Thank you for standing by, and welcome to the Navigator Holdings Conference Call on the Fourth Quarter and Year-End 2018 Financial Results. We have with us Mr. David Butters, Chairman, President and Chief Executive Officer; Mr. Niall Nolan, Chief Financial Officer; and Mr. Oeyvind Lindeman, Chief Commercial Officer.

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 the conference is being recorded today. And I now pass the floor to one of your speakers, Mr. Butters. Please go ahead, sir..

Well, thank you, Rose. And good morning, everyone, on this April Fools' Day. I don't think this conference call is any joke, but - and we haven't one prepared. But I do want to apologize for the delay in reporting our fourth quarter 2018 earnings.

But we have been waiting to finalize the financing of our portion of the Enterprise-Navigator ethylene export terminal and wanted to conclude all of the financing prior to our call. We have done that. And Niall Nolan will shortly give you the details of the financing on his formal remarks.

But now that the financial - financing of that terminal is complete, I think it will relieve some of the overhang that we perceived to be there and the belief that on the part of some investors that we would need to do an equity raise. That is behind us and we're excited about the completion of the financing and the term fee.

Now following my comments - introductory comments, I will hand phone over to Niall who will cover the financials and then Oeyvind Lindeman will cover the past and current trends in the trading environment. Later, I'll come back and do brief comments on the market conditions and where we're going from there.

So Niall, would you want to pickup on the finance?.

Sure. Thank you, David. And good morning, everyone. The headline revenue for the fourth quarter 2018 was $78.2 million, 2% ahead of the revenue of $76.7 million generated during the fourth quarter of 2017. Revenue for the 12 months of '18 was $310 million, 3.8% higher than the $298.6 million generated during the 12 months of 2017.

Net revenue, that is revenue after deducting pass-through voyage costs, was $62.8 million for the fourth quarter, a small increase from the $61.9 million generated during the fourth quarter of '17, but a slight reduction from the $63.6 million generated for the previous quarter, the third quarter of 2018.

We generated an extra $1 million during the fourth quarter compared to the fourth quarter of '17 as a result of a slight increase in charter rates, which rose to $20,920 per day or $636,300 per month for the fourth quarter compared to $20,586 per day or $621,160 per month for the same period in 2017.

However, net revenue reduced by $600,000 as a result of a small drop in utilization to 86.3% during the quarter from 87.2% for the fourth quarter in 2017. Our fleet of 38 vessels has remained unchanged with 14 being the complex ethane and ethylene capable vessels, 17 semi-refrigerated vessels, and 7 vessels that are fully refrigerated.

We have approximately 30% of our operating days for the remainder of 2019 currently committed at an average rate of $25,975 per day. We've undertaken a total of 6 dry dockings during 2018, costing an aggregate $5.8 million, the last of which underwent drydocking during the final quarter of 2018.

There are 10 vessels scheduled to enter drydock during 2019, expected to cost an aggregate of $14.4 million, and this includes the now mandatory fitting of ballast water treatment systems since January 1 of this year, which will cost approximately $400,000 to $600,000 per vessel.

Voyage expenses for the fourth quarter and the full year increased by $700,000 and $6.1 million, respectively, but all voyage costs are pass-throughs and are covered by increased revenue. During 2018, approximately 65% of our operating days related to time charter and contractor affreightment days with 35% on voyage or spot charges.

Vessel operating expenses, or OpEx, remains largely consistent for the full year 2018 compared to the 12 months of '17, with average OpEx per day of $7,694 for the 12 months of '18, an increase of just $59 or 0.7% from the average OpEx of $7,635 incurred during 2017.

However, we would expect to see the average daily OpEx rise by approximately 3% to 4% in 2019 as the new builds added to the fleet over the past number of years have tended to keep the average OpEx costs lower as those new vessels incur reduced OpEx in their earlier years.

General and administrative and corporate expenses increased to $4.8 million for the quarter from $4.1 million for the comparative period of 2017, as a result of incurring additional costs facilitating our in-house technical management.

We now provide in-house technical management for a total of 14 of our 38 vessels with a plan to take a further 4 to 6 vessels into in-house technical management over the course of 2019. Interest expense for the quarter was $12 million, an increase of $2 million compared to the fourth quarter of 2017, primarily as a result of increases in U.S. LIBOR.

Our income statement now contains two additional line items, both of which relate to Norwegian-denominated bond. The first is an unrealized foreign exchange gain of $2.4 million, resulting from translating the bond at the year-end exchange rate and the second is a $5.2 million unrealized loss on the cross-currency interest rate swap.

Neither of these will have any cash effect and both will be reversed over the life of the bond. EBITDA for the 3 months ended December 31, 2018, was $29.5 million compared to $29.6 million for the fourth quarter of 2017, resulting in an EBITDA of $117.6 million for the full year 2018 against $120.8 million for the 12 months of 2017.

And a net loss was incurred for the fourth quarter of $3.9 million after taking effects of these unrealized noncash foreign exchange items, without which the loss for the quarter would have been $1.1 million. Turning to the balance sheet. The cash and cash equivalents stood at $71.5 million at December 31, 2018.

And in addition, we had $55 million available for drawdown from one of our RCFs. Total debt stood at $847.4 million at the end - at the year-end, which includes both the $100 million and the NOK 600 million Norwegian bonds.

The carrying value of our vessels stood at $1.67 billion at December 31, 2018, which was $205.3 million greater than the aggregate broker assessed values as of the same date.

During the quarter, we contributed $16 million towards our share of the capital cost for the ethylene terminal from the proceeds of the Norwegian bond, taking our total contributions to $41 million at December 31.

Since the year-end, we have contributed further $31.5 million, taking our investment to date to $72.5 million out of a total expected spend of $150 million. The joint venture investment will be equity accounted and is shown separately on the balance sheet under noncurrent assets. Since the year-end, we have executed two new bank loan facilities.

The first being the refinancing of 4 vessels from an existing facility that was due to mature from June next year, June 2020. This new loan, which is now fully drawn, is in the amount of $107 million.

Following the repayment of the then-existing loan on these 4 vessels in the amount of $75.6 million, the net proceeds of $31.4 million are available for fees and for general corporate purposes. The term of this loan is 6 years, thereby maturing in March 2025 and the cost is U.S.

LIBOR plus 2.4%, which is lower than the previous loan, which was LIBOR plus 2.7%. The second facility agreed relates to - relates specifically to the ethylene terminal JV at Morgan's Point and is for a maximum amount of $75 million, dependent on the level of committed throughput agreements.

It is in the form of a construction loan converting at the completion of the terminal's construction into a further 5 year term loan. There are no repayments during the construction loan phase, and the initial amount available based on the current level of committed throughput is $23 million.

This amount increases to a maximum of $75 million as additional throughput agreements are signed. Interest on the loan commences at a margin of 2.5% during the construction phase, rising to 2.75% plus LIBOR for the first 3 years of the term loan and 3% plus LIBOR for the final 2 years of the term loan.

The cash currently available from these two loans, together with the initial equity investment paid during 2017 and the amount raised on the Norwegian bond, results in the terminal now being fully financed. And with that, I will hand you over to Oeyvind..

Thank you, Niall. And good morning, all.

The handysize rate environment rolled pretty much from the third quarter '18 into the fourth quarter of '18, with independent broker assessment for the semi-refrigerated 12-month time charter market starting at $440,000 per month at the beginning of the quarter and ending with a modest 7% increase to $470,000 per month in December.

The slight increase in sentiment leading up to the winter months is pretty common in LPG transportation as the various retail customers manage their inventory levels in anticipation for colder weather. For this reason, Navigator experienced increased activity in regional areas, such as Europe and to North Africa in LPG.

We hardly lifted any LPG from the U.S. during the quarter as domestic LPG pricing due to high local demand made it tricky for the various off-take as defined export opportunities for handysize vessels. The Mariner East pipeline system also experienced its own challenges, which put a cap on export volumes.

However, as an aside, we have seen slowed handysize LPG cargoes from Marcus Hook, which is good to see and should bode well for future utilization from this particular location. Our earnings days from carrying LPG remained at about 50% for the quarter with a slight increase in time charter employment as oppose to voyage charter opportunities.

Petrochemical trades also remain at about 40% of our earnings days with a slight uptick in deep-sea demand leading up to December, principally to cover Chinese inventory management prior the Chinese Lunar Year, New Year.

The petrochemical voyages on average can often take more than 2 months to complete and, therefore, logistical planning leading up to this event every year is essential. The U.S.-China tariffs on petrochemicals, whilst it's not generally helpful to trade, have not reduced handysize activity as a whole, but merely changed some of the trading patterns.

As an example, there has been no let up of ethylene exports from the existing Targa Terminal in Houston Ship Channel. However, whereas, in the past, our vessels discharged across all of North and South Asia, including China.

We have seen our vessels increasing calling Taiwan and Indonesia and the Chinese boats are receiving an increasing number of our ships from Brazil instead.

During the quarter, we assisted Saudi Aramco and PETRONAS, new refinery and petrochemical joint venture facility in Pengerang, Malaysia in bringing in propylene and ethylene to condition and commission the onshore storage tanks. This is a complex process, and we are proud to have been selected to be part of such operation.

This particular facility should give a boost to regional short sea petrochemical exports in ethylene and propylene once operational. While we await for the various debottlenecks to materialize in the various parts of the U.S.

midstream industry and new infrastructure project to become operational, it is comforting to see that the underlying fundamentals are present, cheap U.S. natural gas, widening spread between naphtha and ethane and subsequently tradable margins between U.S. produced ethylene compared to other parts of the world. The U.S.

rig count is up and efficiencies at the various production sites are continuously improving. New fractionators are underway to process the rising NGL production, particularly from the Permian Basin, which should underpin these pricing fundamentals for some time to come.

Therefore, the various midstream terminal operators reached 85% of nameplate capacity for LPG exports at the end of '18 and many of them, including Enterprise and Targa, are particularly adding capacity or investigating how to add capacity on the back of these NGL fundamentals.

And some are forecasting additional export capacity of about 0.5 million barrels a day or one third increase of current capacity. We shall see. New capacity is always welcome, and so for us, volume is available, which sustained arbitrage pricing.

We eagerly await the positive effects from the combined incremental demand from the various milestones in our road to 2020. However, we have started seeing propylene move in larger quantities and with increasing frequency from the U.S. Gulf, predominantly with Europe as destination.

Our vessels are participating, and we encourage such trades whenever we are in position to do so. And as mentioned, we have loaded handysize LPG cargoes from Marcus Hook via the ME2 loop and - which is the first in a very long time since our vessels have actively been involved in the Mariner East LPG expansion.

So we are on the way on the road to 2020. And with that, I will leave it to David..

Well, thank you, Niall, and thank you, Oeyvind. Fourth quarter 2018 worked out to be pretty much what we expected, and we don't anticipate much of a dramatic change for the first half of this year.

While we have seen some clear and positive signs for some of the milestones on the road to the improved 2020 highlighted in our previous calls, they were not offset the sluggish activity in the LPG transport nor in the overcapacity in our handysized sector.

These sluggish conditions will improve in our handysize sector, but it will take a while and not be significantly changed until later in the year when we see our ethylene export terminal become operational. As Oeyvind mentioned, on one of our milestones, we have begun to see propylene cargoes exported out of the Houston area as we have anticipated.

These volumes are the result of purpose-built PDH plants that commenced operations in late 2018. We expect more export petrochemical plants to be build over the next several years. Now on the other hand, where we have been somewhat disappointed is in the slow progress of getting the energy transferred Mariner East pipeline project up to its potential.

Mariner East 2 is operational at the moment, although there are - they are utilizing a work about our loop on the last 10 to 15 miles. This loop has a restricted capacity and is expected to be utilized until the company is given permission to complete construction on the last few miles.

Now just as Mariner East 2 was ramping up, a sink hole near the mid-Mariner East 1 pipeline halted also from this line to Marcus Hook. ME1 is the smallest of the 3 pipelines and, as you remember, is basically used to transport ethane. The line is expected up, but only when Pennsylvania authorities determine that it is safe to do so.

Mariner East 2 or Mariner East 3 has approximately 95% of its pipe actually laid, but construction now is also halted along with ME2 line. Energy Transfer has been reassuring shippers and investors that all three lines will be up and running by year-end. We hope so.

Now I have used the opening of ME2 as one of the milestones leading to a major improvement in Navigator's business.

And I have done so because of the belief that Mariner - that the Marcus Hook location on the Delaware River and its close proximity to Europe will give Marcus Hook terminal a distinct advantage over the Gulf Coast competition, at least for LPG cargoes into Europe.

The number of small ports and terminal facilities in Europe will provide an opportunity for some of our smaller handysize vessels to compete with the mid and large gas carriers, who will be the major beneficiaries. As Oeyvind pointed out, finally, we have begun to see some cargoes out of Marcus Hook into Europe in the last couple of months.

However, we should not overlook the developments, as Oeyvind began to discuss, the developments and expansion of the LPG export infrastructure taking place along the Gulf Coast. For example, last month, Enterprise opened its newly constructed Shin Oak pipeline.

This pipe, with its origins deep into the Permian basin, is now shipping 250,000 barrels a day of LPG to its processing and storage complex in Mont Belvieu. A lateral line is scheduled to be operational later this quarter bringing total throughput capacity by year-end to about 550,000 barrels a day.

These lines are critical to clear the NGL molecules out of the prolific Permian and ultimately onto the water and into the international markets. Now importantly, since the commencement of the Shin Oak pipeline and some other smaller projects, we have seen weekly propane inventories rise, which is counter seasonal.

With the increase in inventories, propane prices have eased, while at the same time, oil prices have risen, opening the arb and stimulating LPG exports. This is, of course, good news for the VLGCs as the Gulf Coast exports are mainly carried on larger fully refrigerated vessels the transit to the Far East and South America.

We move very little LPG out of the Gulf, but focus instead on the transport from that area of petrochemical gases. I'd like to turn now and reflect for a moment on the impact of the current U.S.-China tariff dispute is having on global trade, in general, and the impact that a resolution will have on Navigator's own business.

It is now more than a year since trading and tariffs have been a focal point of U.S.-China discussions. During this protracted period, global trade and shipping had eased in reaction to the uncertainty created by the lack of any clear progress. Long-term commitments on imports and exports have suffered.

For example, I am confident that if our ethylene export terminal were operational today, we would be at 100% capacity, selling great amount of product into the spot market, and yet, customers have been slow to commit to long-term contracts.

While I suspect we will sign additional throughput agreements relatively soon, it does show how business executives have been holding back on attractive projects until there is greater clarity on where the U.S.-China tariff stand.

While our current negotiations on terminal throughputs are not dependent on tariff resolutions, if and when a settlement is reached, we are likely to see a much improved willingness by customers to commit to long-term contracts. Eventually, we will sell out nearly all of our terminal capacity, all committed on long-term contracts.

A tariff settlement will also unleash a pent-up demand on the part of Chinese petrochemical companies to contract long-term supplies of U.S. ethane. We understand there are at least 6 to 7 applications submitted to the Chinese Central Government to obtain licenses to build world scale ethylene plants.

The feedstock of choice for these new plants is U.S.-based ethane. It is the first choice because it can be delivered much cheaper than oil-based naphtha, it's more efficient and because it is much cleaner to burn the naphtha.

We will see a number of ethane supply contracts signed shortly following the tariff settlement, along with a major build out of new, very large ethane carrier vessels needed to transport the ethane. Now I'm sure we will be discussing these issues as they develop over the next several months.

And with that, Rose, I'd like to open the conference to questions and answers, please..

Thank you, sir. Thank you, ladies and gentlemen. We will now begin the question-and-answer session [Operator Instructions] We will now take our first question. Please go ahead. Your line is now open..

Hi. This is Sean Morgan on for Jon Chappell..

HI, Sean..

So the CapEx on the new JV terminal, I think you said there's going to be about 77.5 remaining, and should we assume that all of that will be spent in 2019? And is it pretty much straight line across that period or is it front ended or just tell us a bit more about the CapEx plans?.

Your numbers Sean are correct. The timing will be - the majority - about 70% of it will be - of the remaining will be paid in 2019 with the residual in 2020. The refrigeration unit comes online later this year, but the tank does not come online until the back end of next year, 2020.

And consequently, there are some smaller element of payments that will be paid in 2020 as a consequence..

Okay. Great. And just, sort of, a bigger question, and I think it's going to be accounted for as an equity line item in the income statement.

But will that business have a similar profile in terms of the cyclicality to your existing shipping business or do you expect that, that will provide you an element of diversity in your overall business?.

I think ultimately that business will be pretty much a contract business, Sean. We're targeting using the infamous enterprise model of locking arb down on long-term contracts and earning a nice fee off of that business, so So the ultimate goal is for that terminal to have a substantial contract cover on a long-term basis.

So in a sense, it is a counter although we are striving to get as many of our vessels on the long-term contract as a tie in with the terminal. So hopefully, we're on the same plane, if you will, with a lot of long-term contracts associated both with the terminal and the extension onto the ships..

Okay, great. That makes sense and I'm going to turn it over. Thank you..

Welcome..

Thank you. We will now take our next question. Please go ahead. Your line is now open..

Yes. Thank you. This is Fotis Giannakoulis from Morgan Stanley. David, you mentioned about the fact that there's still an oversupply in the midsize carrier market.

Can you please give us an estimate of how many vessels are over supplied? And explain to us how the mid-carrier market is being affected by the rising rates for VLGCs the last few weeks? And also, from the weakness that we experienced in domestic U.S.

ethylene demand and the decline in prices both for ethylene and ethane?.

Okay, sure. There are a number of questions there, Fotis. Well, first, I think you meant - when you said midsize, I think you meant the handysize....

Correct, correct, yes..

So, for the longest period, we believed, based upon our own judgment in a field or universe of around 110 vessels on the handysize, there probably were roughly 8 vessels too many. Now that's a judgment based upon what we see daily on the market, what utilizations were experienced, what we understand utilization of other companies are.

So it is not an absolute scientific number, but it's a reasonably good number. So we have to absorb 8 handysize vessels in some way over the next 24 - 9 to 24 months in order to get back to the level we believe we can achieve and that is a level in 2015 where rates for our vessels were considerably higher than they were today.

And where we were going to get that absorption of those 8 vessels were from the Mariner East 2 project when Mariner East 2 was opening and additional volumes coming from there to Europe, we're going to get it from the propylene and that is happening now.

We're going to have to get it from the opening of the ethylene export terminal, where we can absorb significant amount of handysize vessels at least those capable of carrying ethylene.

And lastly, we believe that ultimately in a year from now, approximately when the West Coast of British Columbia opens up the Pembina export terminal, we'll be able to absorb another 4-or-so vessels out of that putting us into perhaps a deficit in the handysize fleet.

And therefore, rates being exceptionally strong and achieving levels of earnings back that we were - we saw in 2015. I think we're on target to achieve those. Eight does not seem like a great deal, but the ups and downs. Now I think we're going to get there. Everything seems to be in place, but it always takes time.

And we're a little disappointed, as I tried to explain in our formal comments that the Mariner East 2 should been up at fully operational today, but it's not. But it is providing some degree of support, but not to the level we expected, but it will.

According to Energy Transfer, it will see its full capacity and activity by the end of this year, so that we should be back on track to our road to 2020. Now the ethylene and ethane pricing is an interesting story. What we have seen today is ethane prices falling along with ethylene pricing. When I'm talking ethane pricing, I'm talking U.S. pricing.

Why is that happening? Well, I just pointed out that there's a growing development of LNG, NGLs coming in from places like the Permian and from the Bakken. And they are getting now processed, more crackers, more processing units are being put online.

So we're seeing a growing amount of propane, butane and ethane as these fractionators are working overtime and new fractionators are putting - being put online. Ethylene pricing that the U.S. in part reflect some of that. And yet, the global world market for ethylene has not seen that kind of low pricing.

So the differential in pricing in the United States for ethylene, I'm going to - it changes every day, Fotis, as you know, but let's call it around $300 a ton today. And Europe and the Far East, it is anywhere from $1,000 to $1,100. So you're seeing $700, $800 differential in ethylene pricing in the United States versus the international markets.

And that kind of orbit doesn't exist, as far as I know, in any other commodity. It's enormous. And that's the basis in which I have the confidence in saying that if our terminal were open today, it would be at 100% of utilization because no one is going to leave that type of differential on the table.

Doesn't to - we can move that ethylene for a fraction of what that differential is, leaving a substantial profit to traders or producers or whoever wants it. So the market couldn't be any stronger and that's why we're seeing, for example, no let up. As Oeyvind mentioned, no let up in the ethylene moving out of Targa going everywhere.

So we're pretty optimistic about things.

And I hope that answers your question, Fotis?.

Yes, absolutely, David. And thank you. Can you explain to us - I mean, this is quite strange because usually when we have such an open arb in commodity, the shipping market usually skyrockets. This hasn't happened in the gas carrier sector.

Of course, VLGCs, they have tripled since the beginning of the year, but they are still at a relatively low historical levels.

Can you explain to us what is the bottleneck right now? And what makes you that optimistic that later this year this market will turn to be highly profitable? Is it the lack of fractionation capacity? Is it the fact that the Chinese are abstaining from purchasing despite the very profitable export margins out of the U.S.? What is the problem right now?.

And the problem very - it's simple, it's infrastructure. Okay. So let's talk - I mean, both ethane and ethylene. Let's talk ethane for a moment. In the case of ethane, you basically have only two companies with any kind of infrastructure gathering system, pipelines, terminals to move ethane out in the United States.

And that's Energy Transfer and Enterprise, both companies have facilities and are building facilities.

In the case of Energy Transfer, they do have the Marcus Hook ethane facility and the pipeline, Mariner East 1, which unfortunately, as I mentioned, is shut down at the moment, awaiting resolution of what caused the sinkhole, but they expect that up soon. Energy Transfer is also building a new facility in - around Nederland, Texas.

That won't be up and operational until the end of 2020. And in the case of Enterprise, their facility is, of course, at - on Morgan's Point along the same site that we are putting our ethylene terminal.

Now can anybody else run and build facilities? Not easy because the key to what they have, I tried to mention in our last conference call, they control the network of pipelines, the gathering systems, the fractionators, the pipelines and the terminals moving this stuff into a terminal and the ability then to put it on ships for - and transport it around the world.

It is very difficult for any other company to come in and build that infrastructure from scratch. Pipeline networks, connecting fractionators around Oklahoma, Texas, Louisiana, all gathered and moved into places where there's storage, et cetera, very difficult.

That will be the big challenge American ethane, who tries -- is trying to break in, they don't have access to this ethane. So you have, in the case of ethane, Fotis, a restricted infrastructure, but that the infrastructure is on the way and in the process of being built out and available, but won't be fully tapped until probably 2020.

Now turning to ethylene, we have the similar problem. We have plenty of excess capacity because of the build-out of a lot of new ethylene crackers that have come on, the ability now to manufacture ethylene and will be in the next - well, say, by the end of this year, we'll have seen close to a 50% increase in ethylene manufacturing capacity.

However, there isn't any - at the moment, aside from our terminal, we only have one export terminal, and that is the terminal controlled by Targa, but under leased by Mitsubishi. And that business is not very effective terminal. It takes four weeks - I'm sorry, two weeks – two full weeks to load a handysize ethylene carrier.

It should be one day, not two weeks. And that ethylene terminal probably won't change any big. No one seems to be putting in the infrastructure necessary to improve partly because of restriction on the land. There are number of reasons why it's not happening.

And that's why because of that is the reason that Enterprise and Navigator sat down two years ago and they said, this is going to be a business. This type of facility, an ethylene export terminal, is critical. It's critical to the olefins business in the United States. It's critical to supply of safety valves for all the ethylene produces.

And therefore, this business should be a terrific business and - but it is a limited business and -- but let's be the first ones out, and we are. So it is going to be critical, but it's not going to be a giant business, not like propane, not like ethane. Ethane will be substantially higher in volumes, but it will be a terrific business.

It already is for us out of the Targa because we transport 95% of the business out of Targa today on a contract of affreightment with Mitsubishi. I think you'll hear more about that in the days to come. But yeah, it - so it is really about infrastructure development, the need for more types, more fractionators and more terminals.

And of course, without that, ships aren't being built. And we have the biggest fleet, and we have a nice diverse size of midsize and handysize to accommodate any shipper, any customer that needs that. It's a long-winded answer to your question, but I think it's a very critical question you asked because it shows how unique this business is.

It is not a commodity business, it's going to be a very specialized business. The demand is there for the business, the economics are there and the markets are there. So we are extremely optimistic. We just like to see a little quicker pace on tying down some contracts, but that's....

Thank you very much David. That's extremely helpful. One last question. I hope this is a very quick answer. The economics of ethylene terminal look outstanding right now given this high arbs and no-brainer for you to make this investment both from stand-alone basis and the profitability of the shipping fleet.

But I was wondering if there are any other infrastructure opportunities that you might look in the future, especially as the market started improving and ethylene terminal is complete and you started having more cash flow to spend on more growth?.

That's not - the answer to that question is not quick. The answer is, this whole - listen, this whole sector of the U.S. abundance of natural gas liquids, the need for the infrastructure, the desire for international companies to grab as much as they can to - either in the process form or in the raw material form is just beginning.

We're not at the end of it. We're not in the middle of it. We're at the beginning of a development of a significant business. And yes, there will be all sorts of opportunities. It won't be just in shipping.

Shipping is probably the most mundane part of it all because everyone understands shipping and unfortunately shipping can get overbuild because of the attract and dip at different times. But the infrastructure piece, the ability to be part of the midstream company's development.

Go back to what I talked about in our last conference call, the growing tower of the midstream companies and how they, in their next step, will need to break away from their parochial domestic clothing and get into the international markets. They just beginning - they're just beginning, Fotis.

And as that happens, it is going to open wonderful, delicious opportunities for companies that are flexible, that have flexible people, flexible equipment, flexible attitude about how to develop this alongside. And with this midstream company, we have the elephant by the tail.

The elephant being the midstream companies and those companies are beginning to wake up and to move, and we're going to be pulled along with them. And that is what we are ultimately going to do. It will take time. None of these things are overnight, but it is a whole different industry that will be shaped up in 5 to 6 years from now.

We're going to be right in the damn middle of it..

Thank you very much, David. We are here to wish [ph] you're right..

Okay. Thank you..

Thank you. [Operator Instructions] Thank you. We will now take our next question. Please go ahead. Your line is now open..

Hey. This is Greg on for Randy Giveans here at Jefferies..

Hi, Greg..

Hey. So last quarter, you guys had mentioned that you're hoping for about 90% utilization for 4Q and you guys came in at about 86% of this quarter.

Can you just talk about the discrepancy? And why things were a little bit lower than expected? And December, I know that you'd mentioned that it was a little bit over 90% for October, November, so it was much lower in December?.

Oeyvind?.

Yes. Hi, Greg. Yeah, I think the average was about 87% versus what we were hoping to do, 90%. 87% isn't good enough altogether. So we will just aim to achieve higher than that. But the 3 percentage points is not a whole of a lot, however, things change. So in October, it was low.

And then as I mentioned because of winter and so forth, in November, December, it increased to above 90% and then the average became 87%. But few bits and pieces that affects the business, some contracts of affreightments not being nominated as expected, time charters not being renewed as expected or vice versa. So it's not one single event.

I think the most our, sort of, bread-and-butter business being LPG, I mentioned that we didn't do much out of U.S. in the fourth quarter and that has an impact. We picked up - we talked about Marcus Hook and so forth, so that has come back a little bit. But when you have no U.S.

Gulf busy because lack of arbitrage, at least, for handysize in the area then that caused that I think. So it's not a single event, it's a collection of many various touch points across the business, our global business, and that's about it, Greg..

Okay.

And then any idea on may be some rate guidance or utilization guidance for 1Q now that we're one day into 2Q?.

No, the assessment on the broker panel, but I think, it's quoted every week. And I think you can take some cues from that. So back end of December, they were quoting or clocked since 12-month time charter were quoting 470. It's about the same level for Q3 - sorry, first quarter, if you look at those weekly quotes.

So to mirror what David mentioned earlier in the call, in the near term much the same.

And then while we wait some of these infrastructure projects, our road to 2020 to materialize and more of the propylene more from Marcus Hook, which both of these two points are, sort of, slowly coming together and then the ethylene terminal by the end of the year or second half of the year and then the Pembina.

So we're on the journey, but Q1, if you take the broker assessments, kind of the same as what we have last year, fourth quarter..

Okay, okay. That sounds good. All right. So to switch gears here on the - talking about this JV and the terminal and getting contracts for 100% of that capacity. I know that you said earlier in the call that you wanted to reach about 100%.

But what's the time line on being able to get all that kind of remaining capacity contracted?.

As I tried to point out in the comments I was making, once this issue about tariffs is overhanging everyone, how to commit to long term. That's been a real bugaboo I think in making progress that was something we expected much greater and quicker progress.

We have far in negotiations now and we expect even without resolution and tariffs to sign up additional capacity here very, very soon.

But the question maybe do we want 100%? Or do we would like to make it - our target 100% really being 80% and using 20% for the spot market? I think that's a joint decision that Enterprise and ourselves will sit down as soon as we approach that number. But we're pretty damn confident that we will get a high level.

But again, I want to stress that if we're open today, it would all be sold out because the economics are so darn good. It's just nothing else around it. It has that kind of profitability attached to it. Spread is enormous and demand is strong. So again, if we're open today, it would be 100%.

We're going to get higher levels of throughput, but whether we want to push completely to 100% or stay at around 80%, I'm not - and use the 20% to the spot market and kind of trade around that, we'll see. But I think it will all fall in place over the next few months.

Remember, the terminal should be up and operational sometime in the fourth quarter of this year. It won't be fully operational because the chiller will be up and operating, giving us the ability to run, say, 75% of the capacity. Once the storage is completed, then we can run at a complete 100% efficiency. That maybe sometime deep into 2020.

But operationally under this year, it will be there, hopefully around November. So it's coming on us rather rapidly..

Okay. Perfect. Well, thank you for the color and I'll hop off on. Great quarter..

Okay. Rose, unless we're approaching the top of the hour and perhaps this would be a good time either to take the last question or sign off now..

So there are no further questions, please continue..

Well, thank you all. I again - once again, I apologize for the late conference call, but you can understand that I - we definitely wanted to finish off the financing, get that behind us, leave no question about whether we were going to be issuing any kind of equity. We got it done and done it successfully.

And we're going to be seeing you and talking to you relatively quickly on the next call. Thanks, again. Okay, you can sign off, Rose..

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may now disconnect, with the speakers please standby..