Ladies and gentlemen, thank you for standing by, and welcome to the Nordic American Tankers Investors Conference Call. I would now like to turn the call over to Herbjørn Hansson, Founder, Chairman, CEO. Please go ahead.
Thank you. Thank you, Mondi. Good morning to you. It's a pleasure to be together with you. We today will talk about the future of our company and the way forward. As an introduction, I will make some observations on the general position of Nordic American. I will ask in a way the first question, what is happening in the marketplace? Our view is clearly, at this time, that there is a scarcity of ships. There are too few ships in the marketplace. When there are too few ships, rates go up, and value of ships go up. Our main focus is on so-called ton-mile, which is the same as transportation work. We are seeing at this time that the transportation work is increasing.
We do see that very clearly in our worldwide operations. Nordic American is listed on the New York Stock Exchange, and we have been listed there since 1975. We have business all over the world. We have business in Japan, in China, in Korea, and also in India. Collectively, I would call it East. I can tell you that we have a ship in China about... If not necessarily every week, but every two weeks or so, we are often in China. We also have a presence in other parts of the world. There is one interesting development I would mention to you is that we have started lifting oil from Guyana in South America. That is an oil field which essentially is managed by ExxonMobil.
Our main focus and our main customers are what I call big oil. The big oil companies, ExxonMobil, Shell, British Petroleum and the like. Again, we focus on transportation work. Evidently, we have a lot of business in the Middle East and also in Saudi Arabia. One of my closest friends, he was living in Saudi Arabia for 13 years, and he has been helping me a lot in understanding the country. We lift oil from the Port of Yanbu in Saudi Arabia, and we have close links with Saudi Arabia. Alexander Hansson, he is the Head of our Operation in Monaco, and he has close friends in Saudi Arabia at the very top of that country. The big question is, I would like to mention, what will happen going forward?
The question, to a large extent, is associated with the situation in Russia and in Ukraine. I would like to emphasize and note that in our group, in Nordic American, we have not carried Russian oil the last 18 months. In the past, we were lifting oil from the Port of Primorsk in the Baltic Sea, from which we lifted Russian oil. It is 1.5 y ears ago since we have done that. As a general observation, I would say that uncertainty is always good for our business, because in uncertain times, we see the notion of hoarding. You wish to have reserve capacity to take care of demands coming out. This time we see there is an imbalance between supply and demand of tonnage, simply because there is not enough tonnage.
I'm always or often asked why the investor market is nervous. I'm probably not the right man to respond to that question, because if you are in the tanker business, that's not the place to be if you are a nervous person. We of course follow the American stage very closely and the action of the Federal Reserve. Generally speaking, observers seem to forget that the action of the Federal Reserve, it's good for some people and bad for other people. It is a question of understanding how this impacts our business. I'm not concerned about that. I would like to tell you about the financing of our business, of Nordic American. We are now in a situation in which we clearly see that we will repay all debt to our excellent partner, the Beal Bank of Dallas.
When we have repaid our debt, we are in a position to increase our dividend strongly from this level we see today. We expect to have repaid all debt to Beal Bank of Dallas in a year or so. They are our main creditor, we have repaid them over the last few years. We now expect very clearly to be a debt-free company in a year or two, being able then to raise dividends significantly. NAT is a dividend company. I would note that we wish to give priority to dividends. We have paid the dividend for more than 100 consecutive quarters. Dividend is, and has been, and will remain our priority. We will never leave that policy.
I would also like to mention our excellent cooperation with Ocean Yield, which is owned or controlled by KKR in Boston, Massachusetts. They have financed a number of our ships, and our cooperation with them is excellent. When it comes to new business, we see now that there are many parties who wish to do business with us. Nordic American is very transparent. We have been, as I mentioned, stock-listed in America since the mid-1990s, and we have been operating in America before that, and everything about our company is in the open. There is nothing hidden as far as our company is concerned. I would also note that our major, the major oil companies are our main customers.
I'm talking about ExxonMobil, I'm talking about Shell, the French group Total, British Petroleum and the like, also the Norwegian major oil company, Equinor, which is controlled by the Norwegian government. Of special importance, we now see how we are able to reduce emission. We do reduce emissions from our ships through active speed management. I will explain this in more detail because quite a few people are not aware of this fact. When we go into a loading area with our ships, we don't have a cargo onb oard, we go slow speed. When we go slow speed with our ships, we consume about 20 tons of bunker oil. When we go full speed with the same ship, we are consuming about 50 tons of bunker oil. That's a big difference.
In the past, 10 years ago, we went much more full speed than today. Mr. Coordinator, Mondi, you are sitting in camera, I believe. I request you to now to ask whether people will be asking questions and I just felt I would like to give this introduction first. We are, as a company, in excellent position, and I'm very enthusiastic that we have so many supporters in America and elsewhere and all around the world. Thank you, Mr. Coordinator.
Thank you, sir. The floor is now open for your questions. To ask a question at this time, please press star one on your telephone keypad. If at any point you'd like to withdraw from the queue, please press star one again. You will be provided the opportunity to ask one question and one further follow-up question. We'll now take a moment to render our roster. [Foreign language]
Our first question comes from the line of Omar Nokta from Jefferies. Please proceed.
Thank you. Hi, Herbjørn Hansson. Thanks for the update. You know, tanker rates have clearly been strong here for just about a year, going on a year plus now. You've got plenty of experience in this tanker market going back. I don't wanna put too many years, but, you know, at least into the 70s, you've seen a lot. Just wanted to ask, you know, based off of what we've seen here and how the outlook is developing, how would you characterize this cycle versus what you've seen in the past?
I don't think I have seen a better condition than now. As I say, with great seriousness, I've only been in the business for 50 years, and I'm committed to continuing in this business for a long time to go. At this time, the conditions are excellent. I'm always concerned about, I think you call it black swan. Is there something we don't see? I have difficulty in seeing the black swan, that simply also because the black swan never comes out in front of us. I would make one special point. There is a very low order book on new tankers. There will be almost no increase of the fleet during the next year, 2 or 3. We could discuss details of that, but that is a main point.
What we do see, of course, also, is that our main customers, I mentioned major oil, and they look upon transparency, and they know for sure that we have good ships, and we have good people. That is a main principle in our group. We only wish to do business with good people, and they know we have good ships. We have an excellent, so-called vetting record. That is the inspection of ships by our customers. We have the best vetting record in the industry. Sorry for talking for such a long time, Omar, I hope this gives you a background.
It does. Thank you. It's a very interesting setup as we, as we move forward. Just to follow up, you mentioned obviously the dividends and that, you know, you paid 100 dividends or so, and it's been a key component of NAT since its founding in the 1990s. You have the Beal Bank facility that's set to get repaid, hopefully as you highlight over the next 12 months. How are you thinking about You mentioned stepping up the dividend. Is there a certain threshold you wanna take that to? Does that get to a certain percentage of earnings, whether that's 50%, 75%, 100%? What are you thinking about the payout ratio once the Beal facility is paid off?
I would like to ask my colleague, our Chief Financial Officer, Bjørn Giæver, to elaborate a little bit on that question. Bjørn, please.
Yeah. Hi, Omar. I think once the Beal facility is paid back on maturity, you could easily see our payout double from today's levels. I mean, or the dividend, everything else being equal, the dividend could double from today's level. And I don't think NAT ever has had a policy of, you know, putting out a payout ratio. We usually distribute the excess cash that we find suitable, and shareholders have usually been happy with that.
I would note, Omar, that I and my family are the biggest private group in Nordic American. My son, Alexander, in Monaco, he did buy shares last week, and he has now quite a lot of shares, and I have a lot of shares, and I'm very confident about the future, I must tell you. Of course, nobody knows what the future is holding, but that is my job and our job here to tell you what we believe about the future. Those people who know about the future, there are not many of them, you know. We have to judge and we have to communicate effectively and we have to communicate openly, but we will never say anything which is wrong in our judgment. Thank you.
Thank you. Thanks, Herbjørn . I appreciate that. Thanks, Bjørn, for the color. Definitely sets up a really interesting payout, you know, going forward, where the doubling would take your dividend from, you know, potentially $0.15 to $0.30 quarterly. Well, good.
Thank you, Omar.
Our next question comes from the line of Liam Burke from B. Riley. Please proceed.
Thank you. Good afternoon, Herbjørn. Good afternoon, Bjørn.
Good afternoon to you, sir.
Herbjørn, as you pointed out to Omar, you haven't seen a better market in for your fleet. Could you give us a sense as to does it change your chartering strategy? Do you wanna lean more heavily to the spot market, or do you see opportunities to lock in some rates on time charter basis?
Let me respond to that. My English isn't all that good, but we now have a large fleet. To use an American expression, I believe it is American, we are raking in money. We must have our objectives clear, and objective number one is to become debt free. Because when we are debt free, we have large flexibility. Nobody can decide except our Board can decide what we are going to do going forward. It is important to have our eyes on the goal, and we must not let the goal become diluted. That's the main point. I mean, it's not so easy to know about the future. I, as the Founder and Chairman and large shareholder of this group, I had to have a feeling and I had to have an understanding of the future.
Otherwise, if I didn't know, when people ask me what you think about the future, I cannot say I don't know at all, because if I don't know, then I'd rather find another job, you know? Coming back to the main point, we are in a good position, and it's very exciting. I can assure you, I will hang in there for a long time. Yes, Bjørn may supplement me.
Hi, Liam. I think, I think it's in our business, which is volatile and highly cyclical, I think, we do have a fairly high operational leverage, we're having 15 out of our 19 tankers trading the spot market. For this reason, we wanna continue to take down our financial leverage so that we pay down the Beal facility, which again, will allow us to increase our dividends like we talked about. I guess that's, you know, I don't think we're gonna change that in the near term.
Fair enough. you added two new vessels several years back, or you just took the delivery of them. Do you have any interest by the oil majors for you to go in and order new Suezmaxes and attach some longer-term charters to it?
We do. We have a close relationship with them. We don't wish to charter out long-term now in the present situation. That is not our priority. Major oil companies, they know that we have first-class ships, and they know that we, I'm not sorry to say, I'm proud to say, we are first-class people, and they rely on us, and we rely on them. That is a fact. I'm always saying, like, important customer, ExxonMobil, the biggest room in the world is the room for improvement. We are always looking for ways to improve.
I think if I may add, I think right now the challenge for a lot of people is that if you're gonna order a tanker today, it will be delivered probably early 2026. It's a long lead time for that decision in order to commit to a long-term charter starting in 2026. That is one of the reasons why the tanker market is gonna continue to be good for a long while. Even after these couple of quarters with very strong earnings, the order book for new tankers has not moved. It's still very low. Yeah.
I would like to add, when we ordered two of our recent ships, we paid about $54 million-$55 million. A close associate of ours, he said that I was mad when I said we should order two ships at $54 million-$55 million. We've had, you know, feelings out in the market. What would it be the price now? The price would be in excess probably of $80 million. You know, so that gives us assurance and it gives us financial stability. The financial stability is important for us, as I mentioned, when we don't have debt anymore. Thank you.
Thank you, Herbjørn. Thank you, Bjørn. I would now like.
Anybody else, coordinator? Mondi?
As a reminder, the floor is now open for your questions. To ask the question at this time, please press star one on your telephone keypad. We do have a question from the line of Thomas Steed, Private Investor. Please proceed.
Yes, Mr. Hansson, I'm a Private Investor. My question to you is not a financial one, it's a practical one. You see, I am a tanker man in United States Merchant Marine, and I would like to know your licensed masters, deck officers, and licensed marine engineer, what is the majority of their nationality, please?
We have some ships with only Philippine nationals from the top to the bottom. We have been in the Philippines for 40 years, and we are very familiar with the position there. Secondly, I can tell you today we have Russians onb oard the ship, and we also, I can tell you, have Ukrainians onb oard the ship. They work excellently together, I can tell you. We have seen that their cooperation is very good. That's point number 1. Point number 2, they wish to hang on our ships and stay on our ships because they are in a very unfortunate situation. They don't wish to go home and to join the war. Very unfortunate war going on.
We do see now a pressure in the way that when we come to America, Russians are not allowed to disembark or embark. There are strict rules governing these procedures. We go to America a lot, and our main commitment is always to observe American rules. When you are listed on the New York Stock Exchange, you must not infringe American rules. That is for sure, and that has been our main principle all the time. In summary, the cooperation on our ships is going excellently, also between Russians and the Ukrainians. Thank you, sir.
I have a follow-up, sir, if I may.
Absolutely.
I've been an investor since 2004. As a tankerman, you said, we have good ships and good people. Now, obviously, I've noticed we haven't had any groundings or major collisions. I'm proud to be a shareholder of NAT just for that one reason. It is run very efficiently, with our officers and engineers. Thank you for your time today.
I can tell you, sir, that those who have been with us since the mid-1970s, mid-1990s, sorry. They have received about $50 in dividend per share. $50 in dividend per share. That is quite an achievement, in my judgment. Also because we cannot run the company based on 90 days periods. Either a company can go up, it can go sideways, and it can go down. If it goes sideways, then it go down. It goes down. Nordic American, the New York-listed company, is definitely going up as we see it. Thank you, sir, and thank you for your interest, and thank you for being a shareholder with us.
Uh, Troy-
Mondi, any other questions?
We do have one final question from Ken Davidson, Private Investor. Please proceed.
Hi. Yes. I wanted to go back to the question that was asked about the spot contracts. I thought that when the last two new tankers were delivered, they were put under contract to the Sultanate of Oman under long-term contracts. I believe that I don't remember exactly what the dollar amount was, but it was relatively low at that time, perhaps in the area of $15,000. Whereas some of the communications that you've put out recently, the spot contracts, for instance, are much higher than that now, $50s, $60s. Was that the case? Do I have that right that the last-
No, you have it wrong. Short version is you have it wrong. When we charted out these ships, we charted them out 20 23, 2024 or something like that. We charted them out for six years to create financial stability at the time. It's always in the business, you know, when you look in the, you say back mirror or look in the mirror, you know, you could always have done it differently. We do appreciate very much our cooperation with the Sultanate of Oman. We enjoy that. Oman is one of the closest allies of America in the Middle East. We are very friendly with them, and we are hopeful that we shall be able to expand the business with Oman in a way which is good for our shareholders, including my own family. Thank you, sir.
Just following up with that. The new, the two new tankers were indeed put under long-term contract with the Sultanate of Oman, but for a higher amount.
Yes, much higher than you mentioned. I, it is in the almost mid-20s, 2023 or 2024 or so.
Gotcha. Thank you very much.
Mondi, any other questions?
There are no more questions, sir. I would now like to turn the call over to Herbjørn Hansson for closing remarks.
Thank you very much for calling in today. You are free to call me or my colleagues any time of any question. We would in fact encourage you to call us because we believe that we know quite a lot about this industry, but the process of learning never stops. We must always be better to tomorrow than we are today or than we were yesterday. For which reason, I would thank you very much for spending time with us and taking your time. It was indeed a pleasure to have you on the call here. Thank you very much and have a good afternoon.
Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.