Hello and welcome to today's International Seaways second quarter 2022 results. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to James Small, General Counsel. The floor is yours. Please go ahead.
Thank you, Elliot. Good morning, everyone, and welcome to International Seaways earnings call for the second quarter of 2022. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates.
Those statements may address, without limitation, the following topics, outlook for the crude and product tanker markets and changes in trading patterns, forecasts of world and regional economic activity, and of the demand for and production of oil and other petroleum products, the effects of the ongoing conflict between Russia and Ukraine, the company's strategy, anticipated cost savings and other synergies and benefits from our merger with Diamond S, the effect of the ongoing coronavirus pandemic, our business prospects, expectations regarding revenues and expenses, including vessel, charter hire and G&A expenses.
Estimated bookings, TCE rates and/or capital expenditures in the third quarter of 2022, the remainder of 2022, or any other period, projected scheduled dry dock and off-hire days, purchases and sales of vessels, construction of new-build vessels and other investments, the company's consideration of strategic alternatives, anticipated and recent financing transactions and any plans to issue dividends, the company's relationships with its stakeholders, the company's ability to achieve its financing and other objectives, and other economic, political, and regulatory developments globally.
Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control, that could cause actual results to differ materially from those implied or expressed by the statements.
Factors, risks, and uncertainties that could cause International Seaways' actual results to differ from expectations include those described in our quarterly reports on Form 10-Q for the first and second quarter of 2022, our 2021 annual report on Form 10-K, and in other filings that we have made or in the future may make with the U.S. Securities and Exchange Commission. Now let me turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois?
Thank you very much, James. Good morning, everyone. Thank you for joining International Seaways second quarter earnings call to discuss our strong results. In the second quarter, we generated our highest quarterly net income since our spin-off nearly six years ago. We closed our merger with Diamond S just over a year ago. The 40 MRs gained in the merger earned incredibly well in the second quarter, and yet they are posting TCEs that are 40% higher quarter-over-quarter for the book days in the third quarter. Refined product oil demand, specifically for gasoline and middle distillates, is up, despite rising refinery utilization. The Seaways fleet of 78 tankers is providing us with a strong foundation to capitalize on rising tanker rates as oil demand continues to recover from the negative impacts from COVID. On slide 4, we summarize our second quarter highlights and our recent developments.
For the second quarter, we generated net income of $71.5 million, $1.43 per share, excluding special items. Adjusted EBITDA was $112 million, led by the product carriers with our MR revenues coming in at $15,000 per day above their breakeven levels. We have a sizable fleet and a substantial operating leverage, not only in the products, but also in the midsize crude. We expect to continue capitalizing on favorable market conditions during the remainder of the year and into 2023, including in the recovering VLCC space. With the exception of the Aframaxes, which are closely tracking the second quarter, rates booked in the third quarter on every sector are counter-seasonally outperforming the second quarter.
Tanker fundamentals are anticipated to remain attractive, supported by growing demand, limited fleet growth, and higher utilization from longer distances between oil supply growth in the West and demand growth coming from the East. Turning to the bottom left series of bullets, our fleet optimization program focused on monetizing our older non-core vessels. I would just like to highlight that we sold two Panamax vessels for recycling in the second quarter with an average age of 19 years old. We exited our non-core 2006-built Handy fleet and sold one 14-year-old MR ahead of our third special survey and the commensurate ballast water treatment system installation and expense. The updated net proceeds reflect adjustments for positioning costs and the timing of delivery. We have sold 24 of our oldest vessels and least efficient vessels with an average age of 16 years.
We've lowered our fleet age profile to below 9 years old and generated aggregate net proceeds of approximately $165 million after all costs since July of last year. Asset values remain at the high end of the 10-year averages for our fleet. In July alone, vessel values track our fleet appreciation at nearly $200 million or $4 per share. We will maintain our fleet discipline, including opportunistically looking to shed older tonnage to maximize returns. On the top right-hand of the slide, we highlight balance sheet gains made in the quarter. We ended the quarter with a total liquidity of over $450 million. This includes $232 million of cash and a $220 million revolver capacity.
Using recent values, our net loan-to-fleet value is extremely healthy, 34%, one of the lowest among the peer group. Our increasing liquidity is a direct result of actions taken during the quarter aimed at unlocking value for shareholders while enhancing our financial strength. This included successfully selling Seaways' 50% stake in our FSOs for $140 million in cash proceeds. After a process that lasted several months evaluating all of our options to monetize the joint venture to streamline our tanker fleet, we were pleased with the favorable outcome of this disposal. We captured the implied value inherent in the fixed-rate contracts on the FSOs. We closed on a new credit facility that saves us $60 million in mandatory repayments in 2022.
We delevered by $95 million, making a $70 million payment on our revolver, and we followed that with the $25 million redemption of our 8.5% baby bonds in August. We have continually lowered our cost of capital. This is consistent with our strong track record over the past five years. Jeff will speak more about these specific steps and actions in his portion of the call. Returning capital is a major component of Seaways' strategy. In 2021, we returned $57.6 million or 9% of our market cap amidst the most challenging tanker market conditions we have seen in decades. We are proud to build upon our consistent track record of returning capital to shareholders. During the quarter, we doubled our quarterly dividend to $0.12 per share.
Over the last 10 quarters, we have returned over $100 million to shareholders in our regular quarterly dividends, $47 million in buybacks, and a special dividend of $32 million in connection with the conclusion of the Diamond S merger. Today, we've announced another boost in our program with the board's authorization to upsize our share repurchase program to $60 million and extend the expiration of the program to the end of 2023. We intend to use this program as one of our options to return capital to our shareholders over time. Our balanced capital allocation approach, number one, consistently returns to shareholders. Number two, allows for opportunistic fleet growth and renewal at the low point in the cycle, such as the Diamond S merger and the ordering of our 3 newbuilding VLCCs.
Number 3, maintaining a strong balance sheet with a diversified debt portfolio that makes principal payments each quarter. Slide 5, we update the current tanker rate environment relative to last year and the range of the earnings over the last 10 years. The larger chart on the left really exemplifies the significant strength on display in the MR rates since the start of the second quarter. As mentioned, they continued to climb in the third quarter. This class of ship has not seen these types of rates since the super cycle in the mid-2000s. As energy security becomes a priority and Russia continues actions in Ukraine, we are seeing Atlantic Basin product demand soaking up tonnage with products sourced from the United States, the Middle East, India, creating long-haul voyages for our vessels.
Clarksons projects 2022 product ton-mile demand growth to clock in at just about 10%. This is happening while South America is recovering from the COVID crisis and demand there has been increasing in Argentina, Chile, and Colombia. With China slowly but surely coming out of its lockdowns, they have been drawing down on the inventories this summer in June and July. They are now starting to ramp up their refinery runs. Seaborne transportation is enjoying strength in products and building on a nascent recovery on the crude. Aframax and Suezmax earnings are nearing their 10-year highs, while our scrubber-fitted VLCCs are building to levels approaching breakeven. Overall, this slide illustrates our operating leverage. Turning to slide 6, we address underlying tanker demand drivers during a time when the situation in Russia and Ukraine continues to create volatility in energy markets.
Oil demand is expected to be about 101 million barrels toward the end of 2022 and further increase in 2023 to approximately 102 million barrels per day. The IEA actually puts growth at 2 million barrels per day in 2023. Of course, slowing GDP could certainly curtail oil demand growth. However, oil production growth, particularly in the West, led by the Americas, Norway, Guyana, is supportive of long-haul trade east and is a positive for tanker markets. As evidenced by the bottom left chart, refining margins remain robust, indicating healthy demand pulling refined products, leading to higher crude throughput and higher clean exports. We anticipate long-term changes to oil movements and trade patterns during this time related to Russia's invasion of Ukraine, and we continue to see cargoes moving longer distances.
In the bottom right chart, OECD inventories have been reduced to their lowest levels in a decade, providing less than 60 days of forward demand cover. SPR U.S. barrels continue to be released and exported as the world scrambles for crude. Combined with the need for further replenishment, this is supportive of seaborne trade and demand for tankers. Next, on slide seven, the main drivers of tanker supply remain positive for tanker earnings. At 5%, the overall tanker order book continues at the lowest replacement level that we have seen in modern record-keeping. The key, net fleet growth has been just 1% since June 2021. Over the last 10 years, the average age of the tanker fleet has increased to 12 years from the previous average of nine.
The bottom left chart illustrates the increasing incentives to recycle older tonnage based upon continued high recycling values, but meaningful volumes have yet to materialize in 2022. We have paired tanker new building deliveries against vessels turning 20 years old in the chart on the bottom right-hand side, and you can clearly see deliveries are dwindling. A number of factors continue to limit fleet growth. New building slots for tankers from reputable shipyards are well into 2025 as yards remain filled with contracts for other shipping sectors. Second, new orders have been tempered by uncertainty around future environmental regulations. Thirdly, new building prices are near all-time highs, limiting tanker owners from ordering.
We also continue to monitor the Russian-controlled fleet, which has been sanctioned by many of governments in the West and may reduce fleet capacity by 30 Aframaxes, 20 MRs, and many from other ship classes and sectors. We don't believe that we have seen the full impact of these vessels or them being out of commercial trading, and it may take some time before the full implications on trading routes and tanker capacity are realized. I'm going to now turn the call over to Jeff Pribor, our CFO, to provide the second quarter financial review. Jeff?
Thanks, Lois, and good morning, everyone. Let's go straight to reviewing the second quarter results in greater detail. Before turning to the slides, let me just provide a quick summary of our financial results. In the second quarter, we had an adjusted EBITDA of $111.7 million. Net income for the second quarter was $69.0 million or $1.38 per share, compared to a net loss of $18.8 million or $0.67 per diluted share in the second quarter of 2021. When excluding one-time items, net income was $71.5 million or $1.43 per diluted share. Now please turn to slide nine. I'll first discuss the results of our business segments, beginning with the crude tanker segment.
TCE revenues for the crude tanker segment were almost $60 million for the quarter, compared to $31 million in the second quarter of last year. Crude tanker revenues doubled year-over-year, largely due to the Aframax and Suezmax re-rates, coupled with more revenue days on the Suezmax fleet due to the Diamond S merger. In the product carrier segment, TCE revenues were $126 million for the quarter, which compares to $14 million in the second quarter of 2021. This very significant increase is attributable to the substantially higher spot rates for LR1 and MR sectors combined with a substantial increase in revenue days as a result of time investment.
Looking at the right side of the slide, adjusted EBITDA for the recent quarter was $112 million compared to just $10 million in adjusted EBITDA in the second quarter of last year, and $26 million in the first quarter of this year. These significant increases from prior periods represent a clear demonstration of our significant operating leverage to the tank markets. Now please turn to slide 10, where we provide a second quarter review and third quarter 2022 rate and earnings update. For Q3 bookings to date, we've so far booked 62% of our spot days for the quarter for VLCCs at an average of approximately $19,500 a day. 53% of our available Suezmax spot days at an average of a little over 33,000 .
50% of our available Aframax spot days at an average of about $32,000 a day. 43% of our available LR1 spot days at an average of under $31,000. On the MR side, we've booked 48% of our third quarter spot days at an average of almost $43,000 a day. Naturally, we caution you that these are indications of the average fixtures in our fleet, that may differ before earnings next quarter. Please turn to slide 11. The cash cost TC breakevens for the forward 12 months are illustrated on this slide. International Seaways overall breakeven rate is estimated to be about $16,500 per day.
Our breakevens are lower for the next 12 months this quarter due to the change in our amortization schedule with our first scheduled payment on the new credit facility in the fourth quarter of this year. As always, these are the all-in daily rates our own vessels must earn to cover vessel operating costs, drydocking costs, cash G&A expense, and debt service costs, which means scheduled principal amortization as well as interest expense. At this point, as I always do, I'd also like to confirm cost guidance for the remainder of the year for modeling purposes. We expect full-year regular daily OpEx, which includes all running costs, insurance, management fees, and other similar related expenses for our various classes as follows. VLCC, $9,000 per day. Suezmax, $7,760. Aframax, $8,200. LR1, $7,900.
For MRs, $7,200. We expect our drydock and CapEx expenses to be $55 million and $65 million respectively this year. As I mentioned, on our previous earnings call, these costs are related to ballast water treatment systems and other upgrades in anticipation of the 2023 EEXI requirements. For a more detailed breakdown of projected drydock, CapEx, and operating by quarter, you can refer to slide 17 appendix. Continuing with cost guidance, we expect 2022 cash interest expense to be about $45 million-$47 million, naturally higher due to increases in treasury bills. For the year, we expect cash G&A to be $33 million-$36 million, up mainly due to increases in costs on shareholder matters and project costs.
Finally, we expect $105 million-$110 million of depreciation and amortization. Now if we could go to slide 12 for our cash bridge. Moving from left to right. We began the second quarter with total cash and liquidity of $166 million. During the quarter, our adjusted EBITDA was $112 million. Equity income from JVs decreased $4 million. Proceeds from the sale of the FSO JV was $140 million. We expended $15 million in drydock and CapEx. We received $54 million of proceeds from vessel sales, $15 million from completion of two sale-leasebacks after fees and debt payment, and $24 million in net proceeds from swap terminations. This was offset by a $70 million revolver repayment, which of course is liquidity neutral.
Debt service on term loans and sale-leasebacks cost us about $22 million. Increased quarterly dividend was $6 million in quarter. We had a substantial negative impact on working capital and other charges of $72 million during the quarter. Most of this impact is due to the increase in receivables from pools due to rapidly rising rates, the doubling of bunker prices, and bunker payments in terms paid. As this stabilizes, we expect to reduce some of these with the natural ebb and flow of cash. The combination of all these factors result in a quarter-end cash balance of approximately $232 million, $220 million undrawn revolver for a total liquidity of $452 million. Now please turn to slide 13. I'd like to briefly speak about our balance sheet.
As of June 30th, we had $2.37 billion in assets compared to $950 million of long-term debt. In addition, we have $220 million available in credit facility that remained undrawn as of June 30th. Our net loan-to-value of our conventional fleet has been reduced to 37% as of June 30th, and as Lois pointed out, 34% using July guidance. Lastly, not included in the June 30th balance sheet, we paid a total of $25 million outstanding on our 8.5% senior notes, further lowering cost of capital. Turning to slide 14, we look at our total debt as of June 30th. You see our total debt balance is $1.06 billion, with $220 million of ongoing revolving credit facility.
As we've mentioned a few times, we closed on our new senior secured facility in May with an aggregate capacity of $750 million, composed of a term loan of $530 million, $220 million of revolving credit facility. The proceeds from this new facility were used to repay three existing senior debt facilities aggregating $575 million at the time we closed. Importantly, this new facility extended the maturity profile of our senior debt by more than two years, reduced our average interest rate on senior debt by about 15 basis points, saving us about $1 million in quarterly interest payments and approximately $60 million in 2022 through the updated schedule of mandatory payments.
This facility was just about two times oversubscribed, and I'd like to very much thank our top-tier bank group for their continued support. It's also worth highlighting that the covenant package is similar to the existing facilities containing enhanced sustainability-linked features, which we're very proud of. Seaways was the first New York Stock Exchange-listed shipowner and operator to link its financing to sustainability in 2020, and we remain committed to advancing initiatives that improve the environment and the lives of our seafarers. We detailed these sustainability features in the press release in our filings, so the last point I'd like to make is that our sustainability-linked features make up 95% of our senior debt, including ongoing revolver, 58% of our entire debt portfolio. That concludes my remarks. I'd now like to turn the call back to Lois for some closing comments.
All right. Thank you very much, Jeff . On slide 15, we provide you with Seaways' investment highlights in detail, which I would encourage everyone to read in its entirety. I summarize them here briefly. International Seaways have proven we will build value while preserving the balance sheet. We quickly captured over $25 million in synergies cost savings from the merger in 2021. Our enlarged fleet is steadily earning at today's strengthened rates. We are good stewards of capital, balancing consistent returns to shareholders with fleet growth and healthy financial metrics. The remaining payments on our new building VLCC installments are fully funded. Our focused and flexible operating model has allowed for us to expand and contract at appropriate moments in the cycle under a disciplined approach. The company is positioned today with significant operating leverage to capitalize in what we expect to be a robust tanker cycle.
Regional imbalances of oil are expected to continue and grow in distance from sources to consumers. This creates higher seaborne demand while the supply of vessels remains limited and likely will shrink as vessels age and are eventually removed from the commercial trading fleet. We are staying ahead of growing ESG imperatives, investing in the fleet to reduce our carbon footprint, keep our seafarers safe, and build a corporate culture of diversity and strong governance with appropriate checks and balances. We back this message up with transparent ESG reporting and sustainability-linked incentives in our debt portfolio. We are striving to continue to evolve these priorities and provide a meaningful platform for all stakeholders. Thank you very much for listening today. With that, operator, we would like to open the lines up for questions.
Thank you. For our Q&A, if you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Omar Nokta from Jefferies. Your line is open. Please go ahead.
Thank you. Hey, guys. Good morning. Yeah, congrats on a really nice strong quarter. The Diamond S merger clearly looks like it's paying off very nicely. You guys have been really streamlining the business here over the past several years, and most recently, obviously, with the sale of the FSOs. You know, Lois, in your earlier comments, you were just discussing the reasoning behind the sale of it. Would you mind just maybe expanding on that just a touch? I wanted to know how you came to that decision. You know, on the one hand, it's non-core relative to your focus on the tanker business. On the other hand, it did offer a good amount of long-term revenue visibility. Just wanted to kind of get a sense from you what drove the decision to ultimately monetize it?
Thank you very much, Omar. You know, first of all, congratulations on your new posting. You know, addressing the decision-making on the FSO, indeed, it was non-core. It is a fixed rate contract in inflationary environment. I really think the transaction was, you know, very much a win-win. International Seaways was not technically managing the assets. That was being handled by our joint venture partners. Therefore, you know, we did not have control of all of the elements. We felt that we were not getting shareholder value for that. Being able to realize a price that really satisfied, you know, I think and provided an excellent return for us, all of those components went into why we divested the FSO.
Got it. Okay. Thanks, Lois. That makes sense. Then just, you know, thinking, you know, more about maybe streamlining the business and maybe not so much streamlining, but potential rejuvenation, clearly, you know, the product fleet you guys coming together with Diamond S was, you know, clearly well-timed, looking back. As we think about, you know, that part of your fleet, it's a bit on the older side. It's obviously earning very well today, and its age really isn't a problem, quote-unquote, just based off of what you've reported thus far and with your results for the second quarter, guidance for the third quarter.
How do you think about this fleet, going forward? It's a, you know, it's what? 12, 13 years average age. Do you take advantage of this incoming cash flow and move quickly or somewhat quickly to modernize the fleet, so maybe you sort of come out the other side of this with a stronger, younger fleet?
Well, you know, the first thing that I would say is, you know, we have three newbuilding VLCCs that we'll be delivering and the merger with Diamond S Shipping, we now have over 9 million deadweight tons, and we're under 9 years old. You know, overall, you know, we've been steadily improving the fleet profile. I would say that, you know, the 24 vessels that we sold, you know, over the last 18 months, you know, we did not raise any equity when the markets were very poor, and we were able to realize strong values on our resales. We will continue to have that type of discipline and really look at, you know, constantly and continually the discounted cash flows of holding or selling our vessels.
You know, I would say, you know, you can expect us to continue the same approach that we have had in making sure that our ships are, you know, able to earn optimally. I would say today we're in a pretty good position considering.
Omar, it's Jeff. Let me just underscore that. I mean, talk about fleet renewal. If you think of doubling our deadweight tons, tripling the units, selling over 20 vessels and still having, you know, 75 vessels and a fleet that's under 9 years of age, you know, I think we're in pretty good shape in terms of fleet renewal. I think the fleet optimization program that Lois referred to has been really taking care of that. I think we feel pretty good about where we are.
Yeah. No, I agree. You guys are, you know, definitely in a very strong situation with a good operating platform. I guess, just sort of thinking now is that now that you've sort of bolstered your product exposure and you've gotten, you've seen the benefits of having exposure to that market, and obviously we've seen the Suezmax do fairly well here recently. How are you guys thinking about, you know, I've asked you this before and you've gotten this question many times, but in general, as you look ahead in terms of deploying capital, whether it's from your liquidity that you've got, as you fine-tune the business to focus on crude and product, where do you put that incremental dollar when you're ready to spend? Do you focus more on the crude side or more on product?
Well, you know, I think. You know, we're seeing, you know, the beauty and the balance of the fleet right now, you know, being led by the products and then following, you know, following with the crude. You know, that's something that we just, you know, constantly, you know, we have our strategic meetings as management team and we sit with the board and we. You know, I think that what we're witnessing right now is a bit of a step change. What was true before is not necessarily true for tomorrow.
I think that, you know, we have that toehold in each of these sectors, you know, big crude, mid-size crude, MRs, and we can strengthen any one of the legs on the table, based on the scale that we already have in each of those sectors. I'm not gonna limit us, Omar.
Great. Thank you.
The other thing to add, Omar, is that, you know, a lot of people have been talking about, "Oh, ships has gotten expensive for investments," and that's quite understandable in terms of speculative investment in ships. You know, if you look at projects like our three dual-fuel vessels with Shell coming next year, you know, if there's more of such projects in any sector, you know, we'll be well positioned to be looking at those, based on our liquidity that we have. Yeah. Sorry. Go ahead.
Thanks, Jeff. No, that's it for me. Thanks, Lois. Thanks, Jeff. Very helpful. I'll turn it over.
Thank you. Thanks, Omar.
Thanks.
You're welcome.
Our next question comes from Ben Nolan from Stifel. Your line is open. Please go ahead.
Hey, guys. I have a handful. Number one, I wanted to just check in on the chartering strategy, both chartering and chartering out. Higher market, we've seen a few competitors put some of their vessels on to time charter them out, lock in some of those cash flows. The other side of that is you guys do have, specifically on the LR1, some charters that are rolling off. Are you thinking about sort of keeping your market presence there and just paying up for them? Or does it feel a little frothy in terms of locking in time chartering capacity?
Okay. You know, just kind of taking it from the start then. You know, the commercial department has indeed, you know, secured a one-year time charter or a two-year time charter on different sectors and, you know, as the market comes into itself, we'll continue looking at, you know, locking up high-level rates. On the charter-in side, you know, the Panamax International pool, I mean, you know, pretty steady. You know, you see them outearning all our other sectors and pretty much everybody in Q1 with over $20,000 a day. You know, the way they're looking in Q2 and Q3, you know, we will look for those opportunities to extend the vessels that we have if we can, you know, if that's something we can make happen.
Could you maybe provide a little bit more color on the 1- and 2-year time charter that you've locked in there?
You know, I don't think we've talked about you know where those rates are at. You know, one of those time charters is an extension on a major oil company for a couple of years on a Suezmax with a scrubber, and that is you know for two years I think you know ticks probably about the strongest that we've seen in the sector. You know, the other one is on an MR, and that would commence you know in the fourth quarter. You know, putting out the actual rates, I'm sure we will do that in due course. I don't think we've done that at this juncture. Yes.
That's fine. Well, just the, even the ship types is s omewhat helpful.
Okay.
All right.
Thank you.
I appreciate that. If I have a follow-up, this goes to. Well, I guess there's maybe two things here. First of all, Lois, for you know, we've seen the VLCCs underperform in a weird market. Usually when things are tight, it's the bigger ships that do better. Russia obviously is a dynamic in there. Do you think that at the moment what we're seeing with the V's coming back is structural and this is just part of how things normally play out? Or the inverse of that is, do you think those ones might be in a place where it's just going to be tough to play catch up, given everything that's going on? Similarly, how are you thinking about the share price?
I mean, we certainly have seen product tanker equities really outperform, and you guys are more than half product tankers just from a fleet count perspective, but haven't quite done quite as well there. I guess do you chalk that up to just having crude or is there something to having a crude and product fleet? Any updated thoughts on that?
Well, I'll take the first part of that, and I'll give Jeff notice to start thinking on the second part. You know, speaking specifically about the VLCCs, China, right? China. You know, you had pretty intense COVID lockdowns this summer and, you know, you had the lowest amount of imports of crude that we've had in quite several years into China. They were also drawing down inventories, from what we understand, somewhere around 1.5 million barrels a day. Knock on wood, you're seeing the COVID restrictions relax and refineries in China and Asia starting to ramp up toward the end of the year. I think that's part of it on the V's.
Part of it is also that, you know, some of the Western crude has been pulled into Europe, displacing, you know, that some of that long haul that we had previously seen going east. Recently, US Gulf exports over 3.5 million barrels a day for the rolling July averages, right? Expect it to continue because the US is producing, you know, 12 million barrels a day and expecting those exports to continue and to increase. That element of additional barrels going longer haul, we think, will start to reenter the space. You know, we do see the VLCCs coming along to the party in due course. In the meantime, the Aframaxes and the Suezmaxes have been, you know, the star beneficiaries of, you know, the trades in the Western Hemisphere, more staying in the Western Hemisphere.
You know, one of the things that, our chief commercial man, Derek mentioned yesterday is just the inefficiencies that are happening in the market right now, are really moving things because there's a little bit of a unsettled market with a lot of volatility and barrels moving to, you know, unusual places, right? You know, these are all elements of that, but I do think that the VLCCs will come along and will come along to the party. Biden got a hard time, you know, going to Saudi Arabia.
They only said they're gonna increase, you know, OPEC plus 100,000 barrels for September. However, between Saudi and the UAE combined increased very quietly close to 1 million barrels a day from what we understand in July of their crude production. You know, I think all of these elements will dovetail into to help out the beast. Jeff, if you can talk about the share price.
Love to. Yeah, Ben, to your point, I think that maybe because before Diamond S we were a bit weighted towards crude, that some of the research you see sort of may lump us in that area or at least kind of overlooked us a little bit when the product tankers were ripping this quarter, and they focused a little bit on others and that. Maybe some investors didn't see it yet. We're glad about our stock price appreciation this year, but yeah, it could have been more. My reaction to that, what an opportunity for investors, you know?
We're sitting here with, you know, almost half a billion dollars of liquidity, 34% net loan-to-value, a fleet that's already been renewed, as I was saying to Omar, and lots of optionality for investors, including ourselves. I mean, to look at our shares at a still large discount to NAV. We think that's a good opportunity for investors, including ourselves.
All right. I appreciate you guys tackling my convoluted questions this morning.
No, no. Thank you.
Anytime, Ben.
Our next question comes from Liam Burke from B. Riley. Your line is open.
Thank you. Good morning, Lois. Good morning, Jeff.
Good morning.
Good morning.
Lois, you talked about regional imbalance. Obviously, Russia is a driver of that. On the product side, how much has the redistribution of global refinery capacity helped the rates on the MRs?
You know, I would say, Liam, that you know largely you know a huge piece of the strength in the MRs is the exports from the US Gulf. You know you're seeing diesel exports over 1.4 million barrels a day. You see gasoline approaching you know out of the Gulf a million barrels a day. You're still bringing in gasoline into the US East Coast. You know we are seeing you know product coming from the Middle East and India to Europe you know. Largely that's gonna be on LRs and that also you know helps to buoy the MRs right? Because overall Clarksons says that product trade going up by nearly 10% this year in tonne-mile right? All of those elements give the product carriers and our MRs, you know, a real lift.
Okay. On the crude tanker side, there's a fair amount of capacity came online the first quarter of 2022. Understanding there's been disruptions in trade routes by midyear, do you think the capacity sort of leveled out on a normal basis? I understand what the order book looks like, but right now, do you see more stabilization after capacity came online earlier?
Yes, I would say so. I mean, you know, once you get into the fourth quarter, you tend to see owners be very reluctant to take deliveries in the fourth quarter and, you know, tend to push them forward. You know, the deliveries next year in 2023 are lighter than what they have been in 2022. Indeed, we are starting to see that level out, Liam.
Liam, this could be the last year of any net fleet growth in tankers for a while.
Okay.
You know, you're looking at flat to negative as you look out to 2023 and beyond, most observers would say.
Great. Thank you, Lois. Thank you, Jeff.
Thanks, Liam. Take care.
Thank you.
Our next question comes from Greg Lewis from BTIG. Your line is open. Please go ahead.
Yeah. Hi. Thank you and good morning, and thanks for taking my question. You know, Lois, I kind of had a broader, bigger picture question for you. You know, understanding that the company continues to, you know, look into being, you know, in the energy transition with the dual-fuel vessels, you know, I may be dating myself, but, you know, I remember conversations about potential opportunities in LNG for INSW and. Just kind of curious, given what's going on in the global gas markets, there's a lot of conversations about not even conversations, but I guess, you know, Qatar's in the market looking to charter LNG vessels. There's probably gonna be a lot more liquefaction coming online in the U.S. that probably needs vessels.
Is that a sector that the company continues to kind of track on the periphery where maybe we could see an investment at some point, or is it at this point we're really just focused in maximizing, you know, the crude and product segments of our business?
You know, I mean, I like how you phrased that, you know, tracking it on the periphery. I mean, one thing that our team has been heavily engaged in, Bill, talk a little bit about the LNG course. Bill Nugent is our head of operations. The LNG course is that our team and the sailors are undergoing for the delivery of our three new VLCCs.
Sure. Well, you know, we did operate those ships with Nakilat and Qatargas, the 4 Q-Flex ships for long times, and that expertise is still in-house. So we retain that. You know, we're now with the new team that's joined us through the merger, you know, we're expanding that in preparation for taking these three dual-fuel vessels with training here. There's actually some going on today, and then more going out in Elba and elsewhere. So we got ample crews ready to take on those ships. You know, I think, you know, we are ready to do whatever Lois asks us to do.
Thank you, Bill. You know, what I would say is that, you know, we are definitely keeping track of, you know, the gas markets as well as tankers and, you know, we never count that out. I wouldn't say, "Oh, you know, we would only be tankers forever," because we know that, you know, as even the dual-fuel Vs is a step toward pivoting to decarbonization.
We are energy transporters.
Yeah. We move energy.
Right.
Okay. Okay, great. Then just, as I think about strategy, you know, as a... I guess I'll ask it this way. It seems like the company, and maybe it's just a function of some trending M&A, it seems like the company's very willing to go out and order new builds on the Suezmax, on the large crude side, right? Should we be thinking about the sale and purchase and portfolio management different between the product and the crude? i.e.
Hey, crude, you know, sometimes we need to make newbuilding opportunities, but as we look at the product side, that's gonna be more of, you know, secondhand portfolio management what if we're looking to, you know, I guess renew, I guess has come up a few times on the call. Or, I mean, I get it's never say never, but is it kind of safe to say the probability of INSW ordering MR new builds is a lot lower than it ordering crude new builds?
No, you know, we look for our opportunities and being able to partner with Shell on the seven-year time charter is what really, you know, enabled that choice, right? When we are able, you know, in particular, when we're able to find an oil company partner, you know, a very strong chartering name, you know, that is interested in moving forward on, you know, dual-fuel, decarbonization, you know, we definitely will look to make that partnership on either crude or product.
Yeah. I mean, Greg, we've been saying since 2020 that we're not in the market for new buildings, speculative new buildings with conventional fuel engines, period. Right? The significant thing about the Shell dual fuels is not that they're VLCCs, it's that they're in partnership with a major customer like Shell on a long-term charter. Something that Bill was talking about before, the in-house intellectual capital we've developed from previous experience, for example, with the LNGs with Nakilat and the current experience with dual fuels is invaluable and it's gonna really help us so that we look towards projects, as I said to an earlier question, you know, we'll look towards projects that are working with customers more likely than speculative new builds at the current prices. As Lois just said, it could be across the board in terms of the fleet size.
Okay. Perfect. Great to hear, guys. Thank you very much.
Thank you.
Thanks, Greg.
This concludes our Q&A. I'll now hand back to Lois Zabrocky, CEO, for final remarks.
Thank you everyone for joining International Seaways on our second quarter and, you know, stay tuned to this space. We're looking for an exciting Q3. Thank you very much.
Today's call is now concluded. I'd like to thank you for your participation. You may now disconnect your lines.