Scorpio Tankers(STNG)2022-02-14 19:54Financial Data and Key Metrics Changes - Scorpio Tankers finished 2021 with more cash on the balance sheet than in 2020, indicating improved liquidity [8] - The company has over 12.5 million per vessel since January 2021, raising the gross asset value of the LR2 fleet by $525 million [26] Business Line Data and Key Metrics Changes - Smaller vessels, specifically Handymax and MRs, have shown more improvement due to demand strength in the U.S., Latin America, Africa, and Europe [15] - LR2s have been slower to recover due to lower demand in Asia and reduced arbitrage opportunities [15] Market Data and Key Metrics Changes - Oil demand increased by 19 million barrels a day since May 2020 and is expected to surpass pre-COVID levels in 2022 [11] - Refined product inventories are at historically low levels, with 181 million barrels drawn from January to November 2021 [16] - The product tanker order book is at a record low, with only 5.3% of the existing fleet on order [23] Company Strategy and Development Direction - The company aims to maintain a strong liquidity position and significant operating leverage in a challenging market, focusing on creating shareholder value in an improving market [10] - The decision to sell assets is part of a strategy to enhance liquidity and reduce debt while capitalizing on increased asset values [9][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, despite the impact of the Omicron variant, citing strong demand for oil and its derivatives [40] - The company believes that the recovery is close, with ton mile demand exceeding pre-COVID levels due to refinery closures [17][20] - Management highlighted that mobility is the main catalyst for recovery, and all fundamentals are pointing in the right direction [74] Other Important Information - The company has refinanced essentially all upcoming maturities and has minimal CapEx, positioning itself well for a market recovery [30] - The company has the largest product tanker fleet in the world, comprised entirely of ECO vessels, providing significant operating leverage [31] Q&A Session Summary Question: Can you discuss the recent vessel sales and the pricing? - Management noted that the strong purchase market allowed for the sale of vessels at surprisingly high prices, reflecting increased net asset values [36] Question: How does the company feel about its liquidity position ahead of a recovery? - Management is comfortable with the current liquidity and may consider further vessel sales to take advantage of NAV arbitrage, but not out of necessity [41] Question: What are the expectations for rates in the upcoming quarter? - Management indicated that rates are volatile and difficult to predict, but overall rates are expected to be above breakeven levels [46] Question: How does the company view the impact of geopolitical events on demand? - Management acknowledged that geopolitical events could affect demand but emphasized that the fundamentals are strong and mobility is key for recovery [59] Question: What is the outlook on refinery closures and their impact on ton mile demand? - Management believes that the full benefit of refinery closures has not yet been realized and expects to see a multiplier effect on demand as it returns to pre-COVID levels [64]