Scorpio Tankers Inc. · NYSE:STNG
Scorpio Tankers — Q3 2021 Earnings Presentation
37 slides from Scorpio Tankers's earnings presentation, Nov 11, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
Scorpio Tankers Inc. Third Quarter 2021 Earnings Presentation November 11, 2021
Slide 2: Disclaimer and Forward-looking Statements
Disclaimer and Forward-looking Statements This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Scorpio Tankers Inc.’s (“Scorpio’s”) curr
Slide 3: Investment Highlights
Investment Highlights • 131 wholly owned, finance leased or bareboat chartered-in tankers on the water with an average age of 5.8 years The Largest & Most Modern Product Tanker Fleet in the • 98 product tanker vessels equipped with exhaust gas scrubbers World • Vessels trading within one of the worl
Slide 4: Scorpio Tankers at a Glance
Scorpio Tankers at a Glance Key Facts Fleet Overview Largest Product Tanker Fleet in the World • Scorpio Tankers Inc. (“Scorpio”) is the world’s largest product with 131 Vessels on the Water tanker owner, providing marine transportation of refined 14x 63x petroleum products (gasoline, diesel, jet fu
Slide 5: Largest & Most Modern Product Tanker Fleet in the World
Largest & Most Modern Product Tanker Fleet in the World • World’s largest and youngest product tanker fleet, including the leading owner in the MR and LR2 product tanker segments • While a significant portion of the global MR and LR fleets are older than 15 years of age, the Scorpio fleet has an ave
Slide 6: Q3-21 Actual & Q4-21 Guidance of Company TCE Rates
Q3-21 Actual & Q4-21 Guidance of Company TCE Rates Scorpio Fleet TCE by Segment ($/day) % of Q4-21 Days Booked as of November 10, 2021 LR2 LR1 MR HM $13,750 Q4-21 58% 55% 55% 52% $12,500 $10,871 $10,262 $10,500 $10,015 $8,700 $7,457 LR2 LR1 MR HM Q3-21 Q4-21 Guidance Source: Company’s earnings relea
Slide 7: Scrubber Fuel Savings
Scrubber Fuel Savings • As of November 10, 2021 the Company has 98 vessels currently installed with exhaust gas cleaning systems (“scrubbers”) Scorpio Scrubber Fleet Scorpio TCE Savings Annual Cash Flow Benefit (Vessels installed with scrubbers) ($/day) (Millions $USD) 80 $2,509 $102.6 70 $2,091 60
Slide 8: Financials
Financials 8
Slide 9: Quarterly Financial Performance
Quarterly Financial Performance (In '000s of USD) Q3-21 Q2-21 Revenue $ 119,271 $ 139,442 Vessel operating costs (85,881) (80,598) Voyage expenses (661) (1,396) Charterhire - - Depreciation (60,115) (59,422) Impairment of vessels and goodwill - - G&A (13,054) (13,324) Marger related transaction cost
Slide 10: Limited Capex & Upcoming Maturities Have Been Refinanced
Limited Capex & Upcoming Maturities Have Been Refinanced • Since 2018, the Company completed $445.8 million in capex payments for drydock, ballast water treatment systems and scrubbers • Remaining capex for FY-21 is $12.8 million • The Company has $18 million of committed scrubber financing that has
Slide 11: Liquidity
Liquidity Liquidity • As of November 10, 2021, the Company had $228.9 Millions $USD $300.0 million in unrestricted cash and cash equivalents. $281.0 $281.0 • The Company is also in discussions with financial $246.9 $34.1 institutions to further increase liquidity by up to $34.1 $228.9 $18.0 million
Slide 12: Potential Cash Flow Generation
Potential Cash Flow Generation Potential Annual Cash Flow Generation Excluding Debt Repayment Potential Annual Cash Flow Generation Including Debt Repayment Millions $USD Millions $USD $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,095 $856 $1,376 $617 $1,137 $1,000 $1,000 $378 $898 $139 $658 $419 $28
Slide 13: Market Fundamentals
Market Fundamentals 13
Slide 14: Short Term Market Update
Short Term Market Update Global Oil Demand (mb/d) (1) • Global oil demand has recovered significantly since April 2020 and is 105 approaching pre pandemic levels 100.8 99.0 98.7 100 • Inventory draws continue to push refined product inventories below their five 96.3 95.0 95 year avg • Product tanker
Slide 15: Floating and Land Based Inventories Continue to Decline
Floating and Land Based Inventories Continue to Decline • Refined product (gasoline, diesel and jet fuel) inventories are below their five year average in the United States, ARA and Singapore • Floating refined product inventories decreased from 108.2 million barrels in May 2020 to 20.4 million barr
Slide 16: East – West Diesel Spread Remains Wide
East – West Diesel Spread Remains Wide Historical East-West Diesel Spread ($/MT) (1) Forward Curve of East-West Diesel Spread($/MT ) (1) $30 $10 $25 $5 $20 $0 $15 -$5 $10 -$10 $5 -$15 $0 -$20 -$5 -$25 -$10 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov
Slide 17: East – West Naphtha Spread Remains at Healthy Levels
East – West Naphtha Spread Remains at Healthy Levels • The East-West naphtha spread remains wide for the 2021-22 winter, encouraging naphtha flows from the West to the East • Naphtha is used as feedstock for petrochemical plants in Asia and can be a substitute for LPG as prices increase during the w
Slide 18: Jet Fuel Demand Is Improving but Still Below 2019 Levels
Jet Fuel Demand Is Improving but Still Below 2019 Levels • Global commercial flights have continued to recover from their 2020 lows, but are still at 82% of their 2019 levels • Remaining recovery in jet fuel demand will be driven by a reduction in travel restrictions and an increase in long-haul int
Slide 19: Share of People with One COVID-19 Vaccine Dose
Share of People with One COVID-19 Vaccine Dose As of June 29, 2021 As of November 8, 2021 Source: Our World Data Vaccination Tracker November 8, 2021 19
Slide 20: Vaccinations to Drive Demand Recovery in Refined Products
Vaccinations to Drive Demand Recovery in Refined Products • Robust economic growth, rising vaccination rates, increasing mobility levels and the easing of social distancing to underpin stronger global oil demand in Q4-21 and 2022 • Low product inventories, refinery closures and growing demand are ex
Slide 21: Product Tanker Demand Drivers
Product Tanker Demand Drivers Increased Volumes Voyage Distance Product Tanker (Seaborne Trading Activity Demand Exports) (Ton Mile Demand) • Oil consumption • Dislocation • Arbitrage opportunities growth between refinery from price volatility and consumer • Refinery margins • Low inventory levels •
Slide 22: Long Term Fundamentals
Long Term Fundamentals Refined Product Demand Expected to Continue to Recover through 2021 & 2022 • Seaborne refined product exports are estimated to increase 6.7% and 5.1% in 2021 and 2022, respectively (1) • Refined product ton mile demand is estimated to increase 9.8% and 5.5% in 2021 and 2022, r
Slide 23: Global Refinery Closures Accelerate
Global Refinery Closures Accelerate Announced Refinery Closures • Global oil refining is being reconfigured and will have a significant change on future global trade patterns Operator Location Capacity (kbd) Timing • Older refineries have faced a wave of closures due to: MPC Martinez, CA(USA) 161 20
Slide 24: Impact of Closing Australia’s Kwinana & Altona Refinery
Impact of Closing Australia’s Kwinana & Altona Refinery Australia Refining Capacity • BP announced that they are closing their 146 kb/d Kwinana refinery in Australia at the end of 2020 Refinery Owner Capacity (kb/d) Status Altona Exxon Mobil 90 Closing • In February 2021 Exxon Mobil announced that t
Slide 25: Orderbook as % of Fleet Remains Near Historical Low
Orderbook as % of Fleet Remains Near Historical Low • Limited newbuilding orders coupled with a low orderbook has kept orderbook as % of fleet near historical lows Newbuilding Orders Orderbook as % of Fleet (# of Vessels) MR LR1 LR2 25.0% 450 433 Product Tanker 10K+ Orderbook % Fleet 400 78 5 Yr Avg
Slide 26: Seaborne Product Exports to Outpace Supply in 2021 & 2022
Seaborne Product Exports to Outpace Supply in 2021 & 2022 Seaborne Exports vs Product Tanker Fleet Growth Product Tanker Net Fleet Growth Seaborne Refined Products Exports 10.0% 7.4% 6.9% 6.3% 5.7% 5.0% 4.9% 4.8% 4.5% 4.2% 4.0% 2.6% 2.0% 1.6% 1.9% 1.3% 1.2% 2.5% 1.1% 0.0% -1.0% -5.0% -5.0% -10.0% -1
Slide 27: Scrapping Continues to Accelerate
Scrapping Continues to Accelerate • There have been 32 MR vessels scrapped year to date and it’s projected to be the highest number of MR vessels scrapped in a year • Increased scrapping is driven by higher scrap prices, lower rate environment and obsolescence for upcoming environmental regulations
Slide 28: Significant % of the Fleet Turning 15 Years & Older
Significant % of the Fleet Turning 15 Years & Older • Certain key customers will only employ product tankers 15 years & younger • This limits trading opportunities for older tonnage and creates a two-tiered market where; • Owners consider continuing to carry refined products, switching from products
Slide 29: Increasing Environmental Regulations to Benefit Modern Vessels
Increasing Environmental Regulations to Benefit Modern Vessels • The EU has put pressure on the IMO to accelerate it’s 2030 GHG emission targets and may implement its own ETS by 2023 • It’s unclear how the timeline of these plans will accelerate, but the focus on reducing GHG emissions in the shippi
Slide 30: Appendix
Appendix 30
Slide 31: Product Tankers in the Oil Supply Chain
Product Tankers in the Oil Supply Chain • Crude Tankers provide the marine transportation of the crude oil to the refineries. • Product Tankers provide the marine transportation of the refined products to areas of demand. • Structural demand drivers in the product tanker industry: • US has emerged a
Slide 32: What is in a Barrel of Crude Oil?
What is in a Barrel of Crude Oil? Source: Valero & EIA, December 2019 32
Slide 33: Product & Crude Tankers
Product & Crude Tankers Tankers “Dirty” “Clean” Crude Products Vessel VLCC Suezmax Aframax Panamax Handysize LR2 LR1 Hmx/MR Handysize (200,000 + (120,000 - (80,000 - (60,000 - (< 60,000 (80,000- (60,000- (25,000- (<25,000 Size DWT) 200,000 DWT) 120,000 DWT) 80,000 DWT) DWT) 120,000 DWT) 80,000 DWT)
Slide 34: Product Tanker Specifications
Product Tanker Specifications IMO Classes I, II, & III IMO Class I Chemical IMO Class I refers to the transportation of the most hazardous, Tankers very acidic, chemicals. The tanks can be stainless steel, epoxy or marine-line coated. IMO Class II Chemical & Product Tankers IMO Class II carries Veg
Slide 35: Design Features on Scorpio Product Tankers
Design Features on Scorpio Product Tankers 35
Slide 36: Scrubber Fuel Savings
Scrubber Fuel Savings Consumption figures below assume that: • Scrubbers do not operate during any port activities • Each voyage has a load and discharge port in an ECA, i.e. scrubber does not operate in ECA waters Annual ECO Vessel Fuel Consumption (MT/year) (1) Sailing (Ballast & Laden) MR LR1 LR2
Slide 37: www.scorpiotankers.com
www.scorpiotankers.com