a project that started last year, and we are now well into it by the end of the quarter. And in this connection, we had booked of legal and tax advisory fees of just under $1,000,000. And the this part of the restructuring will be finished, if you will, by the end of the third quarter. So next time we meet, we expect to have the that restructuring complete.
And it's worthwhile to say that, that then you will have a clean legal structure starting with Spok Tankers Limited as a Bermuda company and with all the tanker activities under that structure. And let me just remind you, however, that the company will still be owned 100% by Stolt Nielsen Limited. That's the project that we're talking about now. Then if you look below the operating profit line, net interest is in line with last year or last quarter. The dollar is already mentioned.
We got that a little bit against us as it lost around to the European currencies. Income tax is a little bit higher, and this is primarily because the Sea Farm results, as you saw, are higher due to the fair value adjustment to the inventories. But also in the first quarter, we had tax adjustment favorable tax adjustments, one in Singapore and another one in Santos. Then moving to the balance sheet. You can see here that the shareholder equity of EUR 1,410,000.00, that's very much in line with what we reported at the end of the first quarter.
Debt is, you can see here, 2,530,000,000.00, and that is up from 2,480,000,000.00. So it's up by EUR 50,000,000. What did we actually do year to period? Well, we did refinance the Sikaap 4 terminal facility that we have. It's maturing later this year, but we already have replaced it, and we actually increased the amount to get a better loan to value on the terminal.
And that actually was a transaction that was set up very last end, very last few days of the second quarter. That gave us additional liquidity of some $75,000,000 Then in addition to that loan facility, we also took delivery of one of our the fourth C38 ship from China. And in that regard, we drew down on the facility with the Chinese Axis Bank of also $48,000,000 That was the end of the quarter. Now the debt to Transform network, you can see here, is up to 1.6 to one, higher actually than than what we would like, and it's up from 1.55. But it is important here to to what I just said that when we did the refinancing, over the last few days in the quarter of the terminal in Singapore, we actually were left with $50,000,000 of cash, that we could not, utilize to reduce the debt because it was at the end of the quarter.
And therefore, the cash balance is significantly up from where it was at the end of the previous quarter. And if we have been able to take that excess cash and just as we did actually in the, into the third quarter, if we had used that million dollars to reduce the debt, we would have been down at 1.56 to one. So again, very much in line, slightly above the 1.5 to one self imposed limit, but nevertheless, very much in line with where we were at the end of the first quarter. EBITDA to interest, SEK 3,560,000,000.00, that's down from SEK 3,610,000,000.00. I talked about the cash of SEK 102 And then together with the remaining amount that we have on liquidity on the revolver, 247, of uncommitted lines of 85,000,000, basically talking about a liquidity right now that we could access of €454,000,000 Fixed in terms of interest on our loans, we are now just under 70% fixed, 31% is floating.
The average interest for the quarter was 4.4%. So we're very satisfied with that. And the interest that we see for the third quarter will be roughly $30,000,000 $31,000,000 And going to the cash flow, it also needs little of explanation. Cash flow generated by operation of EUR 104,000,000. Now that is significantly up from the first quarter, and that ties in with the fact that during the first quarter, we had just acquired JIO, and we were in the process of integrating their ships and their operations into our own operations.
And as part of that process, the accounts receivables of or related to JL were actually building up. So we were tying up more and more and not to collect it and tying up more working capital. In the second quarter, all of that was corrected, and that's why you see a difference between the 3%. So now no issues, we're back to where we should be as far as the third quarter is concerned. Capital expenditures, we already mentioned the fourth ship from China, and we also did $25,000,000 of investments in our terminals, a little bit spread to Houston, to Singapore, to Australia, to some of the other European terminals.
In addition to that, we also made the last payment. So this is part of the contract to when we acquired JL. After we closed the deal November, there was a period when we went through in detail all the the financials and the updates and trued up the balance sheet transactions. And then the 21,000,000, you can see here, JLT final payment was made in the second quarter. This is all nothing new, doesn't change the price, it's just the cash impact.
Then if we look at the on the debt side, we did issue new long term debt. I already mentioned the Singapore refinancing the debt and the China Ex I'm Bank. But I think with regards to the the Singapore, what is interesting there is the fact that we have been approached by a new sort of consortium of banks. So this was like UOB, DBS, OCBC, and ANC. So that for us is a little bit of a new consortium that came in and said we want to finance the term that we want to be doing more business for you.
And that very just that we don't always have to rely on the European banks. So we raised that financing. Of course, we then repaid the financing that we were replacing in Singapore. And then we also paid dividends of 27,000,000. And you can see here then the that caused an increase in the cash.
Next slide, EBITDA. In this slide, as we always say, we take out any gain or losses on sale of assets. We take out any adjustments to the fair value of the inventory in Sea Farm. So you can see here, yes, we had a little bit of headwinds in tankers in the second quarter on the EBITDA. Terminals were more or less the same, very flat.
Tank Containers shows a nice increase. And for the group as a whole, it's 116,000,000 on a consolidated basis, which in a sort of summary of analyst reports, I saw that we have done internally. I think the the figure actually was 117. So not far away from that. A and P expenses here, 54,100,000.0, up from EUR 51,700,000.0.
There's a little bit of increases in terminals relating to some legal expenses that that we have had of some $303,150,000,000 oh, $350,000. At the corporate level, this is more a catch up from the first quarter. I think we underreported slightly some of the corporate A and G costs. So you can see we were negative one we were actually positive EUR 1,000,000 in the first quarter, again, 900,000.0 negative as an expense, if you will, in the second. And part of that actually should have been in the first quarter.
Then I already talked about the SEK 900,000 for the tax and legal consultancy fees tied to the restructuring of the tankers. Likewise, you can also see that the profit sharing in LTIP is down, again, given the performance so far. The figure that we have for third quarter is $54,600,000. Next, the depreciation. Here, we're at 64,200,000.0.
Last quarter was EUR 64,900,000.0. Not really much to say other than the in the first quarter, FPC, as you saw from this chart, we did an adjustment to the residual value of our tank containers as the steel price went down. We actually made that adjustment in the first quarter to skip the p and l by $1,300,000. It's all according to the IFRS rules. Going forward, 65,600,000.0 is the depreciation.
And of course, that's the effect now the delivery of new ships from China. The share of profits in JVs, slightly better than in the previous quarter. But this also relates to the fact that we now we get the the full benefit, if you will, of the ships that we have in the joint venture with JL. It's a joint venture company called Hassle four Hassle four. So that has, if you will, more ships, more days and those ships are now trading in FPJS.
So we expect that this figure will for tankers will actually increase. The corporate one negative of 2.7 is of course us picking up our share of Avant cash, where we have a shareholding. Going forward, I think we're saying for the quarter, April. Taxes, I think we already talked about EUR 3.4 versus 2.4 really tied mostly into the increase in Sea Farm because the fair value adjustment is positive Capital expenditures, again, this needs some explanation. You can see here that on the total in the second quarter alone was 88,000,000.
But yesterday, in '17, for the first two quarters, we're at the 217. For the remaining of 17 plus the next four years, we're talking $538,000,000 That's the capital expenditure program that that we have. Out of that $5.38, roughly six 60% is in decimal 17 and into 18. And out of that, it kept so so that adds actually up to 340,000,000. Out of the 340,000,000, we have financing for 60,000,000 because that's one of the ships.
The last ship has been actually with China, the c 38. We expect within the same market that we are today, that there will be a cash flow over this period, that's for 08/17 and over '18, to about half a billion dollars cash from operation. We will repay 220,000,000 of your scheduled payments, debt payments. And that that's down to $340,000,000, which is basically taking care of the the CapEx program. That's how it looks right now.
It's important then to add that then we have assumed that the balloon payments that we have, the maturities of existing debt during that period actually will be refinanced. So with that in mind, it's fair to say that we do believe that the debt to cash flow network will not change much going forward through this period on the assumption that the market stays more or less at the same level. Of course, there are things we can do to hold back on the CapEx should the market conditions change. Now next slide, which is the debt maturity slide. The blue is just the regular amortization.
The green is the the balloon payments and the the orange, the bonds. And in 02/2017, since the end of the second quarter, we have actually already repaid half of the balloon payment that you see here for $100,000,000 and we're in the process of doing the rest. We don't see really any any funds for them. For '18, there's a bond as you most of you know in April, 164,000,000. And we depending again on the market, we will set up the market later on in the second half of or twenty early twenty eighteen.
Green part of the green part for 2018 is actually related to financing that we took off in connection with the acquisition of JL Tankers. And some of you may remember that or recall that we got the $200,000,000 worth. The debt financing was short term, two years. So we're just going to seek to roll that over. Again, talking to the banks, talking to the parties involved, we believe that, that will be done without any issues.
So with that, back to you, Niels. Thank you, Jan. So net profit for the quarter, 15,000,000, very much in line with the first quarter. The integration of JL Tankers is progressing as planned, focusing on realizing its synergies and improving the overall operations. We see a continued soft market in Tankers with a significant newbuilding order book deliveries, strong demand in tank containers and the fundamentals remain solid.
Sea farm while we were above prices negatively impacted by turbulence. So I think that will come back. As Jan told you, we have access to competitive funding. We have unencumbered assets, several terminals that we can use as collateral. The group has sufficient liquidity, and the CapEx is partially funded.
However, we have gone up to 1,550,000,000.00 as Jan said, and our focus will be on debt reduction and also getting cash flow from the investments that we have made. That completes our presentation. We will now open up for questions and we'll be able to answer them. So operator, we will start here in Oslo. Now we'll try to repeat the questions so the listeners can open up the other questions.
Any questions in Oslo? Yes. Of course, we need to have the and historically, we as you know, over the I think over the last 14, business payments, we have paid around $1. We have on occasion reduced it to 50¢, so two times 25¢. And if if we feel that that is not coming down fast, that is, of course, something that we all consider, which, of course, has a quick impact on our balance sheet.
Just to talk a little more about our situation as it stands now, it is slightly higher than what we wish. But we continuously have a five year plan, and we update it. And based on the latest updates that we have done on first oil tankers, we see that believe that 2018 is going to be tough, but it's going to remain the same as '17, so no recover in '18. And with that scenario and and, you know, assumptions for the other businesses, we think that the debt will come down to 1.5 next year without doing anything. And then it will go dramatically down as you see that our capital expenditures are producing.
Of course, that's something that we don't do in terms of an investment, but I do want to get it done as quickly as possible. There are other things that we can do and that we are considering. There are, I would say, some gold nuggets of nonstrategic importance for the company in the company, which we can sell, which we are considering selling. But I'm not going to rush out. I mean, I'll only sell those nuggets if if we can get a good price, and that might take some time.
But that is something that we're working on on nonstrategic assets that has been collected over the years in the various businesses. So, yes, it's it's above one and a half to one, and it limits us from pursuing opportunities, which we would love to do. But I feel that we have quite a few optional parts to play with to get it down or to manage the situation if the market should change. So there are things that we can hold back on the investment. I question the ability for us to be able to use the remaining CapEx that is scheduled for 2017, that most likely will be pushed into 2018 and 2018 into 2019, etcetera.
So there are things we can do. No. Not really because I don't that that would create maybe a bit of we'll tell you once we've done it. But but there are market marketable assets, which which yeah. There is a market for.
We have over many years tried to make various approaches to yeah, JL by other. Yet we have we have talked to several operators and and and look at it. What what we have said earlier is still tankers have have have we have split our fleet into two, partial tankers and chemical tankers. Partial tankers are large, sophisticated with high segregation ships. And the chemical tanker fleet are still stainless steel but lesser 1,500 smaller ships.
We most likely will continue to build our own ships for parcel tankers. And there's a a there's a relatively small market for those ships that have 40 clogged aggregations, 38,000 deadweights. So there's few operators and very few ships in the secondhand market. On chemical tanker side, there are much more many more operators and more opportunities. But that's also where it's a big challenge because there's an oversupply.
And there's but that's where there's room for consolidation. We have said that we will build the partial tankers and we will buy and operate in the commodity chemical tanker segment, but they ask price needs to be correct. And we looked at JL, was there really a replacement for the partial tanker segment, It's always that we needed. If we're going to do a second deal in the chemical tanker segment, it needs to be a good price. If it's not a good price, forget about it.
It's it's you know the yard situation, how many ships are out in the market. The only way you're gonna be able to no. You're never gonna be able to get a return if you're also you know, acquisition costs are too high. So we need to be disciplined to make certain that we acquire cyclone ships or do a consolidation at the right terms. And if that situation if that if the market is not there now, well, if the opportunities are not there or we are not able to come to the deal, I mean, we adjusted the JLV, we are store tankers can stand alone as it is.
We open for chemical factory, but as as said, it needs to get the right size. Yes. Of course. I mean we took the step of we believe the deal that we had in capital for those two ships were repricing. We've been able to get an extension several times.
We listed the target. We wanted to have more business for those ships. But we have been convinced that by this the time those two ships have been delivered, we will have plenty of work for we will have good business for them. We're very convinced. And that's why we listed in Saudi.
Had our balance sheet been stronger, I think that we would have been more aggressive in our growth within Energy. So our appetite to grow in that segment, in that small sales segment is still there. But it's being, as you point out, we need to be a little careful with our balance sheet. So after we have a stronger balance sheet, we need to be Not as a stance now. Unless, of course, we can do there are things that we can do structurally also.
We can look at partnerships and such as this. I got the we have we have to be disciplined enough. Yeah. I want to get to that level down. So if I I'm sorry for the reviews that are calling in.
It's difficult to see, but if you see part of this is or the tanking or enterprise is called now. But this this area here, basically, where you see all the small tanks are our tanks. It's not this. This all of this all of this, we can't see all of it. It's for the existing jetty, they are two and three.
And then we bought strategically, my brother actually did it twelve years ago, this piece of land. The only expansion that we have done for this property are those tanks. Now as you point out, it took me quite a long time. It's been taking me quite a long time to get permit for the authority to build. We have to change the the time because you can't go too far into the channel.
So we came up with a design for us and we accepted. It still makes sense. Investment. It's a $45,000,000 investment to build. You need to dredge and you need to build.
So those we cannot expand our Houston terminal until we have more jetting capacity because first of all, the band is full here and the utilization at the far existing two jetting is full. So for us to be able to develop this ramp, we have to be able to double check it. Those tanks are connected also to the existing. And the plan is that both all of these banks should be connected to be able to be used both. So the bottleneck for us to further expand our Houston terminal is injecting capacity.
Now, of course, also when you have more difficult capacity waiting time at the terminal, it will allow us to show up on our P and L on our terminal side, but it will improve on and reduce the waiting time for our ships. So a big part of the decision to build an additional jetpack is to get the waiting time. Most of the terminal customers are tanker customers. We try to push our tank customer to our terminal so that we reduce the number of shifts that we do in the Port Of Houston. So you're saying we don't have Yes.
Now the question could be asked, what are we going to do with this land? I mean, this is prime real estate. This is suit I mean, this is good stuff. And as as you read chemical industry, with all the expansion plans coming as a consequence of of shale gas and shale oil, it's highly sought after property. But we are consistently or continuously challenging our own strategy about Owners Perth and pushing these partial customers.
What the alternative is to have pipeline customer, twenty year contract, less sophisticated, maybe higher throughput and less operating. So it's we're looking at the stand alone terminal business, we're looking at what gives us the highest return. Is it to continue to serve the chemical tanker customers? Or is it to look at the it can be a chemical tank customer, but not necessarily the highest sophisticated small parcels. It's something to consider.
But the distance is there. We're looking at quite a few few differences. Again, to develop this, it's expensive. So we have to do it. Right now, we get the jetty up and running.
Question. Do you think was the price open pay for $5,500,000 $40,000,000 Yes. I mean, that's approximately the cost at Anchorage or what's the name of the company? Chemtran paid for them, right? Chemtran, Chemtran.
Chemtran's pickup. So that's approximately the delivery cost for 10 times. I think that the new building market has come off slightly. But I think that it's a it's a great move, I would say. It's good for the industry.
They get the ships that they need and without ordering new ships. So I think it's good news. I mean, you know, if it's possible to get 1,000,000, but in three year time, you know, million dollars here and there. So it's a fair price. Singapore is Singapore terminal is still very profitable, but next mobile contractor that we that we have, which is a big part of our business.
But part of that business was taken to one of our contractors. So we are we are looking for replacement and there are we're sure, you know, quite a few leads of market out there. It's a bit sluggish in in Singapore. That's straight to the bottom line if you get a memo business. So we're there are leads, and we're working on it, but we haven't we don't have anything for a month.
Well, liners have been very good at getting the prices their prices up. So what they charge up, which is a task to cost for us. But it's also usually good when the liner market starts going up, our margins or our cost also goes up. So I think some of the improvements that you've seen is just the activity of fixed up, but we increase in some trade lanes, have seen some normal increases from the liners. We have benefited from that too.
Yes, we continue to have tough cost of being able the key to the difference is being able to reduce the number of MTV positions. And, yes, we have caused exercises everywhere and and sometimes I think Apple and and keep it always. But I think that the number the the activity has picked up. You see clear, you know, you see our utilization now up to 74, 75%, which is which is helpful. So there is place called scoping.
There is the non room increase, but there is more activity. I think as I said earlier, I think that we we have been at the level where they're losing money or some of them are losing money. But it's very difficult to know because we are the only one that are public, so it's very much rumor based. If we achieve this project that we if we achieve this strategy or the project that we're working or passing out, the the the small ships will get higher than that. But it's it's, you know, it's it's there on paper.
It's just to be able to to secure and operate, but it looks pretty good. If we if we want to and just time charter ship out for ten year or five year period, then we will get less than 15%. And we get 8% where we have the lowest requirement on the return. But that's not really what we're after. What we and it's it's always a backup.
But what we're after is is kind of trying to, again, build up a program, a rotation in the in the Mediterranean where we are either through CUA or part time travel for 06/02/2000, where we will get the shipping out and manage our inventory. But it's quite difficult because, you know, you serve the cruise ships. And the cruise ship is there at at 05:00, and you have to be there at 05:00. So but it's possible. It's exciting.
And with the opportunity, I mean, we are being approached. Everyone that is converting their ships or or and and to be powered by cabs, and it's quite a few of them. And quite a few of the oil companies are also have committed themselves to supply that LNG. So I think there are a lot of opportunities. But I'm I'm open to stop suffering.
It's it's very exciting. That this is gonna be, you know, the rotation of ships and and triangular trade. That's what we are good at. Okay. Operator, could you ask if there's anybody on the phone that would like to ask some questions?
Certainly, sir. Ladies and gentlemen, if you would like to ask a question via the telephone, please signal by pressing the star or the asterisk key followed by the digit one on your telephone. Please ensure that mute function on your telephone is switched off to allow your signal to reach your equipment. A voice prompt on the phone line will indicate when your line is open to ask your question. There are no questions in the telephone queue, sir.
Thank you. Thank you all for coming. I wish you a good summer, and that completes our second quarter earnings release. Thank you.
Ladies and gentlemen, this will conclude today's conference call. Thank you all for your participation today. You may now disconnect.