Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Avance Gas Holding presentation of fourth quarter 2019 earnings. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session, at which time, if you wish to ask a question, you need to press star one on your telephone. I must also advise you that the meeting is being recorded today, on the 27th of February, 2020. It is my pleasure to introduce Mr. Ulrik Andersen, Company CEO, alongside Mr. Peder Simonsen, CFO. Please go ahead, gentlemen.
Yeah. Good afternoon, and welcome to Avance Gas fourth quarter earnings release call. My name is Ulrik Andersen, and I'm joined by our CFO, Peder Simonsen. Together, we'll take you through the main highlights of the results we presented earlier today. Peder will present the financial part, whereas I will talk about the market and about our two dual-fuel new buildings which we ordered last year. After the presentation, we, as always, welcome any questions. Without further ado, Peder, the word is yours.
Thank you very much. Ulrik, I'll move to slide number three, looking at our Q4 financial highlights. We achieved a TCE rate of $51,000, just above $51,000 per day. This compares to $42,700 in the previous quarter. The effect of IFRS 15 adjustments, as we have highlighted the last quarters, was smaller this quarter than previous. On the discharge-to-discharge basis, our TCE rate was just below $51,500 per day. We achieved a 100% commercial utilization rate, and with 13 ships out of 14 in the spot market, we are very pleased with that. That contributed to the strong rate that we achieved. Our one ship that we have on TCE is with Wilhelmsen, and that TCE was extended until December 2021 during the quarter.
Looking at our OpEx, it came in at just below $7,700, which is down from just above $8,000 per ship day in the previous quarter. Our ANG was impacted, as it has been for the past quarters, by one-offs and came in at $1,200 per ship per day, up just around $200 per ship per day. For the full year 2019, our TCE came in at $35,000 per day, our OpEx just below $8,000 per ship per day, and our ANG just above $1,000 per day. This is in line with what we have guided previously. I think the ANG we can expect to come down further as the one-offs are taking out of that number. Also, when we get more ships delivered, as Ulrik will come back to later on.
During the quarter, as we previously have announced, we entered into two shipbuilding contracts for two dual-fuel VLGCs for delivery in Q4 2021 and Q1 2022 at DSME. We have also, on the back of the expansion of our scrubber program, found it sensible to get in place a financing of that CapEx. We have established a $50 million scrubber financing, which equals approximately 75% of our scrubber CapEx established with the existing banking group and within the financing that we have under the $515 million credit facility. This financing will not incur any other limitations or otherwise increased costs. It will be repaid over the remaining tenure of the financing until 2024 and will otherwise have the same terms as under the existing facility. We achieved a net profit of $37 million, approximately, or $0.58 per share.
The board announced a dividend of $0.30 per share for the quarter, which represents approximately 50% of net profit. Looking at our balance sheet, we had a cash position of $86 million at the end of the quarter. We had, net of financing fees, a debt position of $453 million. We then had shareholders' equity of $411 million at the end of the quarter. As you can see, the cash flow from operations was strong for this quarter, reflecting the higher freight rates and also payment of freight. This was offset by the repayment of the $35 million tranche that we announced before our last earnings call that we had repaid in November last year. We then moved to page four. We had, as mentioned, 100% commercial utilization for the fourth quarter.
Of those days, 97% was in the spot market and 3% was relating to TCEs. This picture is also in the full-year numbers, but we had 98% commercial utilization and 3% TCE, while 95% in the spot market. In terms of off-hire, we had marginal off-hire of just 1%, and 99% of calendar days were available days. This also is the case for the full-year figures. As we have been discussing in the previous quarters, we have a project of installing scrubbers and dry docking six ships and with further dry dock three ships in addition to that during the remainder of the year. In Q1, we have three ships that will be completed, three to four ships being completed during the first quarter. 70% of all these estimated dry dock days will be completed in the first quarter.
We are dry docking our ships in a Malaysian shipyard, which, in the view of the coronavirus, is impacting most of shipping and especially also shipyard capacity and efficiency. We are happy to be not dry docking our ships in China. We are, to some extent, exposed to the coronavirus in this regard as well due to some of the equipment being sourced from China, which is being delayed somewhat. We are constantly programming our fleet and making all adjustments possible to reduce the off-hire and reduce the waiting in connection with the dry docking program. We now expect the six ships program being completed by mid-May in Q2. We are also considering what to do with the last two ships in the eight-ship series that are due for dry docking at the first special survey this first half or the first nine months of this year.
We may consider scrubbers or other options for these ships. We have an estimate of 45-50 days now off-hire in connection with the dry docking and scrubber installments. Yes, as mentioned, 70% of these days will be estimated to be covered by completion of Q1, whereupon the majority of these ships will be out trading in what we believe to be a positive spot market. Just an update on the cash break-even, if we move to slide five, we have here included the cash break-even, including the new financing, which then has brought the cash break-even slightly up to approximately $22.50, which is in line with what we have had historically on average as a normal run rate. It excludes the dry docking, but, as I said, it includes the new financing.
On the basis of that cash break-even, which we believe is very competitive, you can move to the graph on the right-hand side where we illustrate the annual pre-cash flow generated by the company with our 14 current ships and based on the cash break-even on the left-hand side at different freight rate scenarios, moving $10,000 per day above the cash break-even. This is also adjusted for the dry dock days that I have mentioned previously of the eight wind-class ships and also the Advance, which is due for intermediate survey in Q4 this year. As you can see, it is approximately $50 million per 10,000 in pre-cash flow and at the estimated, which is around the analyst average of $42,500 per day. We generate a pre-cash flow of $100 million per year. On that note, I'll give the word back to Ulrik.
All right. Thank you. A quick throwback to Q4 before we look ahead to see what generated the result that we have delivered today. This Q4 delivered quite unusual, as the market stayed strong more or less throughout the period. Normally, what happens in Q4 is that the U.S. consumes more and exports less. It means that the demand for vessels drops, and thus also the freight drops. However, this quarter, the U.S. production was so high that the export did not drop. In fact, October set a record as the month with the highest export of LPG ever. This was, of course, one of the main drivers in keeping the market up. Other factors impacted as well. We do not have time for all of them now, but one of them was, or another one of them was the attack on the Saudi oil installations.
Although they happened at the end of Q3, the effect really only materialized in Q4 and sort of kickstarted, what can you say, the quarter. It was not all rosy for the owners in Q4 because as we got closer to the deadline for IMO 2020, i.e., the 1st of January, the new bunker regulations were kicking in. As owners gradually started to procure and burn the more expensive low sulfur fuel line, but being unable to pass on that bill to the charters, the earnings did erode to some degree over the course of the quarter. Of course, ultimately, we are still satisfied with the result. We must say also that the quarter developed like it did was not a huge surprise to us. We had been speaking about this already back in Q3, that we thought the market would stay strong.
We believe it justified our decision to keep a large part of the fleet in the spot market. Turning the page to page number eight, let's try and look a little bit ahead and see what is in store for us. Looking at the supply side first, we still see a modest order book. It stands at 13% of the fleet, which is unchanged since we had the last call. Some vessels have been delivered and some have been ordered, but ultimately, we stand at the same place. Eight orders have been added to the order book, of which two, of course, are Avance , our own. I will speak more about those two new buildings at the end of the presentation.
The historic data for scrapping shows that the average scrapping age is 28 years, which actually signals that there would be some scrapping this year with 11 vessels above 28 years of age. However, given the strong outlooks that we see, we don't expect much, very limited scrapping activity over the next 12 months, if any at all. Two other factors have been influencing the supply side and positively, you can say, influenced the supply side in recent months, but also going forward. Naturally, the COVID-19, the coronavirus, which is on everybody's lips, has had quite an impact on the supply side. Also, on the demand side, which I'll talk about a little bit later, but on the supply side, it has been a positive effect despite the regrettable situation. What happens is that China has been, what can you say, not as efficient as we have seen previously.
We have seen vessels being rerouted from China to, for instance, Japan. We have seen vessels being stuck in load ports for longer than usual. We have seen quarantines on vessels after they have discharged in China. Naturally, we have also seen delays in the scrubber installations. Peder talked about it, but we have seen that for both our own and also for other owners who have had their vessels in dry docking and scrubber retrofitting in China. All of these things, of course, not making the fleet utilized as efficient as it could be, which creates links and which is, all other things, equally good for the rates. We continue to see IMO 2020 disruptions. The effect is definitely wearing out. It's not as impactful as it was before the turn of the year and into the new year, but we still see some scrambling around for bunkers.
We still see, of course, the delays in the dry docks, which are partly due to COVID-19, but also due to owners installing scrubbers, which takes longer. All in all, the supply side is looking reasonable with some disturbances at the moment, but with IMO 2020 disruption wearing out over the course of the next two to three months, in our view. If we turn the page and look at the production side, we will today look at the U.S. because it's the most important area. U.S. production has, of course, gone from strength to strength since 2013 and even before that. Before we jump into the graph, it's important to remind everyone that production is not equal to export, and export capacity is also not equal to export.
Of course, the higher the production in the U.S. is, the more product is available for export, and the cheaper it will also be. Last year, the production increased with 8.5 million tons. It's quite significant. It's 11%. For this year, the EIA forecasts a growth of 7%, approximately 6 million tons. As it appears on the graph, a slight drop in production is expected for 2021. Naturally, as I just stated, we would like to see as high a U.S. production as possible. We are watching the developments here for 2021. What we see now is that a slight drop in production, it's around 2%, is not a catastrophe. We think there's plenty of product available for export also for 2021. As I said, we will be watching this space. On the capacity side, the expansion projects, they continue.
Most notably, we have had Enterprise wrapping up their latest expansion. It was due to be completed by the end of last year. As we have been able to see, we think that the expansion is really only about fully completed around now. We still have more projects to come from Targa and Enterprise, potentially Margaret Hook and other suppliers. We are pretty confident about the export capacity not being a bottleneck in the years to come. All in all, yeah, we remain confident that the U.S. will continue to drive the VLGC market in the years to come. Turning the page to page number 10 and the demand side, the question is, of course, is there demand for all this additional LPG? We believe the answer to that question is yes.
Where we would be seeing this increased demand is primarily in the Far East, Asia. Today, 80% of the global demand is in the East, mainly driven by China and India. Also South Korea, though, and other Southeast Asian countries. Last year, the import to China went up a staggering 23%, and India with 20% right thereafter. Next year, we still expect, maybe before I say this, I should point out that this forecast we are looking at now was done before the coronavirus. I will talk about that in a moment. In any case, we still, despite the coronavirus, which we think is a bump on the way, we still expect a lot from the Chinese import. As I just mentioned, the outbreak of the COVID-19 happened after these figures we have here. Of course, this will have an impact.
The situation is dynamic, and it is too early to establish the exact impact of the virus on the Chinese import. I think we can safely conclude that in the short run, fewer tons will be imported. This is for sure. The good news is that China announced a few weeks back that the previous import tariff of 25%, which was imposed on U.S. LPG, will be reduced to just 1% from March. What we believe is that our assessment of the situation is that once the COVID-19 is under control, we will see a bounce back in the Chinese import, which will hopefully act as a catalyst and an accelerator on the freight market as well. We have seen drops in the freight market given the coronavirus, but so far, we have avoided a huge drop. We hope that to continue.
Overall, what we are looking at here is that we have a modest order book and no additions coming because it takes two years to build a vessel. We have good U.S. production, certainly for the next 12 months or more. We have strong demand as well. Overall, our assessment of the situation is still positive, particularly for this year. Turning the page to page number 12, I would like to talk about our new vessels. As announced last year and as Peder presented earlier, we have entered into a contract agreement with the Korean shipbuilder DSME for two VLGC dual fuel vessels. It means they can burn LPG, which we are transporting, and they can burn compliant IMO 2020 fuel as well.
Before I wrap up, I just want to spend a few minutes talking about these new vessels and why we consider them a milestone for Avance Gas. As it appears, the vessels differentiate themselves from pretty much everything which is currently on water. The vessels offer, right here in the box, unrivaled performance, and they are even reducing emissions at the same time. What these vessels offer is a significantly lower bunker consumption. If we look at the average vessel on water, we estimate around 20% less bunker consumption while steaming. At the same time, they burn cheaper fuel. They burn LPG. This is, of course, a very strong proposition: lower consumption, cheaper fuel. Other advantages worth mentioning is that we avoid mixing risk of bunkers.
What is happening after IMO 2020 is that a lot of different specs on fuel is available that all comply with the new regulations. If you mix these, it can make the engine unstable, which is obviously not good, as the engine may, in worst case, break down. We avoid that. Also, we have reduced bunkering time, currently around 3%, sometimes even more. Time on a voyage is spent on bunkering, waiting for batches, getting the bunker on board, etc. With these last assignments and cargo intake we have, we can bunker once to perform a full round trip from the U.S. to the Far East. It also means that while we are taking cargo for our charters, we just continue taking that cargo for a few more hours because the pumping capacity is much higher at the terminals.
We avoid all of this risk with waiting for batches and batches that can seduce bad weather, etc. These vessels are also able to achieve higher speeds. It means, of course, that if you can perform a voyage faster, you have the same revenue, you get higher earning per day. Naturally, a positive thing. We have constructed and elected to construct these vessels with a larger cargo intake. These vessels are 91,000 cu, which is quite a lot larger than the standard vessels today. It means not only will we have LPG for the propulsion, we also have additional capacity for extra cargo, which obviously we can generate revenue on, which again will help us increase the daily earnings. The green profile is, of course, something that is offering us more attractive finance terms.
Today, the banks are very interested in financing and green projects and bringing down the emission of the loan portfolios. This means that we can achieve a lower break-even with this vessel than we would have otherwise been able to. Finally, the vessel is designed as a pure dual fuel vessel. It means that we can avoid deck tanks, which will, of course, require more engine capacity and will mean that the vessel will burn more. We can also use shaft generators. It means that we can generally burn LPG while we are steaming and not use compliant fuel on our accelerators, which some other retrofit solutions will have to do. Finally, of course, we are reducing emissions, and we think that's very positive. We are delivering on our sustainability agenda with this.
As you can see, we are reducing the emissions with, yeah, we are basically wiping out SOx and particle pollution, but also bringing down CO2 and NOx with significant percentages. What we look at versus the requirements that we expect or the legislation we expect from IMO is by 2030, we will be looking at reducing CO2 emissions by 40%. I think what is worth noticing here with these vessels is that already today, by the technology we know that is available and by slow steaming and combining these two, we believe we are very, very close if we cannot already comply with the 40% reduction. Mind you, that's eight years ahead of schedule for the IMO 2030 timeline. We think this is a very, very big leap and the right direction to go for us.
With that, I want to conclude today's session by just wrapping up as we see on page 13. We believe the supply situation is looking positive. We do not expect many orders, and the order book is under control. We still see strong growth. We see further expansion of the U.S. export capacity and increasing demand. We do have the COVID-19 still hanging over our heads. We hope that gets resolved sooner rather than later, but we do not deem this as a showstopper for the otherwise positive story. We do have dry dockings, as Peder explained, in Q1, and they will, of course, have an impact. Once we are through Q1, we have a clean runway where we are able to generate, hopefully, a lot of cash, as was also shown on the graph. With that, I want to conclude today's session.
I will hand the word back to the operator. If there are any questions, we are very happy to answer those. Thank you very much.
Stephanie, thank you. Ladies and gentlemen, if you'd like to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, it is star and one for any questions. We do have a request from the line of Dennis Angelopoulos of ABG. Please ask your question.
Hey, guys. How are you doing?
Hi. How are you? Fine. Thank you.
Very good. Just the first question on bookings. You guys in the previous quarters have guided towards bookings, and from what I can see, you haven't guided in this quarter. Should we just utilize year-to-date numbers as a proxy for what you've booked to date?
I think, as we explained, it's together with the coronavirus on top of an otherwise very difficult quarter in terms of a lot of ships going out to dry dock and how that will impact our results is very difficult to say. We have chosen not to guide. It's more a reflection of that rather than, I mean, the market is the market, and the market has remained very strong so far this quarter, adjusted for the seasonal effect. I think, as we previously have seen, the market normally is with a time adjustment for when you fix the ships until it actually comes into your books is a good proxy, as we have asked before we started to guide. Once we have, and I think that's probably still the best proxy.
The market is still volatile, and to use the year-to-date market and following the market, I think, is the best you have.
Okay. With regard to the remaining CapEx, you guys have the new builds, obviously, and then the scrubber retrofits. How much is remaining on both of those? What's the timing and the cadence for the installments on the new builds?
The new builds will have only $16 million due for payment this year. The remaining is then in 2021 and then coming into 2022 with the final installment being, I mean, 60% of the payment. I think we went through this last quarter. When it comes to the CapEx on the scrubbers, that falls due when the ships are being delivered or up until the ships are being delivered, and also some of this falls due after. We have $12 million out of the $32 million paid already, and $20 million is remaining as of today.
All right. Thank you very much, guys.
Thank you.
Once again, it is star and one for any questions. We currently have no further questions. Please continue.
Yeah. I think that concludes the Q4 presentation, and thank you for joining.
That concludes the presentation today. Thank you for participating. You may disconnect.