Good day. Welcome to the Stolt-Nielsen Limited third quarter 2016 results presentation and conference. Today's conference is being recorded. At this time, I would like to hand the conference today over to Mr. Niels Stolt-Nielsen, CEO. Please go ahead, sir.
Thank you. Good afternoon. Thank you for joining us for our third quarter earnings release. Together with me here in Oslo is Jan Engelhardtsen, CFO. The agenda, as always, the highlights for the third quarter. I will go through each of the businesses. Jan will take you through the financials. Then we will open up for question and answers. The highlights for the third quarter. The biggest highlight, I would say, is the downturn that we saw in Tankers. Operating profit $31.4, and that is down from $35.3 in the previous quarter. Most of that is a result of a reduction of $7 million in our bunker hedge, but also lower trading results. Stolthaven Terminals operating profit $14.8, slightly up from $13.8, reflecting improved operations performance at nearly all of our terminals.
Stolt Tank Containers reported an operating profit of $10.7, and that is in line with prior quarter, as lower trading results were offset by higher income from our joint ventures. Most of those joint ventures is our depots. Stolt Sea Farm reported operating profit before fair value adjustment of inventory of $1.9 million. Corporate and Others reported a loss of $6.7, compared with a loss of $3.9 in the previous quarter. This is mainly due to increased accruals for our profit-sharing plan and long-term incentive. You can say that we actually accrued too little in previous quarters. Giving us a net profit for the quarter of $22.2 versus $37.8 in the previous quarter. If we compare it to the third quarter of 2015, $30 million, $30.1 versus $22 this quarter, this year.
If we move to page six, we compare the net profit variance between the second and third quarter of 2016. Here you can see previous quarter, we reported $37.8. $13.9 million lower because of the lower operating profit from Tankers. We had higher margins in terminals, stable performance in Stolt Tank Containers, lower Sea Farm operating profit after we have adjusted for the fair value, and higher Corporate, as I explained, lower interest rate. That brings us to $22.2. We move to Stolt Tankers, the deep-sea revenue decreased by 1.5% from previous quarters. That was mainly due to a reduction in volume and freight rates as a result of weaker summer demand, weaker Asian exports, and a weaker CPP market, which influenced our market. I will talk more about that later.
The average COA rate decreased by 3.4% during the quarter, that's due to the cargo mix. The cargo nominations, if the parcel sizes are different, it can have an influence on the average COA rate that we booked for the quarter. Also the spot rates decreased by 4.5% compared with the prior quarter. However, the COA renewals during this quarter were on average up 4.1%. The contracts that we renewed during the quarter, we were still able to get, on average, of the contracts that we renewed up 4.1%. We sold two ships during the quarter, and we also recycled two ships. Looking at page eight, the second quarter and third quarter operating profit variance. As you can see here, $10 million down on lower trading results. Lower bunker cost, net of surcharge.
As a result, even though the bunker prices are actually higher, we had to give less surcharge to our customers, we had lower bunker costs net of surcharge. Change in the bunker hedge the previous quarter, as I explained earlier our paper hedge we took a $7 million adjustment to the unrealized hedge. The lower manning cost of $1.9 million, higher loss on sale of assets, lower joint venture, et cetera. That brings us to $31.4 million for the quarter. The big part of the impact is again the bunker hedge. If you look at page nine, Stolt Tankers bunker cost. Bunker cost net of bunker surcharge, but excluding the bunker hedge, decreased by $1.8 million from the second quarter. The average price of the bunkers that we consumed increased to $232 per ton from $175 from the previous quarter.
The average price of the bunkers that we purchased during the quarter was $245 versus $194 in the previous quarter. COA bunker surcharge clauses cover on average approximately 77% of our total volume in the third quarter due to the continued high COA percentage that we have. You can see here that we had realized gain on our hedge of $1.1 million year to date, and unrealized gain of $2.9 million on the hedge. We have done actually well if you look at the year to date on the hedge that we did, the paper hedge. On page 10, STJS or Stolt Tankers Joint Service Sailed-In Time-Charter Index. Here, you can really clearly see the drop in the rates that we saw in the third quarter. On page 11, you can see the deep sea market spot rate development.
Since the peak, specialty chemical freight rates have dropped about 16%, versus approximately 30% reduction in the commodity rates due to the impact of CPPs, Clean Petroleum Products swing tonnage coming into our segment. Most commodity products move in spot markets, while most specialty chemicals move under COAs. The commodity segment is far more impacted by the MR market, as MR can also handle commodities. If you see here on the left hand graph, our biggest trade-in is U.S. Gulf to the Far East for the specialty. There you can see that, yes, it's declined, but the light blue one is relatively stable. Where we see the dramatic decline since the peak in 2015 is the return cargoes. That's Far East to the U.S. Gulf, and Far East to Europe is the green one. That's where we've seen the really big decline.
On the right-hand side, this is on average of all trade lanes, and as I explained earlier, approximately 16% drop in the specialty. That's 1,000 ton stainless steel required cargoes have dropped 16% since the top. On the commodity size, 5,000 ton parcels, really not the segment that we work that much on, dropped approximately 30%. On page 12, we have 77% contracts of affreightment. That coverage protects us from impact of short-term swings in the spot rates. As a result of us having such a large contract portfolio, we are not that dependent upon the spot market, and we can actually be more selective in the spot cargoes that we pick. Even though the spot rates fell quite significantly, you can see that our spot rates actually has held up quite nicely during this period.
With contract durations of one to two years, it will take time before the lower spot rates have a full impact on our COA rates. The impact on the COA rates is typically less than the fall in the spot rates. Of course, I'm not saying that it doesn't influence us. When you have a drop in the spot rates as we have seen, and I would say a weaker sentiment as we saw during the summer period, our contract customers of course will take advantage of it. The contracts that are up for renewal, that are currently up for renewal, we see pressure. We can't deny that. Subsequent to the end close of the third quarter, we have actually seen a slight pickup in the market on the spot volume.
The order book is actually reducing, not because the ships have been delivered, but some of the ships have been canceled. If you look at this chart, you can see that the blue and the green, the blue being stainless steel and the green being coated. I doubt if all of this tonnage that you see in 2016, I doubt if all of that is going to be delivered in 2016. I think it will be pushed into 2017, and some of the new buildings from 2017 will be moved into 2018. It's still a large order book, as we have been talking about. That has been my biggest concern, and continues to be my biggest concern. It's encouraging to see that some of the ships have been canceled. It is going to be a challenge, this order book.
We are partly to blame because we do have our own new building schedule here. We have the Chinese new buildings being built at Hudong-Zhonghua in Shanghai, and the first ship was delivered this summer, and the second ship will be delivered in October. They are performing as per specification. Actually, the first voyage of the Stolt Pride has been exceptionally well. Excellent results. We are actually very happy, and there's a lot of concern about the standards and the quality of ships being built in China. I must say that the quality that this yard has delivered has been excellent. This summer, we announced the acquisition of JO. The transition encompasses most of the organization, including five of their offices. They have currently 13 chemical tankers on the water, out of which we already have six on time charter.
They have a 50/50 joint venture with TRF of 8 new buildings, out of which I think one or two has been delivered. Then it's the technical management complex for 7 non-chemical ships being retained by Jo. We expect to close this acquisition by year-end after receiving approval from the competition authorities. The three areas that we need approval from is Germany, Holland, and South Africa. We don't foresee that as any issue. Why did we buy Jo? Jo is one of the original three chemical tanker operators in addition to Odfjell Stolt. We have always viewed Jo as a quality operator with high standards of operations, as evidenced by the 6 ships that we have had on time charter for an extended period of time from Jo.
Through this transaction, we will satisfy our fleet requirements of both chemical tankers and partial tankers, so both sophisticated tonnage and what we call chemical tankers, less sophisticated, which then will eliminate the need for us to order new ships for the next, I would say, 4 to 5 years. We operate in most of the same trade lanes. One trade lane where we are not present, but they are, is on the West African trade. From South Africa up to Europe along the West Coast and down again, which again, through this acquisition, we will expand our service towards our customer. We will leverage our systems, the investment that we are in our systems over recent years to gain scale at lower incremental costs. If you look at the way, or at least the way I look at this acquisition, it's really not Stolt-Nielsen expanding within tankers.
It's really replacing or it is part of our tonnage plan. We will get a little more than we presently need, but it will eliminate our need to go out and order additional tonnage. The value financing and the balance sheet impact. We try to illustrate here the gross purchase price was $575 million. The estimated remaining joint venture new building payments, the 50% share that we will take over is $145 million. The subtotal is $430, then we will take on the debt of $156. $274 million we will pay for the equity. The acquisition will be funded with $125 million bank financing and drawdowns on the company's revolving credit facility. The joint ventures has its own separate limited recourse financing for the 8 new buildings, which will remain in place. Following the close, Stolt-Nielsen will have a debt to tangible net worth ratio.
That ratio is expected to increase from an estimated 1.26 as it is today, up to 1.53 at the end of the year. Still well within our covenant, which is 2 to 1. With the incremental cash flow from Jo, this ratio is expected to rapidly decrease. The advantage, of course, is buying when the ships are on the water, they will be generating an EBITDA right away. I think, yes, we have come up to 1.5 to 1, but following the closing, we will still have a $300 million worth of capacity under our revolving credit line at the end of 2016. Post-closing, we will still have liquidity available of $300 million.
The expected EBITDA contribution from Jo, including the joint venture, bases the equity method is $60 million on takeover, raising to $80 million, when all of the 8 ships have been delivered or the 4 ships that we have and then the 8 ships that will operate in our pool. Bases the consolidated method. In other words, the 4 ships in the joint venture, the $60 to $80 million is on the equity. So we take the net profit from that joint venture, our share of the net profit. If we take 50% of the EBITDA, we are looking at $66 million up to $92 million of EBITDA increase from this acquisition. And if you then look at it as a multiple of EBITDA, what we bought from the company, I think we have done a reasonably good deal. Moving over to Stolthaven Terminals. Positive picture.
Revenue increased marginally due to higher throughput and increased capacity. The utilization marginally increased to 90.9, up from 90.5. And cost saving initiatives are slowly starting to have an impact per cubic meter. It is always nice to report all these blue graphs. If you move to page 19, second quarter to third quarter operating profit variance. $13.8 million previous quarter, $0.7 higher gross operating margin from previous quarter. Higher equity income from our joint ventures and others bringing it up to $14.8. On page 20, Stolthaven owned terminals. We have added 5,000 tons of capacity in Dagenham outside of London, and 60,200 cubic meter to be added in the next 12 months in Singapore, Moerdijk, and Dagenham. The average lease capacity improved at almost all owned terminals. The biggest improvement was in New Orleans and in our terminal in Newcastle, Australia.
Stolthaven Houston continue its business optimization program. Focus on the ship-to-shore interface to reduce ship time spent in ports with continued progress in Houston-based waiting time and tons per hour year-on-year. Significant expansion opportunities at several of our terminals owned and at our joint venture under discussions. The full impact, as I reported earlier, the full impact of the improvement programs that we have been putting in place primarily in Houston, you will not see in 2016, but I think you will see, hopefully, some nice pickup in the performance of our terminal division in 2017. The fundamentals in the terminal business are still good. There is still demand for storage in Houston. We are getting a lot of inquiries at most of our terminals, so the fundamentals there are still good. Stolt Tank Containers. Revenue down 3.4% due to fewer shipments.
Operating profit unchanged from previous quarter as marginally lower trading result was offset by gains in our joint ventures. The joint ventures are primarily our depots. Very quickly through page 22, the operating profit variance. $10.7 previous quarter, $0.2 lower trading result, a pickup of $0.5 from our joint ventures and others of negative $0.3, giving us $10.7. Page 23, the container market situation. There is still strong competition from new operators and availability of low-cost new tanks from China are putting pressure on rates and margins. We continue to take an aggressive view on pricing. So we are actually dropping our price, reducing our margin actually, to increase the utilization. Our new building order is complete. Off hiring of older and more expensive lease tanks and scrapping of older owned tanks has resulted in a slight fleet reduction.
There is also opportunities for us now to take on additional tanks, lease tanks at very attractive rates. We will continue to develop our depot network in strategic location in order to support global operations. We believe the margin deterioration is bottoming out. The reason we believe that, okay, it's too early to say just after one quarter, but if you take, and we did this exercise, if you take a new operator and take what he will pay, what we assume he will be able to book a cargo for on the revenue side. What it will cost him to ship this with a liner. What it will cost him to repair, maintain it, turn it around, and his organization. What it will cost him to reposition the tank.
We think that at today's level, a new operator is at best break even, most likely losing money, and we are still making money. Just based on our cost assumption, revenue assumption for a new player in this business right now, I think that we have really come to the bottom. At least I hope so. Stolt Sea Farm, very quickly. A better supply balance allowed for higher turbot prices and increased volume. We have seen a significant increase in turbot prices the last six months. We are now at on average above 10 EUR per kilo, and that's up from around seven. The average sale price improved marginally, and the volume was up 16% compared with previous quarter, but the growth is still not on target at our new farm in Iceland. The caviar prices increased during the quarter, but volume was down, mainly driven by seasonality.
Fair value adjustment of inventory at a gain of 0.6 compared to a gain of $0.3 million in second quarter of 2016. I'll skip this one. Stolt-Nielsen Gas, just a few word about it. We are kind of narrowing in and closing in on the strategy for our LNG strategy. We are focusing on really small ships, small scale distribution as I've mentioned earlier, but on the shipping side and on the receiving side. Either small storage tanks on the receiving side or floating storage on the receiving side. We are looking at several interesting projects, one in Sardinia, which is making nice progress. With the debt level that Stolt-Nielsen has post the JO acquisition, we will of course be careful in how aggressively we go into this market. Once we get long-term contracts in place, we will most likely take FID both on ships and on terminals.
That completes my part of the presentation. Jan will take you through the financials before we answer questions.
Thank you very much, Niels. Good afternoon, and good morning to those on the phone. I will cover and give a few more comments to the financial results that we have released today. I will also give some guidance on some of the P&L line items as I normally do. We have filed our nine months financial statements with OSE today. The press release, this investor presentation, and the interims, you will also find on our website. Going to the next slide, net profit. You can see here that operating profit before one-offs is down. It is down from $73.4 million, down to $57.7 million in this quarter. Half of this reduction we talked about earlier is the swing in the hedges that we have for our tanker business.
Basically what has happened between the second and the third quarter is the fact that the forward, the margins or the spread on the hedges have come in significantly. We took a big $6.5 million uplift on the hedges in the second quarter, and we had to adjust that as the spreads came in. When that being said, I think this is important, I do not think that many of you guys sitting here or, if you will, other analysts, made adjustments for that in the research material that we have seen. Obviously, nobody can foresee it. Now as we are already one month for us into the next quarter, we have seen the increase in the bunker prices significantly, now above $50 a barrel. As a result, there will be an increase now if you were to market the hedges.
To remind you, the hedges covers now 50% of the bunker requirement that we have through four COA cargoes covering the rest of fourth quarter 2016 and also 2017. 50% of the COA spot cargo-related rates. I would say that year-to-date, we are $1 million up. We have still mark-to-market. We are in the money. For us, those hedges that we put in place have exactly done what we wanted, which was to protect against quick rises in the oil price. I said that was half of the reduction. The other half is, as Niels has talked about, $4.6 million net, lowering the results in tankers, basically tanker trading. The others, terminals slightly up, STC the same, and then we got the fair value adjustments in Stolt Sea Farm a little bit against us, but not significantly.
Also, in terms of accelerated depreciation, you can see here that we took $3.1 million in the quarter, and we have taken $13.7 million for the first nine months of this year. What is this? Why do we call it accelerated depreciation? It relates to the fact that the steel price has come down so significantly tail end of 2015, during 2015, so that it has impacted the residual value of the ships. We decided at the end of last year to write off quicker the ships that are going to be recycled in 2016 and 2017. I think that is also very important. You see what is written, that year-to-date our results are down. Yes, you can see we have taken much more depreciation for the first nine months due to this that was not there in 2015. We also sold two ships and took a loss.
These were smaller ships, took a loss of $1.9 million in total in the year. That's part of a deal to sell four of the smaller ships. The next two will be sold in the fourth quarter, and they will be sold at a small profit. In terms of interest expense, it's down slightly. Of course, that ties in with the fact that we have repaid our bond issue, $300 million, which was more expensive. That has been replaced by drawing down on the revolver and other lower-cost facilities. Taxes are also a little bit up, but that is really because of the fact that we have higher earnings in our terminals in the U.S. and also in Australasia.
Just a comment about the nine months, because I think this is important to understand that the operating profit before these one-offs were actually up for the nine months when you compare 2016 to 2015. If you then look at the accelerated depreciation, you take into consideration that we had a gain of nearly $20 million when we closed down a defined benefit plan in the U.S., you can see here that hit the nine-month results for 2015. Those two items alone explains more than the drop in the bottom line for the first nine months of this year. Going to the balance sheet slide. Shareholder equity, $1.4 billion. That is up from $1.85 billion.
Improvement there, of course, it's the earnings that we made that has gone through retained earnings, but also a positive impact on OCI, other comprehensive income, where, among other things, the improvement in the Golar investment we made has had a positive impact. Debt, $1.9 billion, and that's up from $1.85 billion. The fact that it's more or less stable means that the capital expenditures that we've had more or less has been paid or funded by a reduction in our cash on hand and also cash from operations. I'll come into that a little bit later. Debt to tangible net worth, 1.19 to 1. The 1.26 Niels was referring to is what we expect at the end of the year before the acquisition of Jo Tankers. With Jo Tankers, it's, as Niels said, 1.53. EBITDA ratio to interest, 4.52. That has come down from 4.82.
Cash and, if you will, the liquidity, when you include the unused committed lines, is at the end of the quarter, $427 million. In terms of fixed to variable debt, 76%, almost 77% is fixed, and less than 24% is variable. Average interest rates have come down from just under five, so 4.9 to 4.57. I mentioned the $300 million bond, one that we paid. That had a coupon, after we had fixed it, of 6.61%. Of course, the savings here in interest relates then to the fact that we drew down on the revolver instead. We also had some other full impact of some other very attractive container financing, which brought the interest down to the 4.57. Again, for the fourth quarter, interest around $22 million.
I don't think that that is going to change much when you take the Jo acquisition into consideration because Niels said that we expect to close by the end of the fiscal year. Our fiscal year is November 30. We are already in the first week of October. The interest rate will not be significantly impacted. Just looking at the liquidity position after we have closed the Jo deal, we still believe that it is going to be just shy of $300 million. That is taking into consideration, and Niels gave you the details on how the loans are, but this is all the debt that will come on our balance sheet from the acquisition. Going to the cash flow. Cash flow from operations, $90 million, up from $82 million.
I think the only thing worth mentioning here is the fact that we have been a little bit more aggressive on collections of our receivables, that has had a positive impact on our working capital. If you look at the capital expenditures, just over $100 million, most of that relates to the ships. We took delivery of the first new building ship, new building in China, Stolt Pride. We also had projects that we entered into on the terminal side, and as you heard, we took delivery of the last containers in STC. Overall, just under $100 million. I will come back to give you the total picture for capital expenditures a little bit later. During the quarter, a lot of financing activities took place. We repaid SNI01, $300 million.
We prepaid $74 million of ship financing loans, this was aimed at freeing some of the collateral so that we could improve the collateral utilization by putting those ships into the new revolver that we are negotiating. If you will, that took $74 million. Then we had $122 million of regularly scheduled principal payments with the banks. On the other side, some of you may know that we did go in and tapped $130 million in various bond issues we had. We drew down in connection with the delivery of the first new building in China, we drew down $57 million. We also drew down on a top-up financing of $45 million on a facility that we have with Danish Ship Finance. Finally, the last $45 million came from drawing down on our line of credit.
Just to have said that because it is not in the slides, we are renegotiating our revolver. It is going to be brought up to $650 million. We have the approvals we need, and we expect to close within the next, let's say two to three weeks, if not sooner. Again, at the end of the day, you can see here that the cash impact from all of these transactions has brought the cash on hand from $150 million to $275 million. Going to the EBITDA slide, which is slide 31. In these slides, we have, of course, taken out the unrealized gain on the bunker hedges. We have, of course, taken out any impact on fair value adjustments, positive or negative in Stolt Sea Farm, also any gain or loss on sale of assets. In the EBITDA slide here, you can see that Stolt Tankers is down basically $6 million overall.
That's the true contraction of the tanker market. Terminals, you can see basically a little bit flat from an EBITDA point of view. Tank Containers, you can see a $1 million improvement. Stolt-Nielsen consolidated, we're basically down from 118 to 112, and that reduction is the $6 million that you basically see in Tankers. For the full year 2016, i.e., nine months with $347 million EBITDA, which compares to $243 million for last year. A&G expenses, not really much to say. All our businesses benefit from a stronger dollar than what they had overall in the second quarter, even though the dollar has come off a little bit now lately. The main reason for the increase here is we had to true up our profit sharing and long-term incentive plan provisions, and that is with as much as $1.9 million that has hit the third quarter results.
Going forward, we're basically guiding at $53.4 million. Looking at the next slide 33, depreciation and amortization. Again, very much in line with the second quarter. We got the new ship from China in July. We also sold some ships. Overall, you can see for Tankers, it's slightly down. Terminals, a little bit up. The rest is more or less the same. In terms of guidance for next quarter, we're saying $60.6. That's, of course, we will take delivery of yet another Chinese new building. We also have three smaller ships that we've had in the service that we have exercised our purchase options on previously in the year, but the cash out to complete the transaction will be in the fourth quarter. Slide 34 profit joint ventures. Again, $8.6 versus $8.8, very much in line with the previous quarter.
Tankers, little bit down because that ties in with the contraction we've seen in the earnings in the pool at the tanker level. The rest is more or less the same. We expect that contraction, if you will also go into the fourth quarter, so we've scaled back the tanker profit from the JVs in the fourth quarter. The guidance is $7.5. Taxes, I think I also mentioned earlier, improved results on the terminal side in U.S. and Australasia. We had improved earnings on the rail side in U.S. I said I was going to cover the capital expenditure, the big picture. Year to date, we have $226 million.
Of that, a little bit more than $100 million was in the third quarter. You can see the fourth quarter, including the Jo Tanker acquisition, is bringing the third quarter up to.
Ladies and gentlemen, we are experiencing a momentary interruption. Please stay on the line and we'll continue the conference in a moment.
Run down the debt. As you can see, the commitment.
Okay, now.
Jaro? Hello? The commitment is being leveled up very quickly. I think it's just important to make that point. Next slide, which is the debt maturity profile. The blue are regular scheduled bank payments, principal payments. The green are bullets, end final payments under borrowing facilities, and the orange are bonds. You can see the next bond payment now is not before 2018. The 2016 bullet here which looks big, that is, we are prepaying, I said, a ship loan so that we can free those up and put those ships into the revolver. In 2017, here we have in terms of the green part, that is, first of all, the short-term loan of $125 million that we need to repay or refinance in connection with the JL acquisition. There is a short-term tranche there, and it's also the refinancing of our terminal in Singapore.
That is actually not due before later on. We've already started to work on that replacement. As far as the debt side is concerned, both the repayments and new transactions we're working on seems to be very well in hand. Yes.
Thank you, Jan. Takeaways. Third quarter net profit, $22.1 million. EBITDA of $111 million. Third quarter analyzed EPS, earnings per share, almost $2. P/E ratio of 6.87 and price to net asset value of 0.53. The current dividend yield, based on today's share price, is 7%. We have, as Jan showed you, good liquidity position with approximately $430 million available at the end of August through our revolving credit line and cash on hand, and CapEx is partly funded. Good performance in Tankers, steady in tank container results in a competitive market. Turnaround in Terminals has started. Our entry into the LNG space will leverage our experience in chemical logistics, targeting small scale LNG demand. Just to talk a little more about the chemical tanker market and what has happened. We've always been quite conservative in predicting the future of the chemical tanker market.
I think that the reports that I've seen has been a little too negative. There was a summer slowdown. We talked about the primary market, U.S. Gulf to the Far East. We saw that the traders pulled out. There was basically no trader volume, because the margin on the trades disappeared. We subsequently have seen them come back again. During the summer months, July and August, they weren't there. Now we're actually seeing traders coming back. Volumes in the spot market is starting to pick up. Another significant impact was also a big part of the business that we do is acid from Africa to India. Those yearly negotiations were ongoing, and they hadn't been completed. As a result, less acid volume, which takes up a lot of stainless steel space, were not moving.
We're now seeing that the acids are now moving back again to India. The contract nominations in general has been healthy. Even though the spot rates have fallen and lower volume in the spot market, I think it's very much driven by these factors and seasonality. If you look at the nomination that we get under the contract, which are very good indicators, all the major chemical companies, they move their products on their COAs. The nominations under those contracts continue to be healthy. Yes, there's a downturn, and yes, there will be pressure on our COA renewals because of the sentiment right now. I'm cautiously optimistic that once the volume starts picking up again in the spot market, that we won't see any big dramatic change.
If I had to predict what the fourth quarter in tankers would look like, I would say it will be similar to the third quarter. That completes our presentation and our comments, and we will open up for questions, and we will start here in Oslo. Any questions? Yes.
On page 29, you do give an overview of expected operating cash flow for the fourth quarter. Is that on the bottom right there. Because you had $90 million in the third quarter, but $67 million of working capital. Is that based on a similar outcome from third quarter, or how do you get to that number?
In there, it's basically the third quarter plus some takeover expenses tied to the Jo transaction.
Okay. When you say fourth quarter is expected to be fairly similar on tankers, that means that it's also fairly similar on containers and terminals.
I would say that the terminal should continue to show small improvements
They will come through. Stolt Tank Containers?
I would say that Stolthaven Terminals, gradual improvement. I don't think that we will see a dramatic change in Stolt Tankers. Stolt Tank Containers, we hope that we have seen the floor of the margin squeeze. We saw that from the second to third quarter. I'm cautiously optimistic that we will see not a pickup, but similar levels on the Stolt Tank Containers side, too.
Since the third quarter, you actually reduced some final bit to CapEx guidance, right? If I read the chart correctly, slightly down just for the JV position. Is that fair to say, or?
Yeah.
The question relates to the LNG investments, because that's been hanging over you for several quarters now. When do you think we should see addition? There has been market chatter about two ships ordered, should we expect anything anytime soon or how close are you being?
The situation is that we have two ships ready to be confirmed. We are working on off take agreements on the Sardinia project. We have gotten volume, not only LOIs, but proper off take agreements, signed agreements. That's what we're working on, the wording of the agreement. I want to make certain that we have a proper solid off take agreement. We will discuss how much risk we will bear if we wanted to have 100% utilization on the ships before we take an FID. That's what we're working on now. If you ask me when we will take a decision on the ships, we will most likely do it in the fourth quarter.
You have one more question.
One or two ships, yeah.
One more question, because you have $1.2 billion of remaining CapEx, $1.1 billion remaining CapEx, mainly from now through 2018. You have $1 billion in debt maturities. That's 80%-90% of the current enterprise value in business. You're comfortable then going ahead with investing $100 million, $150 million in on another leg.
I agree with you that after the Jo acquisition, we will be more cautious in taking on additional debt and particularly in LNG. If we have a solid deal in place, we will look at it. But at all time, we will look at what our debt situation is, how the market develops in each of the businesses before we take on significant additional debt.
Thank you.
Any other questions? Okay, operator, any questions amongst the callers?
For those on the telephone, you may press star one to ask a telephone question. That's star one for any telephone questions. We have no callers in the queue at the moment, sir.
All right. If there's no further questions, we will complete the presentation. Thank you for joining us.
That will now conclude today's conference call. Thank you for your participation, ladies and gentlemen.