Scorpio Tankers Inc. · NYSE:STNG
Scorpio Tankers — Stifel Conference (February 2020)
38 slides from Scorpio Tankers's conference presentation, Feb 11, 2020
Slide 1: Scorpio Tankers Inc. STIFEL Conference Presentation
Scorpio Tankers Inc. STIFEL Conference Presentation February 11, 2020
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: Earnings Reminder
Earnings Reminder Scorpio Tankers Inc. Fourth Quarter 2019 Earnings Release Date Date: Wednesday, February 19, 2020 Conference Call Details Date: Wednesday, February 19, 2020 Time: 8:30 AM Eastern Standard Time and 2:30 PM Central European Time US/CANADA Dial-In Number: 1 (855) 861-2416 Internationa
Slide 4: Scorpio at a Glance
Scorpio at a Glance Key Facts Fleet Overview (1) • Scorpio Tankers Inc. (“Scorpio”) is the world’s largest and most Product Tanker Vessels on ECO Scrubber Avg Age Segment the Water Vessel Fitted/Planned (Years) modern product tanker company • Pure play product tanker offering all asset classes • 126
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: Investment Highlights
Investment Highlights Largest and Most Modern Product Tanker Fleet in • 128 owned vessels (126 on the water) with an average age of 4.0 years with track record of outperforming the market the World Largest Scrubber Fitted • Scorpio's ECO fleet well positioned as the largest scrubber fitted product t
Slide 7: Financial Overview
Financial Overview Avg Number of Vessels Fleet TCE ($/day) Owned & Finance Leased TC-In BB-In $25,000 $23,163 160 125 119 $20,000 120 107 10 10 $15,783 $15,538 98 99 6 $15,008 8 $15,000 $12,805 8 8 10 80 17 13 $10,000 109 109 40 78 88 73 $5,000 0 $0 2015 2016 2017 2018 2019 (Q1-Q3) 2015 2016 2017 20
Slide 8: Potential Cash Flow Generation
Potential Cash Flow Generation Potential Annual Cash Flow Generation (Company) Potential Annual Cash Flow Generation (Per Share) Millions $USD Net Cash Flow $/ Per Share Net Cash Flow $3,000 Scrubber Savings $45.0 Scrubber Savings OPEX, Cash G&A, Interest & Principal OPEX, Cash G&A, Interest & Princ
Slide 9: Appendix: IMO 2020 & Scrubber Economics
IMO 2020 & Scrubber Economics Appendix 1 9
Slide 10: IMO 2020: It’s Still Early
IMO 2020: It’s Still Early • What We Have Seen So Far ➢ High Levels of VLSFO Fuel Adoption: Accumulated storage in preparation of IMO 2020 allowed for greater availability. ➢ Widening of the VLSFO-HSFO Spread: In January, spreads averaged $200-$350/MT, depending on the region. ➢ Regional VLSFO Price
Slide 11: Eco & Scrubber Fitted Vessels Provide Significant Fuel Savings
Eco & Scrubber Fitted Vessels Provide Significant Fuel Savings • IMO 2020 has changed the underlying economics of the spot freight market, the spot market TCE rate ($/day) for one specific route now has four different daily TCE rates Four TCEs Now Available Fuel Savings By Vessel Type Vessel Type Ve
Slide 12: Bunker Prices & Forward Curve
Bunker Prices & Forward Curve Spot Bunker Prices ($/MT) (1) Forward Curve ($/MT) (2) Location HSFO VLSFO MGO Rotterdam (VSLFO-HSFO Spread) Singapore (VSLFO-HSFO Spread) Houston $365 $521 $534 $300 New York $342 $533 $546 Rotterdam $298 $473 $543 $250 Fujairah $294 $561 $672 Singapore $336 $573 $639
Slide 13: Largest Eco & Scrubber Fitted Product Tanker Fleet
Largest Eco & Scrubber Fitted Product Tanker Fleet • Scorpio currently owns and operates the world’s largest Eco product tanker fleet and will be installing exhaust gas cleaning systems “scrubbers” on all of its owned and finance leased MR, LR1 and LR2 vessels • By Q4-20, Scorpio will have the large
Slide 14: Scrubber Fuel Savings
Scrubber Fuel Savings Scorpio Scrubber Fleet Scrubber TCE Savings (1) Annual Cash Flow Benefit (3) (Vessels Installed with Scrubbers as of Q2-20) ($ per day) ($ millions) $177 60 $3,345 $147 $2,787 $2,489 42 $118 x = 12 MR LR1 LR2 MR LR1 LR2 $200 $250 $300 Assumes MGO / HFSO Spread of $200 / MT MGO
Slide 15: Appendix: Market Update
Market Update Appendix 1 15
Slide 16: Murphy’s Law: Refined Products End to 2019 and Start to 2020
Murphy’s Law: Refined Products End to 2019 and Start to 2020 Murphy’s Law – everything that can go wrong has gone wrong this winter for Saudi Refined Product Exports (kb/d) refined products. FY-18 FY-19 • Saudi Oil Infrastructure Attacks 2.0 1.7 1.8 1.6 • Reduction in Saudi product exports since the
Slide 17: Spot Rate Earnings
Spot Rate Earnings LR2 Avg Earnings ($/Day): Dec 2013-2019 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 MR Avg Earnings ($/Day): Dec 2013-2019 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Jun-14 Jun
Slide 18: One Year TC Rates Continue to Increase
One Year TC Rates Continue to Increase • One year time charter rates have increased significantly over the last two years and are now approaching 2015 levels MR One Year TC Rates ($/Day) LR2 One Year TC Rates ($/Day) MR Eco MR $35,000 LR2 Eco LR2 $25,000 LR2-Scrubber Fitted Eco LR2-Scrubber Fitted $
Slide 19: Significant YoY Increase in Asset Values
Significant YoY Increase in Asset Values • Increasing spot market and time charter rates continue to drive asset values for vessels on the water • Resale vessel values have exceeded newbuilding values, reflecting positive future expectations for products market • In addition, uncertainty about futur
Slide 20: Appendix: Long Term Fundamentals
Long Term Fundamentals Appendix 1 20
Slide 21: Short Term Tailwinds & Long Term Fundamentals
Short Term Tailwinds & Long Term Fundamentals Short Term Tailwinds Long Term Fundamentals • Significant number of LR2’s have switch from clean to dirty Demand • There are currently more LR2’s trading dirty than clean, • Oil consumption expected to increase year over year tightening LR2 supply • Grow
Slide 22: 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 T
Slide 23: Distillate & Ton Mile Demand Continue to Grow
Distillate & Ton Mile Demand Continue to Grow • Light & middle distillate demand has increased every year except 2008/2009 • Ton miles, the quantity of cargo multiplied by the distance it travels, has increased at a CAGR of 3.8% since 2000 Incremental Light & Middle Distillate Demand (1) Seaborne Pr
Slide 24: Regional Diesel & Gasoline Balances
Regional Diesel & Gasoline Balances FSU Europe 1.1 (1.1) North America 0.1 1.3 1.3 Asia 0.1 0.9 Middle East (0.1) Africa 0.6 (1.1) (0.3) (0.8) Latin America (1.2) (1.1) Diesel surplus / (deficit) in mb/d Gasoline surplus / (deficit) in mb/d Source: Energy Aspects, estimates are for FY-20 24
Slide 25: Saudi Arabia Refining Capacity
Saudi Arabia Refining Capacity • Since investing in new domestic refining capacity, Saudi Arabia has increased refined product exports 400% since 2013 • The last of Saudi’s 400 kb/d mega refinery series, Jazan, is expected to come online in Q3-2020 Saudi Domestic Refining Capacity Saudi Arabia Refin
Slide 26: Record Low Product Tanker Orderbook as a % of Fleet
Record Low Product Tanker Orderbook as a % of Fleet • Limited newbuilding order continue to extend the duration of limited fleet growth over the next three years • Current orderbook is at its lowest levels ever recorded, measuring 6.8% of existing fleet on water • Significantly below longer-term fiv
Slide 27: What’s Delivered May Never Die….So Far
What’s Delivered May Never Die….So Far • Since 1996, there have been 1,597 MR’s delivered and of these 1,573 MR vessels are still active today or 98.5% • Refined product demand growth and corresponding vessel supply did not accelerate until the early 2000’s • Vessels are typically scrapped around th
Slide 28: What does this Mean? Age Makes a Difference
What does this Mean? Age Makes a Difference • Product tankers have coated tanks, typically epoxy, making them easy to clean and preventing cargo contamination • As a product tanker becomes older, the quality of the epoxy coatings can deteriorate which increases the risk of cargo contamination • A pr
Slide 29: Demand Expected to Outpace Supply in 2020
Demand Expected to Outpace Supply in 2020 • The market could tighten significantly in 2020 as a result of slowing fleet growth, growing global refined product consumption and an expected increase in the demand for middle distillates from IMO 2020 Historically Low Orderbook & IMO 2020 Demand Catalyst
Slide 30: Appendix
Appendix Appendix 1 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: Scorpio at a Glance
Scorpio at a Glance Owned & Finance Lease Vessels Name Year DWT Type Name Year DWT Type Name Year DWT Type STI Comandante May-14 38,734 HM STI Manhattan Mar-15 49,990 MR STI Elysees Jul-14 109,999 LR2 STI Brixton Jun-14 38,734 HM STI Queens Apr-15 49,990 MR STI Madison Aug-14 109,999 LR2 STI Pimlico
Slide 38: www.scorpiotankers.com
www.scorpiotankers.com