David Butters – Chairman, President and Chief Executive Officer Niall Nolan – Chief Financial Officer Oeyvind Lindeman – Chief Commercial Officer.

Mike Webber – Wells Fargo Ben Nolan – Stifel John Chappell – Evercore Ben Friedman – Morgan Stanley James Jang – Maxim Group.

Thank you for standing by, ladies and gentlemen, and welcome to the Navigator Holdings Conference Call on the First Quarter 2017 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; Mr. Oeyvind Lindeman, Chief Commercial Officer of the Company.

At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. And I now pass the floor to one of your speakers to Mr. Butters. Please go ahead, sir..

Thank you, Jenny, and good morning, everyone, and welcome to the first quarter earnings conference call. Now Navigator’s performance in the first quarter of 2017 pretty much mirrored that of last year’s fourth quarter and that a weak LPG shipping segment was partially offset by a more buoyant petrochemical gas market.

Reasonably good utilization in the low 90s, however could not overcome last – the low and deteriorating charter rates. Oeyvind Lindeman, our Chief Commercial Officer will shortly review the current state of the market and provide some details around the first quarter’s activity.

Now leaving aside the $4.2 million extraordinary charges associated with the early refinancing of $125 million Norwegian bond in February one of the items that Niall Nolan will cover in a few minutes. Navigator’s net income after-tax amounted to about $6.9 million or $0.12 per share. EBITDA totaled $33.5 million for the quarter.

These results are pretty much in line with what we thought we would achieve at the beginning of this year, but a poor reflection against last year’s EPS of $0.35 was recorded.

It is especially striking when considering that last year’s higher earnings were actually achieved with the utilization, substantially below this year’s 92.4%, and it’s quite clear that the culprit in the lower earnings was charter rates.

Indeed this year’s first quarter time charter equivalent day rates were $8,000 below last year’s when they reached approximately $29,561 per day. Now the only bright spot has the – is the recognition of the higher operating and earnings leverage that the company can achieve if rates move back up and if we can maintain or improve on our utilization.

Unfortunately however, we do not expect that to happen in the near future. Realistically we need to go out as far as this year’s fourth quarter before we can see the possibility of any release. And by then Braskem’s long-term charters on a handysize ethylene carriers should commence reducing our exposure to the spot market by two vessels.

Also Sunoco Logistics or Energy Transfer Partners as they are now referred to, expects completion of the Mariner East two pipeline by the end of this year’s third quarter.

And if all goes according to plan, they will begin transporting an incremental 275,000 barrels a day of liquids from the Marcellus and Utica basins into the Delaware river terminal at Marcus Point. This east coast refrigerated terminal will benefit all types and sizes of LPG vessels.

Turning to the petrochemical side of our business; the transport of propylene, butadiene and ethylene, amounted to just over half of this year’s first quarter activity, up over twice the percentage carried in the same period last year.

Our contracts of affreightment with Mitsubishi and our contract of affreightment with Braskem were an important part of this olefins trade.

In general, petrochemical gases are a preferred trade for us considering the premium rate we get over LPG and the tendency to carry these products a longer distance earning us more money for a longer period of time. The downside of this trade however, is that it is easily impacted by price volatility in crude and refined products.

Especially, when hydrocarbon prices are falling and traders are really reluctant to take on long-term positions in a following a week market and consequently business tends to be unpredictable. A market view of any length of time in this segment is rather difficult.

Lastly, we have no further developments to report on the progress of an ethylene export terminal. We continue to discuss with the relevant parties, who have indicated their interest in constructing a terminal, but we are not aware of any firm commitments as yet.

We remain confident based upon these discussions as well as discussions with ethylene producers and buyers that a terminal is needed and will be dealt.

It is worth noting that, since our last conference call Exxon in partnership with SABIC, a Saudi Arabian company, have announced their interest in building yet another world-scale steam cracker near Corpus Christi, Texas. The $10 billion ethylene plants could be operational around 2022.

If they follow through with the expansion as expressed in their press release, this could signal a second wave of new construction and capacity expansion of ethylene. And now I’d like to pass the call over to Niall Nolan to review the financial performance..

Thank you, David, and good morning to everyone. Revenue for the three months ended March 31, 2017 was $77.3 million, an increase from last quarter, but a small reduction of $1 million or 1.2% relative to the comparative first quarter of 2016.

Net revenue, however, revenue less voyage expenses, which eliminates the effect of further vessels on time charter or voyage charter, was $62.3 million for the first quarter, a slight increase from last quarter, but $7 million or 8.6% less than the $69.3 million generated during the first quarter of 2016.

This decrease in net revenue was extensively as a result of a reduction in daily charter rates as David as just mentioned. Charter rates for the three months ended March 31, 2017 were $21,712 per day or $660,000 per month, compared to $29,560 per day or $900,000 per month during the first quarter of 2016.

This have the effect of reducing quarter-on-quarter revenue by $21.3 million.

This first quarter’s average charter rate was also approximately a $1,000 per day less than last quarter Q4 of 2016 as the 12-month time charters agreed in late 2015 or early 2016 expire and are renewed at the current lower rates than those available more than 12 months ago.

Vessel utilization however increased for this first quarter to 92.4% from 87.6% during the first quarter of 2016 and also a further improvement from the 89.5% achieved during the fourth quarter of 2016. This improved utilization helped to increase net revenues by $3.2 million compared to the first quarter of 2016.

During the first quarter we had an average of 34.6 vessels in operation, compared to an average of 29.8 vessels during the first quarter of 2016, contributing an additional $11.1 million to net revenue.

At March 31, we had 35 vessels in our fleet, following the delivery of Navigator Nova and Navigator Luga in January this year, giving an overall average age across the fleet of 6.6 years. Since the quarter-end we’ve taken delivery of Navigator Yauza, and now both it and Navigator Luga are on long-term time charters.

We have two final vessels in our new build program, Navigator Jorf and Navigator Prominence. Navigator Jorf is also charted long-term, immediately after her schedule delivery in July of this year. There were dry dockings undertaken during the first quarter and none are scheduled for the remainder of 2017.

Seven vessels are expected to enter dry dock for special service during 2018 at an anticipated combined cost of $8.5 million.

Voyage expenses for the first quarter were $15 million, an increase of $7.9 million from the first quarter of 2016, as a result of an increase in voyage charter days to 1,397 days or 49% of all vessel available days during the first quarter, compared to just 792 voyage days or 34% of the total during the first quarter of 2016.

For voyage charters the company pays for voyage expenses, which are then passed through an increase in revenue. Today, 17 of our 36 vessels are on time charter, a further six on contracts of affreightment continuing to carry petrochemicals from the U.S. and from South America to the Far East.

And the remaining 13 vessels undertaking voyage charters on the spot market, the majority of which transport petrochemicals.

Vessel operating expenses or OpEx increased by 6.7% to $23.9 million for the first three months of this year, compared to $22.4 million for the comparative period in 2016, as a result of increased number of vessels in our fleet.

The daily rate – vessel operating expenses reduced to $7,672 per day during this quarter, compared to $8,164 per day for the first quarter of 2016. General, admin and covered expenses remained relatively static at $3.4 million quarter-on-quarter, as we benefit from current favourable U.S.

dollar sterling exchange rates offsetting the additional costs incurred associated with the newly formed technical function managing our vessels in-house. Five vessels are now technically managed in-house with a further four to five vessels expected to be taken in over the course of the next year.

Technical and crewing management for our other vessels are currently outsourced to three third-party managers with their management costs being included as part of vessels OpEx.

During the quarter we exercised the call option to redeem the full $125 million of spending on our 2012 bonds at the call price of 102%, incurring a premium payable of $2.5 million, and an interest penalty of approximately $1 million. In addition, $650,000 was written off in deferred financing costs associated with this redemption.

Interest costs for the quarter were $8.9 million, up by $1.1 million compared to the first quarter of 2016, primarily due to additional bank debt associated with five new build vessels delivered since March 2016, but could have been higher except for a reduced interest rate on our new bonds and a lower interest rate margin on the two loans that we refinanced last October.

Adjusted EBITDA was $33.5 million for this first quarter if we exclude the finance costs associated with the bond redemption, compared to $41.9 million for the first quarter of 2016. Net income for the three months ended March 31, 2017 was $2.7 million, giving an earnings per share of $0.5.

However, as David mentioned, if costs associated with the earlier redemption of the 2012 bonds were excluded, net income was [indiscernible] and earnings per share of $0.12. Turing to the balance sheet, cash remains strong at $45.6 million at March 31, 2017.

In February, we successfully issued a new $100 million unsecured bond and [indiscernible] in Norway at a fixed rate of 7.75% and with the maturity of February 2021. The principal purpose of this bond was to help refinance the earlier redemption of the company’s larger $125 million bond that had no original maturity of December 2017.

At March 31, 2017, our current liabilities exceeded our current assets by $149.3 million, primarily as a result of a 2012 bank loan that is due to mature in February 2018. This bank loan had an outstanding balance at March 31 of $147.6 million and in accordance with GAAP this was included in current liabilities.

We’re currently reviewing a term sheet to refinance this facility at what will likely be a more favourable margin than the 3.5% being paid on the existing facility.

And finally, the current aggregate contractual commitments to the shipyards across are now remaining two new builds as reduced to $80.4 million, against which facilities exist to provide up to $89.7 million against these two deliveries, giving us a net cash inflow of approximately $10 million once both vessels are delivered.

And with that, I’ll hand you over to Oeyvind..

Thank you, Niall, and good morning, everybody. We have touched upon Navigator’s positioning of versatility and complexity continuously throughout these earning calls and how this fits in with the current industry trends.

We’ve been working very hard on carrying out – carving out a niche for our company of being a specialist and using our knowledge of gas transportation to enable trades. That is particularly relevant for a deep sea petrochemical market, where we play an active role. Today we are involved with ethylene from the U.S. to Asia.

We’re involved in taking propylene from U.S. to Europe. We are involved with taking ethylene, butadiene and propylene from Brazil to Asia. And we are involved with taking ethylene from Middle East to Europe, just to name a few. Whilst we are unable to call upon Iran for the time being, others can, and I have been pursuing opportunities there.

Recently large parts of petrochemical cargos including ethylene were shipped from Iran to Asia, reflecting the ongoing development of the Iranian gas infrastructure and their ambitions to become a substantial and reliable supplier of olefins. Another news, we have our first ever spot fixture in ethane during the quarter.

Navigator Neptune successfully loaded a full cargo of ethane from Enterprise’s Morgan’s Point export terminal on the U.S. Gulf Coast to Stenungsund in Sweden, but ethane is used as cracker feedstock for the production of ethylene.

The proportion of our total revenue from petrochemical transportation increased from 20% in the first quarter 2016, to about 52% in the first quarter of 2017.

This 52% of our total revenue was the derived from 12% of total cargo lifted across our entire LPG, petrochemicals, and ammonia portfolio, which is due to the longer duration of these deep sea petrochemical voyages.

In terms of our total vessel earning days, LPG time charter and LPG spot trading reduced from 59% and 16% respectively in the first quarter of 2016, to 42% and 10% in the first quarter of 2017.

However, earning days for petrochemical gases increased from 18% to 43% during the same period, taking up some of the lost ground from LPG and providing support to our utilization rates. That said, as David touched upon the LPG market continues to be challenging over the near-term.

With oversupply of tonnage across most segments ultimately limiting much of a rate upside in the fully refrigerated propane and butane freight markets, as well as impacting utilization for the vessels we have trading in LPG. And with that, we’ll open the floor..

So Jenny, you can open the floor for the Q&A period now, please..

Of course, thank you, Mr. Butters [Operator Instructions] From Wells Fargo, your first question comes from the line of Mike Webber and your line is now open, sir..

Thanks. Good morning, guys.

How are you?.

Yes, fine. Thank you.

David, my first question is for you, and then maybe Oeyvind. Oeyvind, I think in your previous remarks you went through some of these, kind of mix shifts between LPG and petchem on a year-on-year basis and I think the answer to this question is somewhere in there, but I’m kind of thinking sequentially.

But when you look at the fact that your utilization across the entire fleet was up quarter-on-quarter TCE’s were down a bit, and your petchem exposure certain higher year-on-year and I think flat to slightly higher sequentially.

It would stand to a reason that you get more petchem business that’s just slightly less profitable or you can maybe – you help us make sense of that on a sequential basis kind of from Q4 to Q1?.

Sure. What is for sure is that, our petrochemical earnings base is pretty meaningful. So the challenge with LPG is that it’s a very much of spot market on the fully-refrigerated part of that business which is the majority of that piece, it’s very competitive.

So for the petrochemical cargoes we do trade, a lot of it is locked up in these contracts of affreightment that we do have that was made at the time that was different than today. But generally the competition is less somewhat in the petrochemicals particularly when you talk about the larger parcels where we play an active role.

So that’s kind of the dynamic, but contacts that were made even in fourth quarter last year are proving to be more beneficial today than what it was back then..

Right. So the sequential pressure on TCEs it’s sounding like it’s coming from the larger parcel LPG business refers to the ramp you’ve seen in petchem volumes, its really up to utilization.

Is that right what you think about it?.

That’s right, yes. The very large gas carriers to medium-sized gas carriers, the fully-refrigerated LPG business are involved, and that is what generally causing this feeling or pressure down if you like..

Got you. Okay, that’s helpful.

And then I mean, just along those lines can you talk how both PC’s and utilization have trended in Q2?.

In second quarter?.

Yes..

I think it’s getting tougher, I think particularly in utilization.

Oeyvind, why don’t you give an update on that?.

Again, it’s more to do with the LPG than petrochemicals. LPG, we’re coming out of the winter months; now it’s spring time, and traditionally that reflects a weaker – weakening market, weakening appetite. And U.S. can – if they don’t get the pricing that they want on a LPG, they can store it in Mt.

Belvieu, which they did last year if you remember, when they started building – less supply then and if you combine that with additional tonnage, fully-refrigerated additional tonnage, then that is challenging. But for the petrochemical side, we still see that is being active, but is not sufficient to soak up all our ships from the LPG side.

However, last for quarter only 10% of our spot business, I’m not talking time charter, spot business was from LPG and that is a new number for us, but that will continue..

All right. Okay..

Yes. And again, I emphasized in my prepared remarks the importance of the Mariner East two is under construction, they seem to be pretty much on time. But I’m just skeptical because everything seems to get delayed in this business and disappoints.

But as of last week in the conference call they were pretty much assured that the thing could get done in by the end of September. And that’s going to be important because there is a lot of volume coming out of that and it’s ideal the location of market.

So to reach out and deliver product to Europe and we can be very competitive even on handy vessels to deliver that product in a competitive way into Europe. So we’re hopeful that that increases something. They did not talk about Mariner East three or Mariner East two extension, which would add another 275,000 barrels.

We know they are working on marketing there, they have – the open season is still in existence. The importance of that should not be underestimated, Michael, because that combined with Mariner East two, Mariner East three, is so much volume that I think it’s going to reshape the pricing of exports of propane out of this country.

And the reason I say that is what surprised us in the Gulf of Mexico particularly product coming out of the big terminals enterprise et cetera, was the ability of the producer to take his product if he didn’t like the pricing and since all of that product was running through Mt.

Belvieu, that they would run it into storage and wait for a different pricing. That won’t be the case when these volumes come out of markets book. East Coast has virtually no significance storage.

So that product is going to run through and be put on vessels and it will be put on by vessels because the price of that product adjusts, it could very well be that the East Coast then determines the pricing of all exports of propane out of the states, because I think the Gulf of Mexico will not produces there, will not necessarily hold back and lose market share.

They will adjust the price. So storage may be less important in the future. But all that is quite dependent upon A, the completion of Mariner East two in September, and the construction and completion of Mariner East three where we can get the significant volumes.

I say and repeat that they are, I mean, we know is when we talk to them and talk to the same customers, they are marketing also it’s a products throughout the world. And I think it’s a matter of time before that Mariner East three gets approved and built. But that’s a kind of thing will change the LPG market for us 1,000 for all sized vessels..

Got you, that’s helpful. And effectively my last question, just to clarify your earlier commentary around not seeing early from the spot market pressure until kind of Q4.

You referenced your exposure were technically stepped down in Q4, but I was curious whether that Mariner East two is effectively the variable you think affectively eases the pressure on your spot PC.

Is that a fairway to characterize it?.

I think it’s going to be a significant contributor to reducing it. There is volume and particularly if they get the third one on Mariner East three, but two would be helpful.

We need to do a amount of business on handy’s out of market spot, but since they put the chiller in and they’ve got volumes now, they’ve reduced the export volumes LPG because of ethane being shipped out of there at the moment. So that’s taking up some of the capacity of the existing Mariner East one line.

So it’s pretty well dried up for us in all handy-sized vessels in the last year. So that with the expansion and with the full groups operating I think that would be a nice change for us..

Got you. Okay. Well, thank you for the time, guys. I appreciate it..

Thank you..

Thank you very much indeed, sir. Now from Stifel, your next question comes from the line of Ben Nolan, and your line is open, sir..

Yes. Thanks. So I have a handful of – hey, guys, I have a handful of questions, the first – I don’t want to – we’ve been talking ethylene export terminals for a very long time, and certainly moving in the right direction, but nothing has crossed the finish line.

I remember four years, five years ago, everyone it was; at the time you guys had been contemplating perhaps taking a more active participatory role and I think it was an ethylene terminal in Pennsylvania.

Is that something that you might would consider doing or being part of in order to kind of help expedite the process, obvious beneficiary from an ethylene exports?.

It’s sure is tempting at times, and it was a butane terminal….

Butane, right..

But at this point we would be robbing a lot of our customers the wrong way if we started doing that I believe. And I think this – what we have seen is that over the last so many months we’ve seen increased pressure to get an outlet build, an export outlet build. It is part because of the buyers of the ethylene have always wanted to have access to it.

They’re nervous about the lengths of contract that they have to take. But what we’re seeing now is the producers are getting nervous about where they’re going to sell all of the ethylene, and export markets, international markets clearly an alternative to domestic use.

Remember, most of this is going to be consumed domestically, but having an outlet in the international markets were important. We believe talking to these produces more important and I think there is an element in the equation that’s different than what we’ve seen in the past.

So, no, I don’t think it’s frustrating it is for us, we’re not going to step in and be a builder of an ethylene terminal. We think – there are several companies who have great capabilities and interests to do it. In time, we will solve that and we will have what we want, but it’s kind of frustrating, but it will happen – continue..

Great. And then maybe over to Oeyvind, I mean, you talked a lot in the prepared remarks and to Mike about the sort of the mix of petchems versus the LPGs in the revenue contribution, and petchem being stronger relative to a soft LPG market.

Are you sort of where you would want to be with respect to that mix? Or do you think maybe there’s more ground to be made up there or how do you envision? Where you stand at the moment LPG versus petchems?.

Yes, Ben. I think we still have a job to do there. But looking over the last 12 months, where we at least doubled our petrochemical involvement both on the earnings days and revenue, I think that’s a feat in itself, but it’s not done yet. So we’re kind of in the middle of that journey.

There are projects involving predominantly propylene, which we are engaging in, which can have a meaningful impact. So the short answer to your question is, no, we’re not done with that transition, it’s still ongoing. So we would like to have a few more of the ships doing petrochemicals, yes.

And I think there’s room for that, but again, with large parcels of olefins, we’re also in part head with inadequate infrastructure at some of the receiving ports and so forth. So things need to happen on some ports and infrastructure, and then you’ll see we’re having more ships involved in those trades..

Okay, that’s very helpful. And then lastly from me, you mentioned that Iran is coming online maybe with oil and you’re starting to see ethylene and various other petrochemicals and LPGs coming out of there.

Makes me a little curious, especially, if we begin to see even more petchems moving out of the United States, what’s the appetite on the demand side? Do you have any sense of – if there’s any risk that we run against a little bit of a demand wall if more and more exports continue to come to the market?.

The scale of dynamic there what we always said Ben is LPGs are supply-driven and petrochemical is a demand-driven product. So, you’re right, demand needs to be there to receive, however, it’s more of a question of disconnecting where it’s produced, not in a fairly consumed because most of it is in Asia, but where it’s produced.

So instead of producing it expensively, locally, then they could buy it arguably cheaper from places like Iran, where the gas is very cheap; and from the U.S., where the gas is very cheap. So that is the question. Demand needs to be there, I think it’s there, but it’s a question of where the olefins are produced..

Okay. And that doesn’t seem to be – sorry, go ahead..

I’m sorry. I was going to say, one important thing for us is to recognize it, doesn’t take much incremental volumes to make a huge difference in our charter rates and utilization. This is not a huge fleet out there in the universe.

So volumes are 50,000 barrel a day increment, for example, something, ethylene, makes a huge difference in capacity constraint, and utilization and day rates. So we don’t need that an enormous amount of volume to be a real game changer for us..

Right. Okay. Well, I could go on, but I’ll turn it over, there’s probably other people in the line. So, thanks a lot guys..

See you..

Thank you very much indeed, sir. Now from Evercore, your next question comes from the line of John Chappell, and your line is now open, sir..

Thank you..

Good morning, Jonathan..

Hey, David, good morning. Good morning or good afternoon, Oeyvind and Niall. And thanks to Ben for turning it over to other people, I appreciate that. So just three quick ones for me hopefully; first, Niall, on the cost side, your cost came down this quarter. Obviously, you’re kind of laying out what’s called a choppy kind of near term rate environment.

Other than bringing the vessels to in-house management, and correct me if I’m wrong, does that save cost or does it not? What are some of the other costs initiatives that you’re implementing? And then do you think that there’s more room to kind of save it on that side?.

Well, first of all it’s bringing technical management in-house; it doesn’t really have much of a cost benefit, not at the level of number of ships that we’re talking about like five or so. Once we get into maybe 12 or above, it may have an overall effect.

On the individual ships side, it was really – $8,100 from the first quarter of 2016 was hired and we would have liked, and I think there’s been more attention to it. There was also specific reasons for it, there was auxiliary engines et cetera that needed just to be repaired.

So I think that the rate of Q1 is kind of the current run rate that we would expect. And of course, once you’ve given that quite a number of ships in our fleet are new builds, new builds are typically for the first two years cheaper than subsequent years because all of the machinery parts are generally under warranty.

So there is an element of A, taking more focus than perhaps it was last year, but also just the effect of some of the new builds kicking in..

Great. And then another thing you mentioned, Niall, in your prepared remarks is the sequential decline from the rates associated with some of the time charters that were signed in December 2015 rolling off in the fourth quarter of 2016..

Yes..

As I look at your fleet in the time charter coverage, it seems like there’s only four contract renewals or expirations before the fourth quarter of 2017.

So to the extent that the market overall kind of stayed steady, should we see kind of very limited negative impact of a mark-to-market on time charters going forward? Is that pretty much behind you now?.

Yes, I think the majority is behind. You’ll recall that up until probably March 2016, the charter was $900,000 or above in the back end of 2016, back end of 2015 it was even higher.

So rates coming off of that level on a typical 12-month time charter for which we’ve had probably five in Q1 of this year, $900,000 number being reseted as $600,000 number times five does have an impact, but, you’re right, generally they are now all past..

Okay. And then my final one also on the market a little bit.

And just more clarification for a comment that you made in the press release and in the 6-K regarding absorbing the 38 VLGCs and 18 medium gas carriers; is that your way of saying David or Oeyvind that that’s the overcapacity in the market today? Or is that your way of saying that we just need to get to this bubble of new buildings? And then once there is a small uptick in volumes, then you see the tightening of the market..

I think it’s related to David’s comments leading up to the fourth quarter of markets and so forth. And there’s dynamic between the pricing of East Coast versus Gulf Coast.

However, the order book – the massive order book in the very large gas carriers clearly slightly behind us, there’s 25 or 20 old ships remaining this year, and then there’s very little in 2018, 2019 and 2020. So I think that’s okay. And the mid-size sort of the immediate segment above the handy’s, we still have our little ways to go.

So there’s about 10 ships this year in 2017 and eight in 2018. So that is kind of what we’re paying attention to and the behavior in that particular market. Remember, they can only do fully-refrigerated LPG and that’s what they’re designed to do.

However, we kind of need to work our way this year to see how the medium-sized gas carrier market, where the freights, where the direction will be. But – so, that is – but those numbers are okay, but they’re related to – if we have additional supply, I think much will be done; but it’s not going to happen over the summer..

Okay, I appreciate the color. Thanks Oeyvind. Thanks a lot, Niall..

Thank you, John..

Thank you very much indeed. And your next question from Morgan Stanley, comes from the line of Fotis Giannakoulis, and your line is now open, sir..

Hi, guys. This is Ben, stepping in for Fotis .Thanks for taking my questions. So just turning more to the longer term LPG trade, it looks like Middle East exports have kind of made way.

I’m just curious I guess more in the mid- to longer-term on how you think incremental exports from this region from the U.S., and then I guess looks like Canada kind of transpiring over the next few years..

The question is where are the incremental volumes coming from?.

And how do you expect – yes, and how do you expect them to play out..

The incremental volumes will be associated with – most of it would be associated with the U.S. So there’s still some way to go with more supply and it’s coming, particularly on the East Coast. You’ve probably seen some announcements perhaps of the Canadians and their efforts to do so export terminals there, so there would be some LPG from Canada.

And as you know, Canadian are primarily U.S. exports of needs to travel ways for the consumers either to Europe, Africa, Latin America or even further Asia. So that will have an impact clearly soaking up existing tonnage and taking care whilst, somewhat taking care of the order book that is going to be delivered over the next couple of years.

But that is the general, we have is that the VLGC’s and the mid-sized ships will probably go back to where the traditional the 10-year historic wants to supply here. At the minute it’s a bit challenging as you’re aware..

All right. And then my last question was on, so just the incremental outside to the petchem trade you mentioned earlier on propylene production, it’s seems like that’s going to increase this year.

If that so, they can offer true incremental outside to that trade or is that also I guess a product that’s inhibited by this export capacity?.

Both. Today the export capacity from the U.S. in terms of propylene is slightly restricted. We know for a fact that the major – the two major terminal operators in the U.S. Gulf are trying to debottleneck that.

But the volume on the propylene will not be here until the various PDH plants are commissioned here in Texas over the next three months, four months and then we might see an uptick on the interest and demand for taking U.S. produce propylene.

But that impact will mostly be seen on the handy’s because as we’ve been repeatedly talking about us being the largest ships doing petrochemicals. So it impact very much the very large gas carriers or the medium-sized gas carriers, but for us it’s meaningful. And to David’s point, any incremental barrel that is being exported from the U.S.

or generally elsewhere that goes on handy has big impact. So we paid close attention to any olefin and propylene is part of that..

Right. Thanks so much, guys..

Thank you very much indeed. [Operator Instructions] The question comes from Maxim Group, comes from the line of James Jang. Your line is now open, sir..

Good morning, James.

Hello?.

James, your line is open..

Hi, guys, sorry about that. It was on mute. So I guess most of the questions have been answer, but we didn’t see a trend of some North East Asian countries particularly South Korea and China, South Korea and Japan switching from LPG to natural gas.

Have you seen the same kind of effect?.

We haven’t registered that trend in terms, so we are not generally involved with LPG trades to Korea and Japan. So we might not be the right people to ask about that, but clearly if you’re interested in energy, power, electricity production, natural gases, is there however infrastructure is very expensive.

But again, we are more involved when it comes to Asia for gas transportation it’s olefins, LPG that’s probably elsewhere..

Okay, got you. And I know you guys mentioned 2017 is going to be a little choppy in terms of earnings and there’s been some pressure on rates.

Do you think this could be an opportune time for you to, I guess, further expand the fleet or once this new build program is finished, you guys are going to be in silence for a bit?.

I think the expansion of the fleet at this point in our life will be focused around contracts. Yes, we will expand the fleet, we fully intend to do it, but it will be done when we execute the proper type of chatter contracts.

Now I believe and we believe that that could happen, but it will be happening on the back of the completion of the ethylene terminals. When that happens it will be significant amounts of export volumes that will need specialized vessels.

We have bulk of them right now, but we may need more and if we need more we will build against contracts and that’s how we will expand. But as far as LPG vessels and itself, I don’t think the market and the clarity of the market would support something at the moment.

And it’s very likely James that new construction could exist, but it will be done on a different basis than grounded in a specular basis..

Thank you. All right, that’s all I have. Thank you, guys.

Okay..

Thank you very much, sir. And with that, gentlemen, there appeared to be no further request for questions. So I shall pass the floor back to you for closing remarks..

Thank you, Jenny. And I just want to thank everyone for joining us this morning. And hopefully we’re back soon with an update in a few months time. Thank you..

Thank you, Mr. Butters. And with many thanks to all our speakers today, that does conclude the conference. Thank you all for participating and you may now disconnect. Thank you, gentlemen..