Teekay Tankers (TNK) Q4 2025 Earnings Transcript

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DATE

Thursday, February 19, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Kenneth Hvid
• Chief Financial Officer — Brody Speers
• Vice President, Finance and Corporate Development — Brian Hamilton
• Director of Research — Christian Waldegrave
• Chief Operating Officer — Lee Edwards

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TAKEAWAYS

• Net Income (GAAP) -- $120,000,000 for Teekay Tankers (NYSE: TNK), equal to $3.47 per share.
• Adjusted (non-GAAP) Net Income -- $97,000,000, or $2.80 per share, reflecting non-GAAP earnings power from the core business.
• Free Cash Flow from Operations -- Approximately $112,000,000, demonstrating strong operating cash generation for the quarter.
• Cash Position -- $853,000,000 at quarter end, with zero debt reported; this excludes $99,000,000 in vessel purchase escrow.
• Dividend Declaration -- Regular fixed dividend of $0.25 per share for the period, as announced by management.
• Fleet Transactions -- Three 2016-built Aframaxes acquired for $142,000,000; two older Suezmaxes sold or agreed for sale for $73,000,000; an owned VLCC sale finalized for $84,500,000, with $45,000,000 in total gains expected from these sales in 2026.
• Spot Market Exposure -- Spot rates secured for booked days: $79,800 per day for VLCC, $56,900 per day for Suezmax, and $51,400 per day for Aframax/LR2 fleets; 78% of VLCC and 65% of midsize fleet spot days booked for next quarter.
• Operational Metrics -- 99.8% fleet availability and zero lost time injuries achieved, supporting operational reliability and safety.
• Full Year Gains on Vessel Sales -- Realized gains of $100,000,000 from asset disposals for Teekay Tankers over the year.
• Orderbook Context -- Tanker orderbook at a ten-year high, but management notes it is balanced by an aging fleet: “completely offset by the number of compliant tankers reaching age 20 over the same time frame.”
• G&A Expense Outlook -- CFO Brody Speers stated, “annual G&A for the year, around $46,000,000 going forward, I think we should be about that or maybe a little bit lower.”
• Depreciation & Amortization Guidance -- CFO Brody Speers expects first quarter D&A “be pretty close to what we had in Q4 there at about $21,500,000 or $22,000,000.”
• Balance Sheet & Leverage -- With no debt and a free cash flow breakeven rate of $11,300 per day, management emphasized an ability to “generate significant cash flows in nearly any tanker market.”
• Fleet Renewal Execution -- Six vessels acquired for $300,000,000; 14 vessels sold for $500,000,000; estimated $145,000,000 in booked gains; management highlights progress reducing average fleet age.
• Out-Charters and Divestitures -- Three vessels out-chartered, an in-chartered vessel extended, and Ardmore investment sold for a gross return above 14%.

SUMMARY

Management specifically pointed to an exceptional spot market environment, supported by record-high oil trade volumes and shifts in sanctioned oil flows benefiting compliant fleets. They noted a cash-rich, zero-debt balance sheet and highlighted ongoing, opportunistic fleet renewal through selective acquisitions and divestitures. Near-term tanker supply growth is flagged as meaningful, but is matched by an aging global fleet and replacement demand, with future spot market performance dependent on both geopolitical and macro supply factors.

• CEO Kenneth Hvid described recent tanker market strength as “a big surprise to us,” indicating higher-than-expected cash generation enabled selective asset purchases instead of major M&A.
• Kenneth Hvid observed, “buyers of Russian and Iranian barrels are having to find alternative sources of oil using the compliant fleet in order.”
• Management does not plan “a major acquisition just because of the relative asset values,” instead prioritizing a gradual approach to fleet renewal and growth.
• Special dividend decisions for 2026 remain subject to board approval and are typically addressed alongside May earnings, as explicitly reaffirmed in the call.
• Outlook for tanker demand is supported by anticipated global oil consumption growth of 1,100,000 barrels per day, and non-OPEC+ supply growth of 1,300,000 barrels per day in 2026.

INDUSTRY GLOSSARY

• Aframax: Crude oil tanker with a deadweight tonnage between approximately 80,000 and 120,000; prominent in regional oil trades.
• Suezmax: Large crude oil tanker near the maximum size for navigating the Suez Canal, typically 120,000-200,000 deadweight tonnage.
• VLCC: Very Large Crude Carrier, with capacity ranging from approximately 200,000 to 320,000 deadweight tons; used for long-haul crude oil transport.
• Lightering: The process of transferring oil or cargo between vessels of different sizes, often offshore, to enable larger tankers to discharge closer to shore.
• Orderbook: The compilation of vessels currently on order at shipyards, not yet delivered, typically expressed as a percentage of the existing fleet.
• Compliant Fleet: Tankers that operate within international and national regulatory requirements, particularly regarding sanctioned oil trades.
• Dark Fleet: Older ships, often non-compliant or sanctioned, used for transporting oil in violation of international restrictions or sanctions.

Full Conference Call Transcript

Kenneth Hvid: Hello, everyone, and thank you very much for joining us today for the Teekay Group's fourth quarter and annual 2025 Earnings Conference Call. Joining me on the call today for the Q&A session is Brody Speers, Teekay Corporation's and Teekay Tankers' CFO; Brian Hamilton, our VP of Finance and Corporate Development; Christian Waldegrave, our Director of Research. Starting on slide three of the presentation, we will cover Teekay Tankers' recent highlights. Teekay Tankers reported GAAP net income of $120,000,000 or $3.47 per share and adjusted net income of $97,000,000 or $2.80 per share in the fourth quarter.

For the full year, Teekay Tankers reported GAAP net income of $351,000,000 or $10.15 per share and adjusted net income of $241,000,000 or $6.96 per share and realized gains on vessel sales for the year totaling $100,000,000. Spot tanker rates during the quarter were the second highest for a fourth quarter in the last fifteen years. With our significant spot exposure and a low free cash breakeven, the company generated approximately $112,000,000 in free cash flow from operations and, at the end of the quarter, had a cash position of $853,000,000 with no debt. This excludes $99,000,000 of cash held in escrow at the end of the year related to payments for vessel purchases.

Teekay Tankers continues to execute on its fleet renewal strategy.

Lee Edwards: In January, we acquired three 2016-built

Kenneth Hvid: Aframaxes for $142,000,000 and bareboat chartered the vessels back to the seller on short-term contracts. We expect to take over full commercial and technical management of these vessels in the second and third quarter this year. In addition, we sold or agreed to sell two older Suezmaxes for gross proceeds of $73,000,000 and just this week, we finalized an agreement to sell our owned VLCC for gross proceeds of $84,500,000 with delivery during Q2. We expect to recognize total gains from these sales of approximately $45,000,000 in 2026.

Looking at our first quarter to date, the tanker market has continued to strengthen and we have secured spot rates of $79,800, $56,900, and $51,400 per day for our VLCC, Suezmax, and Aframax/LR2 fleets, respectively, with approximately 78% spot days booked for VLCC and around 65% spot days booked for our midsize fleet.

Lee Edwards: Lastly,

Kenneth Hvid: Teekay Tankers has declared its regular fixed dividend of $0.25 per share. Moving to slide four, look at recent developments in the spot market. Spot tanker rates strengthened in 2025 due to a combination of fundamental drivers, geopolitical events, and seasonal factors. Global seaborne oil trade volumes were near record highs during the fourth quarter due to the unwinding of OPEC+ supply cuts coupled with rising oil production from non-OPEC+ countries, particularly in the Americas. In addition, tighter sanctions against Russia, Iran, and Venezuela created trading inefficiencies, which have benefited tanker ton-mile demand while pushing more trade volumes away from the dark fleet towards the compliant fleet of tankers.

Midsize tanker spot rates were further supported by disruptions on the CPC terminal in the Black Sea during November 2025, which led to a reduction of crude oil exports for around two months. This outage opened up the arbitrage to bring U.S. oil across the Atlantic to Europe, while poor weather in Europe prevented ships in ballast from returning across the Atlantic, giving rise to very strong rates for both spot voyages and lightering in the U.S. Gulf region. Spot tanker rates have strengthened at the start of 2026 with midsized rates trending above the five-year high in February, as many of the factors which supported the tanker market during the fourth quarter remain in place.

Turning to slide five, we look at the impact of sanctions on tanker trade patterns. Geopolitical events continue to shape global oil trade flows and in recent months have pushed an increasing portion of global seaborne oil trade to the non-sanctioned or compliant fleet of tankers. As shown by the chart on the left, both Russia and Iran have found it increasingly difficult to sell their oil due to stricter sanctions, leading to a more than 70% increase in sanctioned barrels at sea over the past twelve months. This includes both tankers in transit as well as oil held in floating storage and reflects the increasing complexity of the logistics chain for sanctioned oil exports.

The end result is that buyers of Russian and Iranian barrels are having to find alternative sources of oil using the compliant fleet in order to compensate for the loss of sanctioned oil. This trend is most evident when looking at Indian crude oil imports. India became the top buyer of Russian crude over the past two to three years, with imports averaging 1,600,000 barrels per day in 2025.

However, sanctions on Russian oil companies Rosneft and Lukoil, coupled with an EU ban on the import of refined products made from Russian crude oil, has led to a drop in imports to around 1,000,000 barrels per day as of January 2026, with replacement barrels being sourced from the Middle East and Atlantic Basin via the compliant fleet. In addition, the U.S. and India recently signed a trade deal which reportedly involves India further reducing the imports of Russian crude oil, which may push even more trade to the compliant fleet in the coming months. Finally, recent U.S. action in Venezuela is incrementally shifting trade flows to the benefit of compliant tanker demand.

Flows of Venezuelan oil to China via the dark fleet, which averaged 550,000 barrels per day in 2025, have fallen to zero since the onset of the U.S. naval blockade in December. Venezuelan oil is now being transported entirely by the fleet of compliant tankers, with most volumes in January being directed to the U.S. Gulf and Caribbean on Aframaxes. In February, we have also seen several loadings destined for Europe on Suezmaxes, while we understand that some Indian refiners have also booked cargoes for April delivery using VLCCs. To give an illustration of the potential impact going forward, an extra 500,000 barrels per day shipped from Venezuela to the U.S. Gulf creates demand for approximately 20 Aframaxes.

Turning to slide six, we review the key drivers for the medium-term tanker market outlook. Underlying tanker demand fundamentals remain positive. Global oil demand is projected to increase by 1,100,000 barrels per day in 2026, which is in line with levels seen in 2024 and 2025. Demand could be further boosted by strategic stockpiling, particularly in China, where the country is projected to add just under 1,000,000 barrels per day to strategic reserves during 2026, as per estimates by the U.S. Energy Information Administration. Non-OPEC+ supply growth is projected to increase by 1,300,000 barrels per day in 2026, led by the Americas, which should lead to meaningful midsized tanker demand growth.

The 2,000,000 barrels per day of voluntary cuts in 2025, has announced a pause on further unwinds during 2026 and its supply policy for the remainder of the year is uncertain. On the supply side, over the recent months, we have seen an increase in tanker ordering, particularly for large crude tankers, which has pushed the size of the orderbook to a ten-year high when measured as a percentage of the existing fleet.

As a result, tanker deliveries are set to increase in 2026 with a further acceleration in 2027, though actual fleet growth will depend on the level of vessel removals through scrapping or via the migration of vessels from the compliant fleet to the dark fleet and the utilization of older vessels. While the orderbook size has increased over the past year, we should keep in mind that the tanker fleet is aging, with the average age of the fleet now the highest in over thirty years, meaning that there will be a significant amount of replacement demand in the coming years.

In fact, the orderbook, which now stretches into 2029, is completely offset by the number of compliant tankers reaching age 20 over the same time frame, not to mention the dark fleet of tankers which already has an average age of over twenty years. So, in short, while the tanker orderbook appears large on the surface, these vessels are needed to replace the older fleet of tankers which are approaching the end of their trading lives in the coming years, although the timing of when vessels will exit the fleet is uncertain. Turning to slide seven, we highlight Teekay Tankers' key achievements in 2025.

Reflecting on the year, the tanker market for 2025 was strong but volatile, influenced by several dynamic geopolitical factors. With our exposure to the spot tanker market and our low free cash flow breakeven levels, Teekay Tankers generated $309,000,000 of free cash flows while returning approximately $69,000,000 of capital to our shareholders via our regular quarterly dividend and $1 special dividend in May. We commenced our fleet renewal process, including our recent transactions in January and February. The company acquired six vessels for $300,000,000 while selling 14 vessels for $500,000,000, booking estimated gains of approximately $145,000,000. As a result of these transactions, we have made progress towards reducing our fleet age.

These transactions highlight our ability to act opportunistically given the dynamic market conditions. In addition to the fleet renewal transactions, we out-chartered three vessels, extended an in-chartered vessel for another twelve months, and sold our investment in Ardmore, generating a gross return of over 14% on this investment.

Lee Edwards: Overall, our strong financial result was

Kenneth Hvid: supported by our exceptional operational performance with zero lost time injuries and 99.8% fleet availability, important metrics measuring the safety of our crews and reliability of our operations. Turning to slide eight, we highlight Teekay Tankers' value proposition. First, as a result of our fleet profile, our operating leverage remains strong, and the company is well positioned to generate significant cash flows in nearly any tanker market. With our three out-charters and no debt, we have a low free cash flow breakeven of approximately $11,300 per day, which is down significantly from $21,300 per day in 2022.

For every $5,000 per day increase in spot rates above our low free cash flow breakeven, it is expected to produce about $55,000,000 of annual free cash flow or $1.60 per share. Second, Teekay Tankers has a strong balance sheet with no debt and a large investment capacity for future growth. Having an $853,000,000 cash position, we can transact quickly in this dynamic tanker market. And lastly, the company's performance is underpinned by our

Lee Edwards: platform.

Kenneth Hvid: We believe our in-house commercial and technical management is a competitive advantage. Combined with over fifty years of operating experience in the tanker industry, we provide superior service to our customers and transparency through the value chain which drives shareholder returns. In summary, the company's strategy over the last several years has been to maximize shareholder value through our exposure to the strong spot market. In 2025, we made progress to renew our fleet by making incremental investments in more modern vessels while at the same time selling some of our oldest tonnage.

As we look ahead, our best-in-class operating platform and strong financial footing positions the company well to continue renewing our fleet, earning cash flow, building intrinsic value, and returning capital to shareholders. With that, operator, we are now available to take questions.

Operator: Great. Thank you. We will take our first question from Jonathan Chappell with Evercore ISI. Thank you. Good morning.

Kenneth Hvid: Yep. Thank you. Sorry.

Lee Edwards: Brody, a couple questions for you today on modeling. So the bareboat

Omar Mostafa Nokta: charters for the Aframaxes that you acquired, it will take full commercial ownership in the second and third quarter? Is it between January and taking that full ownership, the P&L impact is that you are just getting the bareboat rate that you chartered it back to the previous owner? There is no OpEx, there is no D&A, there is no other impact except the revenue.

Lee Edwards: Yeah. That is right. We are just getting the bareboat

Operator: back

Brody Speers: and those ships will actually dry dock in the first half of the year during that period too, but we will continue to get the bareboat rate during the dry docking.

Lee Edwards: Okay.

Omar Mostafa Nokta: Great. The other thing I wanted to ask you was the G&A run rate. So, you know, you did the whole management reorg, etcetera. As we look at kind of the last three quarters, is that the right run rate to think about going forward, maybe with some inflationary impact on there? Or is there anything that would even make either make that go up or down significantly from, let us call it, the last three-quarter run rate.

Brody Speers: Yeah. I think that is right. I think if you look at even our annual G&A for the year, around $46,000,000 going forward, I think we should be about that or maybe a little bit lower. So it approximates the run rate from the last few quarters.

Omar Mostafa Nokta: Okay. Final thing. Sorry. Just to harp on this stuff. It is, you know, the strategic stuff, the market I think covered that pretty well already. The D&A. So you have done a lot of fleet renewal. Taken out the VLCC, a couple more Suezmaxes, and then, obviously, you are not going to add the three acquired Afras until, call it, the middle of the year. What do we think about for a first quarter starting point on D&A? Is it similar to 4Q? Or would it be a step down from there?

Brody Speers: Yeah. It should be pretty close to what we had in Q4 there at about $21,500,000 or $22,000,000 in the first quarter.

Kenneth Hvid: Yep.

Omar Mostafa Nokta: Okay. Sorry for the minutiae, but appreciate it. Thanks, Brody.

Lee Edwards: Yeah. No problem.

Operator: Our next question will come from Omar Nokta with Clarksons Securities.

Lee Edwards: Thank you. Hi. Hi, Brody. Hi, Kenneth. Good morning.

Omar Mostafa Nokta: Obviously, things are progressing quite nicely. You

Omar Nokta: the $850,000,000 of cash you have got, that gives you plenty of flexibility in this market to act quickly when an opportunity arises. And you are getting close to that billion-dollar number here, seemingly, I would say, in the next, presumably, next few weeks or months. But, and you have no debt. So just wanted to get a sense from you in terms of how you are feeling about this cash position you have on the balance sheet. Do you feel compelled to put that to work? And is there, like, sense of urgency that you have either at your, you know, at the management level or at the board level that you want to put that to work?

And I guess maybe kind of related obviously to that is how are you thinking about putting that to work when it is time? Is it more kind of drip-feed dynamic, you know, in acquiring assets in the sale and purchase market? Or are you thinking more big picture or M&A?

Kenneth Hvid: Thanks, Omar. Good morning. Welcome back. Good question, obviously. It is a high-class problem we are sitting on here. But it is not something that is a big surprise to us. I mean, we could obviously project this out. I think what has surprised us maybe in this quarter, last quarter, and this quarter we are in here is how strongly the market has performed. That is obviously positive. We have still a lot of operating leverage and are generating a lot of cash flow in this market. Had the market been lower, we probably would have been a bit more active on the buying side. We still found a couple of ships, and we are happy about that.

The way we look at it in a strong market, which, very clearly, and we have seen the big uplift in tanker values here, is that we are still an operator. We still want to renew our fleet. We still believe that there are deals that we can find in this market. But at the same time, we also recognize that the asset values have had another step up here, and that is natural as we are seeing spot rates as we have. I expect that we will continue to do a couple of purchases throughout the year here.

I think it is a very tough environment to see that we do a major acquisition just because of the relative asset values. So I think the short answer to your question in terms of big acquisition versus drip-feeding, I think, was your words, it would probably be more drip-feeding with a couple of ships here and there. And the way we think about it is that we can still do it on a basis where we are selling maybe one old ship and buying two new ones and using a bit of the arbitrage that we have, as we have seen a nice uplift also on the values of the older tankers that we have.

Omar Nokta: Yeah. Thank you. That makes sense. Thanks, Kenneth, for that. And then I guess perhaps a follow-up and clearly related. We are coming up on the 1Q dividend potential. I know you declared $0.25. The past three years, you have conditioned us to anticipate a special with 1Q. The plan still to stick to that, and I know it is a board decision. You cannot just speak openly like that. But can we presume that the payout for the first quarter will be higher than what was done last time around?

Kenneth Hvid: I am just looking for my note to your question from exactly a year ago, Omar. And I think my answer that time was that it is something we discuss with the board at our March board meeting, and, as we have done in the last couple of years, we typically announce any specials in connection with the May earnings release.

Omar Nokta: Okay. Thank you. I will try to remember that for next year. I will turn it over. Thanks.

Operator: We will now take our next question from Ken Hoexter with Bank of America.

Omar Nokta: Great. Good morning. Probably love going back to the May script to repeat it. So

Kenneth Hvid: thoughts on, you mentioned the 500,000 barrels increase in Venezuela.

Ken Hoexter: Can you provide the increased demand for a number of vessels? Your thoughts on timing of Venezuela getting back up and running? Or is there an immediate amount that they have talked about kind of revamping and being able to scale up with speed before long-term capital investments have to be made? Is there potential of that increase of 500,000 barrels?

Kenneth Hvid: Yeah. I think the—hi, Ken. Morning. Kenneth here. I will pass it on to Christian. The oil is obviously being transported already now, as we said in our prepared remarks, but I will let Christian comment on kind of our outlook for Venezuela.

Lee Edwards: Yeah. So last year, Venezuelan crude exports averaged about

Kenneth Hvid: 800,000 barrels a day. We obviously saw in

Christian Waldegrave: December and January after 500,000 barrels a day, and it was all the long-haul flow to China that disappeared. Just looking at where it is tracking in February, we are already back up to about 700,000 barrels a day of exports. So the oil is starting to move again. And it is all going on non-sanctioned ships primarily to the U.S. Gulf/Caribbean region, but we have also seen two or three cargoes to Europe. We know that India is starting to buy some barrels as well. So it looks like we are going to get back up to the normal run rate of 800,000 barrels a day of exports fairly soon.

Then I think there is an expectation as well that with the Venezuelan oil industry opening up and foreign companies coming in and doing more investment that production and exports could be boosted within the year by another 200,000 to 300,000 barrels a day. But that is obviously dependent on how quick they can get things moving there. So I think it is a good story for the tanker market in terms of the exports shifting from the dark fleet to the compliant fleet. And then if we can get some extra production and volumes moving as well, then it is just going to benefit the midsized tankers especially even more.

Ken Hoexter: Great. How about the same thing, Christian, on an update on the Canada shipments?

Christian Waldegrave: Yes. So it is an interesting one because, obviously, a lot of that Venezuelan crude, which is heavy sour, was going to China. And so some of the Chinese state-owned refiners that were getting that heavy sour crude will probably be looking for replacement. And there are two areas they could replace it from. One is Middle East heavy crude, and the other is Canadian. We have seen an increasing trend of the TMX exports going directly on Aframax to Asia, and I think it is a natural replacement for some of that Venezuelan crude. And we are also seeing a trend of, you know, the U.S.

West Coast requirement coming down because there have been some refinery closures there, and the Benicia refinery, I think, is in the process of closing down as well. So again, that just frees up more Canadian crude to flow to China. So I think we will see some volumes picking up there directly on Aframaxes, which again is going to benefit the Aframax market.

Ken Hoexter: Yeah. So it is staying on Aframaxes. It is not transloading?

Christian Waldegrave: The load? But now it does not seem to be transloading. It is going more directly on Afras rather than transloading up onto VLCCs.

Ken Hoexter: Kenneth, how about a little history lesson? Right? I mean, it seems like something—do not know. Maybe it is getting a little more antagonistic with Iran the last couple of days. If there is action, maybe a little history lesson on what has happened with rates and volumes with military action in the region.

Kenneth Hvid: Yeah. I think it is a good question. Right now, it is more in anticipation of something happening. And as you are probably alluding to, we go back to the last time that we had action in the region where there was military action, and we looked at it back then. We saw a run-up in rates. We saw some security fears. I think at the time, we pointed out that historically, we have never seen a closure of the Strait of Hormuz. But, of course, that is what everybody is speculating about in the event that we see an escalation there. How is that going to drive up rates?

I would say the one difference we have this time around is that we have seen also consolidation in the VLCC segment, so it is a slightly different dynamic this time around, in the event that charterers will be looking to secure tonnage quickly. But I think at this point, I mean, we see rates which are as high as we saw last time but for slightly different reasons. And I think it is just a situation we need to watch. Christian, do you want to add anything?

Christian Waldegrave: No. I think like Kenneth said, when we had the last time, obviously, it was last June during that twelve-day conflict. As Kenneth said, I think the big thing was during that time, there was no actual disruption to flows and to movements. It was more of a security sort of premium that caused the rates to spike, and it came down pretty quickly. So it will depend if there is military action. Obviously, we do not know that. That is kind of speculative. But if there is military action, it depends on whether actual shipping and oil infrastructure is impacted or not. If the oil keeps flowing, then presumably, it will be a bit like last time.

The effects might be short-lived, but it really depends on how it unfolds.

Ken Hoexter: So if no attack on shipping or infrastructure here, then rates—well, you are saying they have already run up in anticipation, and we see it cooling off.

Lee Edwards: Okay. Got it.

Ken Hoexter: And then last one for me is

Omar Nokta: is the tanker orderbook now. You mentioned 18%

Ken Hoexter: of the fleet, the highest since 2016, but you said optically, it is different as I think you said some of the vessels needed to replace an aging fleet. So maybe thoughts on your thoughts on supply/demand, Christian. How do you think we see the balance in the year ahead?

Christian Waldegrave: Yeah. It is

Kenneth Hvid: it is going to be a timing issue, I guess, because as we laid out in the prepared remarks, the

Christian Waldegrave: orderbook, while on the surface it looks quite big, if you look at the fleet age profile, there were a lot of ships that were built in the late 2000s, especially 2008, 2009, 2010. So we are approaching a big hump in the fleet age profile that needs to be replaced. So the ships that are on order right now are needed to replace the older ships, but it is a matter of timing. Right? We know when the ships are coming into the fleet. We do not know when ships are going to be exiting either through scrapping or other means.

So, in the meantime, like I said, the deliveries will ramp up this year and further into next year. So there is quite a bit of tonnage that needs to be absorbed. But for now, as we are seeing in the rate environment, the fact that, you know, the underlying demand is still positive, we are seeing more and more trade getting pushed to the non-sanctioned fleet. There are factors there that in the near term at least suggest that the market stays firm. Beyond that, it is going to depend on the timing of the orderbook coming in versus some of these changes that are going on the geopolitical side.

So that is why we think we take a more balanced outlook on the medium term. Certainly in the near term, I think things still look pretty positive.

Kenneth Hvid: Great. Thanks for the time and thoughts. Appreciate it.

Operator: And that does conclude our question and answer session for today. I would like to turn the conference back to the company for any additional or closing comments.

Kenneth Hvid: Thank you very much for tuning in today. We look forward to reporting back to you next quarter. Have a great day.

Operator: And once again, that does conclude today's conference. We thank you all for your

Thank you.: participation.

Operator: You may now disconnect.

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