Navigator Holdings (NVGS) This fall 2021 Earnings Name Transcript

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Navigator Holdings ( NVGS -4.10% )
This fall 2021 Earnings Name
Mar 11, 2022, 9:00 a.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Members

Ready Remarks:

Operator

Thanks for standing by, women and gents, and welcome to the Navigator Holdings convention name on the fourth quarter 2021 monetary outcomes. Now we have with us Mr. Dag von Appen, chairman; Mr. Niall Nolan, chief monetary officer; Mr.

Oeyvind Lindeman, chief business officer; and Mr. Michael Schrader, working officer of the corporate. [Operator instructions] I have to advise you that this convention is being recorded right this moment. And now I go the ground to certainly one of your audio system, Mr.

Appen. Please go forward, sir.

Dag von Appen — Chairman

Good morning, everybody. Welcome to the Navigator Gasoline fourth quarter earnings name, and I am glad to provide some introductory feedback. As we conduct right this moment’s convention name, we will likely be making varied forward-looking statements. These statements embody however usually are not restricted to the long run expectations, plans and prospects from each a monetary and operational perspective.

These forward-looking statements are primarily based on administration assumptions, forecasts and expectations as of right this moment’s date and are as such topic to materials dangers and uncertainties. Precise outcomes could differ considerably from our forward-looking info and monetary forecast. Extra details about these elements and assumptions are included in our annual and quarterly reviews filed with the Securities and Change Fee. In the present day’s name will embody feedback from Niall Nolan, our chief monetary officer; and Oeyvind Lindeman, our chief business officer.

As we’re confronting particular geopolitical occasions in Europe and in delivery, I wished to share some ideas with you. In fact, the overriding information of the final two weeks is Russia’s invasion of Ukraine. The longer term geopolitical situation in Europe is being reshaped as we communicate. The sudden invasion of Ukraine could have main ramifications not only for the power market but in addition for the safety and well-being of Europe.

Main ramifications in power, commodity and delivery markets have already began. All of us need to know the influence on delivery however with out understanding the tip recreation of this invasion and imposed sanctions. We won’t estimate the scope and period of potential disruptions. Creating sanctions to the Russian financial system and its corporations has impacted commerce provide chains already and is growing commodity costs.

Open markets and free commerce are about shopping for from the closest best supply. Geopolitical tensions and sanctions usually improve ton miles due to shifting commerce patterns, which require cargo delivery over longer distances. This, in fact, helps elevated freight charges. Europe will search to develop into much less dependent from Russian fossil fuels, oil, refined merchandise, pure fuel, LPG, coal and others, which, in fact, will not be simple to sort out brief time period.

Now, speaking about Navigator, I would really like first to thank the employees of the corporate for his or her continued laborious work through the remaining quarter of 2021. On account of their dedication to our firm through the interval, we began this yr in a stronger place. One other thank it’s best to go to the manager administration group comprised by Niall, our CFO; by Oeyvind, our chief business officer; and Michael Schrader, our chief working officer. They’ve been working very properly collectively and main the corporate as a robust group within the final 5 months.

Now let’s go to Slide 3, the place we have now some highlights. Working revenues have been up 26% in comparison with Q3 2021. And earlier than impairment losses, web revenue was $16.7 million, up 149% when in comparison with the $6.7 million of Q3 2021. Utilization elevated in comparison with the identical interval in 2020.

Moreover, the corporate has seen elevated ethylene volumes from its Morgan’s Level ethylene terminal three way partnership in Houston in addition to growing ethane exports from the USA, primarily by the pricing competitiveness in contrast with oil. As well as, we proceed to see new synergies and contributions to our income on account of the Ultragas nature and are delighted by the brand new alternatives this has introduced us. Within the face of uncertainty with world occasions, the corporate could be assured that its strong steadiness sheet, sturdy money place, flexibility and distinctive place out there will proceed to facilitate additional development. I wish to take this chance to welcome Dr.

Anita Odedra to the board of administrators of Navigator Gasoline. Anita was appointed as of tenth March, and we look ahead to welcoming her to the Navigator board and to benefiting from her appreciable business expertise. On this thrilling time for Navigator, Dr. Odedra will likely be an especially precious contributor to our board of administrators.

OK, I would really like now at hand over the decision to Niall Nolan, our chief monetary officer, Navigator Gasoline, who provides you with a extra detailed monetary assessment. Thanks.

Niall Nolan — Chief Monetary Officer

Thanks, Dag, and good morning. Throughout the fourth quarter of 2021, the corporate, as Dag talked about, generated a web revenue of $16.7 million or $0.22 per share earlier than impairment losses on 9 vessels of $63.7 million. That is proven on Slide 6. That is significantly greater than the web revenue of $3.4 million for the fourth quarter of 2020 or the web revenue of $6.7 million for the earlier quarter, Q3 of 2021.

And this $16.7 million is the best quarterly web revenue for the reason that first quarter of 2016 and pertains to market enhancements throughout the delivery segments in addition to elevated volumes by the ethylene Marine Export Terminal. Adjusted EBITDA for the fourth quarter was $55.2 million, in comparison with $32 million for the fourth quarter of 2020 and $40.3 million for Q3 of 2021. Complete vessel working income for the quarter was $129.4 million in comparison with $87.4 million for the comparative interval of final yr, and the $102.7 million generated through the prior quarter — third quarter of 2021. The $42 million improve in income between the fourth quarters of this yr and final was partially on account of the seven extra handysize vessels becoming a member of the fleet as a part of the Ultragas transaction in August 2021, which accounted for $11.5 million of that improve and one other $15.9 million on account of revenues derived from the Unigas Pool, representing revenues from the smaller Unigas vessels.

As a reminder, the Unigas fleet consisted of 18 vessels, seven of that are handysize, 22,000 cubic meter, semi-refrigerated vessels, just like these operated by Navigator, and 11 have been smaller 4,000 to 12,000 LPG or ethylene vessels. Two of the older, smaller vessels have now been offered. The 1999 Blissful Bride was offered in October 2021 for $4.75 million. And the 1999 constructed Blissful Chook was offered for $6.1 million earlier this month.

Common constitution charges rose to roughly $22,500 per day or $684,300 monthly for the fourth quarter, up from $21,123 per day for the fourth quarter of 2020, which accounted for an extra $5.1 million to complete revenues and utilization too nudged up from 91% for the quarter a yr in the past to 91.4% for this quarter. Three vessels have been in dry dock for scheduled surveys through the fourth quarter, taking a complete of 88 days. In complete 14 vessels have drydocks through the 12 months of 2021 at a complete value of $19.2 million. The corporate didn’t have every other capital expenditure throughout 2021 and doesn’t have any deliberate capital expenditure for 2022 aside from dry dockings.

Working income from the Pool was $8.3 million for the quarter, representing our share of the opposite contributors’ revenues, which voyage bills from the mortgage approval of $6.4 million representing the opposite contributors’ share of our revenues from the Pool. Consequently, our vessels had a web advantage of $1.9 million from the Pool through the fourth quarter of 2021 in comparison with a $600,000 deficit from the fourth quarter of 2020. Voyage bills elevated by $5.4 million through the quarter to $21.9 million, principally on account of the extra investments within the fleet, most of that are beneath voyage charters, thereby incurring these pass-through voyage bills. And we see bunker prices, which type a part of voyage bills, growing dramatically on account of the state of affairs in Ukraine as there’s concern concerning the scarcity of oil globally on account of attainable power sanctions in opposition to Russia.

Vessel working bills or opex, elevated by 43.8% to $40.8 million for the fourth quarter, all of which was a results of the extra vessels within the fleet. Vessel working bills per vessel per day really decreased by $120 per day to $8,000 per day per vessel for the quarter in comparison with $8,119 per vessel per day through the fourth quarter of 2020. I referred to impairment losses on vessels of $63.7 million in the beginning of my remarks. This associated to impairment on 9 usually older vessels following a assessment during which we decreased the accounting estimated helpful lifetime of the vessels of all vessels from 30 years to 25 years.

In consequence, the long run money flows of those vessels couldn’t help the then carrying values of the 9 vessels resulting in this impairment loss. On account of shortening the estimated financial lifetime of all vessels in our fleet to 25 years, depreciation from Q1 2022, i.e., this quarter, we’re residing in will improve to roughly $30.9 million from a present stage of round $25.7 million per quarter primarily based on the present fleet. Common and administrative prices elevated by $3.9 million to $10.3 million for the quarter, ostensibly on account of incorporating the G&A prices of Ultragas of $1.4 million, severance prices of $1.1 million and one-off authorized and different prices related to the Ultragas transaction of $1.3 million. And at last, different revenue being administration charges earned from the opposite participant of — for our administration of the Luna Pool was $100,000 for the quarter.

Curiosity expense for the fourth quarter was $10.7 million, a rise of $1.6 million or 18% within the fourth quarter of final yr, all of which was on account of curiosity on the extra debt taken on as a part of the Ultragas transaction. That debt amounted to roughly $197 million and the tax curiosity at U.S. LIBOR, which is topic to a hard and fast fee swap of round 2% plus the financial institution margin, which varies relying on the power of between 1.9% and a pair of.65%. Our share of outcomes from the ethylene Marine Export Terminal was a revenue of $6.4 million for the quarter primarily based on 241,500 tons of ethylene throughput costs.

As well as, depreciation for the terminal was $1.5 million, giving an EBITDA for the quarter from the terminal of $8 million. On Slide 7, we have the steadiness sheet, which is exhibiting the corporate had a money steadiness of $124 million at December 31 and an additional $22.9 million obtainable from undrawn revolving credit score services related to our secured vessel loans. Our minimal liquidity covenant from our varied financial institution loans and credit score agreements is a most of $50 million. Our complete debt at December 31 was $932.8 million, comprising of mortgage services secured by our vessels of roughly $707 million, a credit score facility related to the terminal of $54.4 million and two Norwegian bonds in combination amounting to $171.7 million.

One vessel mortgage, as is printed on Slide 8 matures this present yr, comprising of three 6-year-old vessels within the quantity of $50 million. And we’re within the means of negotiating that — the refinancing of that facility in addition to specializing in refinancing two different services that mature within the second half of subsequent yr 2023. Earlier this yr, on January 1, we offered Navigator Neptune, a 2,000 constructed ethylene service for $21 million. The vessel acted as safety beneath certainly one of our excellent Norwegian bonds.

And in accordance with the phrases of that fund, we tendered a suggestion for the web sale proceeds of $20.6 million to these bondholders at 102% of par. However as there have been no acceptances, and the bondholders preferring as a substitute to retain the bonds which have a maturity of November 2023. Consequently, the web proceeds from the sale of the vessel have been launched to the corporate for normal company functions. The corporate does have an present name choice on that bond at a redemption fee of 102.864%.

And that is it for me. I am going to now go you over to Oeyvind for his remarks.

Oeyvind Lindeman — Chief Industrial Officer

Thanks, Niall, and good morning, everybody. If we go to Slide No. 10. Throughout 2021 final yr, our fleet safely reliably and effectively delivered 5.6 million metric tons on behalf of our LPG petrochemical and ammonia clients.

31% of this quantity being the biggest portion by far was exported from North America and we anticipate this portion to extend this yr. Nevertheless, there’ll most certainly be different modifications within the close to and medium time period to our commerce flows as a consequence of the Russia and Ukraine battle. As you possibly can see on the slide, on the pie chart, Ukraine is without doubt one of the largest exporters of ammonia with an annual export quantity of two.5 million metric tons. This represents roughly 15% of world seaborne ammonia demand following the Black Sea port dilution in closing, worldwide ammonia shoppers might want to search sourcing from different places, which might have an effect on distance sailed.

The world nonetheless wants ammonia as an enter to the manufacturing of fertilizers for the agricultural business. Equally, LPG is frequently exported from the Baltic Sea. That is set to proceed, topic to legal guidelines and rules. We do, nonetheless, count on that the volumes will decline for the subsequent 9 months in parallel with the EU’s targets to scale back its Russian fuel imports by two-thirds by the tip of the yr.

Europe’s demand for LPG, nonetheless, stays in place, and we count on sourcing to modify to different places near Europe, similar to Algeria and North America. On Web page 11, we will see Navigators’ fourth quarter employment and you may see that it is growing each in LPG and petrochemical incomes days and utilization peaking through the month of December at 95.4%. As we talked about within the current commerce replace, our estimation of first quarter utilization stays above the 90% stage. February is often a softer month resulting from slowdown in exercise main as much as the Lunar New Yr.

As well as, for 2022, Chinese language import can also be restricted shopping for demand throughout Beijing Winter Olympics following authorities restrictions curbing manufacturing. Should you have a look at Web page 12, detailing the speed setting. Regardless of a step down in exercise for February, the speed setting for handysize fuel carriers, each ethylene succesful semi-refrigerated and absolutely refrigerated vessels remained regular through the interval. Bigger absolutely refrigerated LPG carriers got here off, nonetheless, with little to no impact on the handysize evaluation.

The very massive fuel service section has, nonetheless, improved during the last week or so, responding to shoppers securing LPG for power demand in an unsure setting. Should you transfer to Web page 13, the worldwide excessive value of power right this moment with Brent above $100 a barrel considerably improves the competitiveness of North American pure fuel liquids and its derivatives. While North American ethane volumes exported on handysize and medium-sized fuel carriers declined throughout January and February on the graph, March is ready to almost match the file peak of December final yr. Ethane used as feedstock for the manufacturing of ethylene is way less expensive in opposition to naphtha, which is priced after oil.

And due to this fact, the petrochemical producers are motivated to import as a lot ethane as they’ll presumably devour, and that could be a reflection of our expectation for March. Simply to provide you an instance, we at the moment have certainly one of our handysize vessels carrying ethane from U.S. to China throughout the Pacific. This can be a commerce that’s sometimes solely open for very massive and medium-sized ethane ships because of the economies of scale.

And this means the great worth of U.S. ethane at this second in time. In the identical vein, ethylene exports decreased throughout February. Exports are, nonetheless, dramatically up for March, which can really be a historic file of ethylene exports from the USA of America of greater than 120,000 tons.

And simply to state the plain, Navigator advantages from growing North American as future exports, irrespective whether or not it is ethane or ethylene and each indications present that the demand is selecting up for the month of March. Going to Web page 14. North American ethylene producers discover themselves in a extremely distinctive place. The graph reveals U.S.

ethylene money prices in comparison with different elements of the world. Within the present setting, with Brent above 100 barrels a ton — at $100 barrel, North American producers which are represented within the mild blue coloration go additional to the left, leading to a big aggressive edge. It strengthens our perception for sustained and continued ethylene exports to Europe and Asia. Europe and Asia is represented in yellow and inexperienced and are positioned principally within the third and fourth quartile on that graph.

Due to this fact, in a world setting of excessive power costs, excessive commodity costs, North America will additional strengthen its management in pure fuel liquids and spinoff manufacturing and exports. And Navigator is in an outstanding place because the logistic supplier to attach U.S. producers and midstream corporations with worldwide shoppers. And we’re very a lot wanting ahead to setting new export information along with our companions within the coming months for this section.

And with that, I’ll hand it again to the operator that may open for Q&A. Thanks.

Questions & Solutions:

Operator

Thanks very a lot. [Operator instructions] And we’ll now take our first query. Please go forward. Your line is open.

Omar Nokta — Clarkson Securities-Analyst

Hello, there. Sure, Omar Nokta from Clarkson Securities. Thanks. Yeah.

Hello, guys. Good morning and good afternoon. Good to see the enterprise, clearly, firing in all cylinders by way of the fleet efficiency and in addition the terminal. I Simply wished to ask possibly, as you highlighted relating to the Russia publicity, these 4 vessels which are on constitution to the Russian counterparties.

These contracts are clearly nonetheless in pressure, however develop into void if the entities or the final word entity or sanction. Are there any restrictions in the meanwhile, I suppose, by way of the place these ships are in a position to transit you form of beneath the present sanction framework? And are these going into Russian ports in the meanwhile? Are you able to possibly simply focus on that a bit of bit.

Oeyvind Lindeman — Chief Industrial Officer

Yeah. Thanks, Omar. So clearly, it’s one thing that we’re extremely targeted on with steady monitoring of all sanctions. So simply to make be clear, these ships on the present charters adjust to U.S., U.Okay.

and EU sanction insurance policies and regulation. And which may change, in fact. Within the contracts, which is kind of typical and really regular throughout the business, not particular to Navigator sanction closes. So ought to one thing change, it provides you with the choice to terminate if sanctions are both on the product or the counterpart.

Now the counterpart for us is predicated in Austria, which is then in flip owned by Seawell Holdings in Russia. And that firm will not be sanctioned and complies with each U.S., U.Okay. and EU sanction insurance policies as they’re right this moment. Ought to that change now that may — time will inform.

In the mean time, its merchandise, which is propane is being purchased by European shoppers, nothing to do with Navigator, however European shoppers are at the moment unrestricted in shopping for these merchandise in the intervening time. And the ports that we go to are nonetheless permitting ships to name these ports. So good query, and it is in flux, and we’re monitoring on an hourly, minutely foundation.

Omar Nokta — Clarkson Securities-Analyst

Thanks for that, Oeyvind. Make sense. And I suppose ought to the sanctions get extra stringent, and the contract turns into void, is there any concern that the constitution simply does not get again to ship? Is {that a} chance or is that seemly only a moot level contemplating you’re really working the vessel?

Oeyvind Lindeman — Chief Industrial Officer

Sorry, what was the query, sorry? Niall, possibly.

Niall Nolan — Chief Monetary Officer

There isn’t any probability, Omar. I imply the ships are crewed by our crew and they don’t seem to be used for privatized commerce, that means staying inside any specific nation, on this case, Russia. So the place are they to go to worldwide — the place there’s some suggestion that, which may occur and so they went into worldwide waters, then clearly, we might direct the ship to go the place we wished to go. So no in essence.

Omar Nokta — Clarkson Securities-Analyst

OK. Excellent. Thanks. You recognize what I’ve obtained a couple of extra questions, however I am going to hop again within the queue and let different analysts ask.

Thanks, guys.

Oeyvind Lindeman — Chief Industrial Officer

Thanks, Omar.

Operator

Thanks. We’ll now take our subsequent query. Please go forward. Your line is open.

Sean Morgan — Evercore ISI — Analyst

Hello, guys. That is Sean Morgan calling from Evercore. Hey. How is it going? So nice manufacturing, clearly, from the ethylene terminal this quarter.

However simply making an attempt to know setting base charges for the remainder of the yr. I imply, there’s been a lot volatility by way of quantity of manufacturing on a quarter-to-quarter foundation. So ought to we be planning for — is there seasonality there? Or ought to we be planning for form of absolutely ramped excessive utilization as soon as we get form of previous all these totally different operational points we have now with chillers and building. Will that begin to regular out into a relentless stream? Or is there going to be a good quantity of variability within the utilization of that terminal going ahead?

Oeyvind Lindeman — Chief Industrial Officer

Yeah. Hello, Sean. I am going to attempt to reply that one. So the operational points from a yr in the past in February 2021 are greater now.

So the whole itself is operational it is working. So then the query sequentially relating to the elemental dynamics normally in manufacturing and its attractiveness in worldwide market. And now talking to our commerce companions earlier this week, indication reveals that we have now illustrated on Web page 13 that March seeking to be our terminal, greater than 100,000 tons, proper. So a present and as well as, you will have exports from — the commentary of our April presents could be very sturdy.

Why is precisely what we talked about on Web page 14, the distinctive place of America, entry of low cost ethane that may produce an affordable ethylene. And the remainder of the world, Europe and Asia in contrast with them utilizing naphtha [Inaudible] It simply makes absolute sense to crank up a lot ethylene and ethane, you will get out of the USA of America. That is the setting we’re in. So we imagine you will be seeing sturdy numbers from the terminal for North America crude oil.

Sean Morgan — Evercore ISI — Analyst

OK. And that is form of given the present market. However — so I suppose, we will infer from that, although, if like in three years from now, issues are form of extra normalized, possibly crude costs has form of settled right into a extra regular state than utilization might form of dip from the form of peak demand that we’re seeing now?

Oeyvind Lindeman — Chief Industrial Officer

The terminal itself is sort of absolutely contracted. This dialogue to see — we talked about this 10%, 20% of our nameplate capability. And our mates at enterprise have undoubtedly present its functionality to extend and crank up the exports when wanted. However you will have the bottom, which is sort of 100%, which is million tons every year.

After which they’ve proven their functionality of doing 20% greater than that for peak demand.

Sean Morgan — Evercore ISI — Analyst

OK. All proper. After which if I might simply squeeze in a single mannequin query. The speed on the 13 ships for the brand new Ultragas associated facility, I believe you mentioned it is swapped out at 2%.

So is that an all-in efficient mounted fee at 2%? Or is that 2% above some form of — like I do know it is mounted, so like LIBOR does not apply, however 2% appears actually low. So making an attempt to know what the suitable fee is for that?

Niall Nolan — Chief Monetary Officer

Yeah. So LIBOR is mounted, Sean, at 2%. On high of that, you will have base margin of between 1.9 and a pair of.65.

Sean Morgan — Evercore ISI — Analyst

Received you. OK. So sure, all proper. So that you’re fixing the bottom fee after which the unfold provides.

OK, thanks. That helps clear that up.

Niall Nolan — Chief Monetary Officer

OK, nice.

Operator

Thanks. We’ll now take our subsequent query. Please go forward caller. Your line is open.

Ben Nolan — Stifel Monetary Corp. — Analyst

Hey, guys. That is Ben Nolan over at Stifel. I had a few different follow-ons. I did need to simply make clear a bit of little bit of what you are speaking about with respect to Russia, not essentially your contracts with seaborne, however once you’re whether or not it is the ammonia popping out of the Ukraine or the LPG popping out of Russia.

It is your view that there is extra capability elsewhere on the earth, such that there will not be essentially fewer cargoes or much less capability of these merchandise. It is simply it will likely be produced elsewhere and doubtless go an extended distance. Is that the way you’re fascinated about it?

Oeyvind Lindeman — Chief Industrial Officer

Fascinating query, Ben. So let’s attempt to go to fundamentals. Europe imported 1.5 million tons of LPG from Russia final yr. 350,000 tons of that was by sea and the remainder was on rail.

Now so the biggest portion of Russia provide of LPG to Europe is there from rail. A few of that will likely be restricted, I’m certain, for the biggest portion of it. And that quantity must come from someplace else. And may the seaborne commerce additionally cease, you then’re a shortfall in Europe of 1.5 million tons, if you happen to assume 2022 is similar 2021.

Due to this fact, which I discussed briefly, the legislation of shut proximity will kick in. So the place is it then that Europe can supply that 1.5 million tons or no matter that shortfall is coming from. And that’s then Mediterranean. They’ve capability, however the largest one, as you realize, and also you’re residing in is United States of America and the transatlantic commerce.

So it is an enormous alternative for North America to provide any shortfall of LPG that comes from this battle for the European continent. And if that’s the case, which I believe then that will increase what Dag talked about on the opening remarks, longer ton mile. After which the query was, what ship — what vessels will likely be doing that? Effectively, that will likely be our combine. What I attempted to level out was that for Navigator’s cargo shipped final yr, lower than 5% got here from Russia.

So ought to that go away it is solely a small, small a part of the enterprise. Even Trinidad Tobago was larger for a Navigator. So anyway, that is a distinct subject.

Ben Nolan — Stifel Monetary Corp. — Analyst

OK. No, that is useful. I admire that. Simply switching gears for a second.

You guys offered the Neptune, which was a 22-year-old ship, however it’s an ethylene service in a market have been, clearly, that is — there’s a variety of tightness within the ethylene service facet, particularly on the handysize portion of the fleet. Are you able to possibly speak by that a bit of bit what the considering was behind that asset sale?

Niall Nolan — Chief Monetary Officer

Hello, Ben. I believe that it was in all probability twofold, one commercially and financially. It’s, as you say, a 22-year-old vessel, and due to this fact, there’s a timeline. And I additionally talked about, we have revised our albeit accounting estimated financial life to 25 years.

So it is obtained three years of life. Should you have a look at any of the analysts, the delivery analysts who’re valuing the ship, no person valued that that is and it is we’re approaching $21 million. So it was an excellent worth. And I suppose, thirdly, the purchaser is a Chinese language counterpart who we perceive goes to make use of the ship for their very own functions in or round China or a minimum of at that facet of the world.

However it’s not, however we don’t imagine that it’s going to be competing with us on the enterprise and trades that we are likely to function on.

Ben Nolan — Stifel Monetary Corp. — Analyst

OK. All proper. That sounds good. I admire the colour.

Thanks, guys.

Niall Nolan — Chief Monetary Officer

Thanks, Ben.

Operator

Thanks. [Operator instructions] And we’ll now take our subsequent query. Please go forward. Your line is open.

Climent Molins — Worth Investor’s Edge — Analyst

Good morning. Climent Molins. I am from Investor’s Edge. Following up on the terminal, you count on March throughput to be very sturdy, and also you additionally underline how excessive oil costs improve the competitiveness of North American ethylene benefiting your terminal.

And I used to be questioning, are you at the moment growing throughput capability? And if that’s the case, what sort of timing we might be for the power to come back on-line?

Oeyvind Lindeman — Chief Industrial Officer

It is an fascinating query, which could be very related on this setting, a excessive commodity worth, excessive oil worth undoubtedly places U.S. ethylene exports within the boardrooms internationally for individuals to their companies to provide polyethylene or ethylene derivatives. So the final two years of COVID and depressed markets, arguably, then that hasn’t actually featured in individuals’s minds. However now because the world has modified over the previous few weeks, safety of ethylene from the states is certainly again on the agenda.

So we will likely be working extraordinarily laborious and diligent with our companions to drum up curiosity internationally for attainable enlargement, completely.

Climent Molins — Worth Investor’s Edge — Analyst

All proper. That is very useful. And you have been divesting the oldest portion of the fleet after the merger with Ultragas and also you’re now additionally sitting in a snug monetary place. May you present some commentary on what your capital allocation priorities will likely be going ahead?

Oeyvind Lindeman — Chief Industrial Officer

That is a very good query, too. I believe the primary a part of that will be debt discount. We might even be different choices, different investments. After which contemplating a — introducing a dividend or share buyback coverage.

That is clearly a matter of topic for the board, which have but to contemplate that. However that will not be unreasonable. However actually, within the brief time period, I discussed, we have a lot of services developing for maturity subsequent yr. So we might have a look at lowering a few of our debt within the preliminary section.

Climent Molins — Worth Investor’s Edge — Analyst

All proper. That is honest. Thanks very a lot for taking my questions.

Oeyvind Lindeman — Chief Industrial Officer

You are welcome.

Operator

And we’ll now take our subsequent query. Please go forward caller. Your line is open. Mr.

Nolan, your line is open.

Ben Nolan — Stifel Monetary Corp. — Analyst

Sorry, I used to be muted, sorry. I did not need to overstay my welcome the primary time. So I admire you taking one other query from me. There had been some noise out there during the last, I do not know, three or 4 months about you guys having a partnership that was shifting — presumably shifting into the transportation of CO2.

I am curious, if you happen to might body that in a bit of bit. After which additionally, it has on condition that every part that is occurring in Russia and power costs and every part else, possibly CO2 or carbon seize and the motion of that has form of taken a bit of little bit of a backseat to introduce safety and that form of factor and possibly is being a bit of bit extra spoke proper that it occurred?

Oeyvind Lindeman — Chief Industrial Officer

Yeah, an expansive query. So it is twofold. So that you’re right. So Dan-Unity, which is the three way partnership between Ultragas and Evergas, which is now Navigator Gasoline is to develop CO2 transportation companies for that.

So what they’ve carried out to date is to design our absolutely fledged and CO2 ship kind with a specific containment system that’s wanted to move CO2 — in a CO2 provide chain. There are a few prior initiatives and a variety of discussions occurring in Europe throughout the Atlantic as properly concerning the chance, logistics, economics and practicality of that commerce. There is a public initiatives in Denmark, particularly known as inexperienced sand initiatives, which this three way partnership is a part of. So it’s undoubtedly shifting in the correct course.

Child steps in the meanwhile, it may very well be one thing a lot larger. The second a part of your query is, is that this a again seat in the meanwhile. I believe fairly the alternative. So if you happen to learn the information in Europe, making an attempt to scale back power dependency of every other area, then setting and different sourcing is coming huge time.

So in that scope, Europeans must deal with the carbon concern that Europe has, amongst others. And due to this fact, I believe — I do not suppose there’s any stopping of or discount in curiosity in CO2 transportation. Fairly the opposite.

Ben Nolan — Stifel Monetary Corp. — Analyst

OK. That is useful. And that was my solely different query. I admire.

Thanks.

Operator

Thanks. There are not any additional questions presently, gents. Again to you.

Dag von Appen — Chairman

OK. I’d thanks all for attending our fourth quarter earnings name, and we’ll communicate to you all once more on the first quarter of 2022. Thanks very a lot, and goodbye.

Operator

[Operator signoff]

Length: 45 minutes

Name contributors:

Dag von Appen — Chairman

Niall Nolan — Chief Monetary Officer

Oeyvind Lindeman — Chief Industrial Officer

Omar Nokta — Clarkson Securities-Analyst

Sean Morgan — Evercore ISI — Analyst

Ben Nolan — Stifel Monetary Corp. — Analyst

Climent Molins — Worth Investor’s Edge — Analyst

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