Brian Lee - CFO Emanuele Lauro - CEO Robert Bugbee - President Cameron Mackey - COO.

Doug Mavrinac - Jefferies Greg Lewis - Credit Suisse Amit Mehrotra - Deutsche Bank Jon Chappell - Evercore ISI Fotis Giannakoulis - Morgan Stanley John Humphreys - Bank of America Merrill Lynch Noah Parquette - JP Morgan Spiro Dounis - UBS Magnus Fyhr - Seaport Global.

Hello, and welcome to Scorpio Tankers Incorporated Fourth Quarter 2016 Conference Call. Today’s conference is being recorded. I would now like to turn the call over to Mr. Brian Lee, Chief Financial Officer. Please go ahead, sir..

Thank you, and thank everyone for joining us today. On the call with me are Emanuele Lauro, our Chief Executive Officer; Robert Bugbee, President Cameron Mackey, COO. The information discussed on this call is based on information as of today February 13, 2017 and may contain forward-looking statements that involve risks and uncertainty.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today as well as Scorpio Tankers’ SEC filings, which are available at scorpiotankers.com.

Call participants are advised that the audio of this conference call is being broadcast live on the Internet and also is being recorded for playback purposes. An archive of the webcast will be made available on the Investors Relations page of our website for approximately 14 days.

Before we begin, if you have any modeling questions, we’ll take those offline and do those separately, so you can call me and I will get back to that. Now, I would like to turn the call over to Emanuele..

Thank you, Brian and good morning to all. As highlighted in our fourth quarter results, which we’ve announced a short while ago, we’ve seen softness in the product tanker rate environment throughout the second half of 2016.

We think this is mainly due by the reduced oil trading activity that we’ve experienced since the summer of last year, which is negatively impacting petroleum products ton-mile demand. Inventories remain high; refinery throughputs are slow, and this is impacting the drawdown of those inventories.

Once the rate environment has improved during the first quarter of 2017, the fundamental drivers for the product tanker markets have remained largely unchanged.

And although, we remain optimistic for the product tanker market medium-term outlook, the Company has taken the decision to scale down its dividend and pay a quarterly dividend of $0.01 per share for the current quarter.

On a relative basis, we are pleased with our booked TCE earnings for the first quarter so far, which compares very favorably with the last quarter of 2016. We are also pleased with completing our bank financing requirements for 2017 and we remain as always grateful for our lender support on this.

On the supply side, things are stable and actually close to unchanged compared to the last time, we’ve been speaking to you in November last year, which is good news as the activity is close to none. So, the outlook is increasingly favorable with the MRs order book being close to its 20 years low.

We expect this to result in demand growth actually overtaking supply growth in the second half of 2017. The shipbuilding industry situation continues to struggle; it struggles to attract new orders in any meaningful way. The yards, which are capable of building product tankers of any acceptable quality, are less than handful now on a worldwide basis.

This is helping to maintain a rather bullish scenario on the supply side for the product tanker markets on a medium-term perspective. With this, I would like to turn the call to Robert Bugbee..

Hi. Good morning, everybody. As Emanuele said on the call, the first thing the Company has done in the last two-three months is increased its liquidity and increased its work on its transparency going forward with the balance sheet. We don’t have any more debt due for on a bank side.

And we’re working, as you can see, on the sale leasebacks, which are pretty efficient borrowing to increase the front top liquidity. We will -- we’ve announced the transactions that are imminent. And I think it’s reasonable to say that we are working on others that we believe to further liquidity.

That gives us tremendous amount of flexibility from the balance sheet side and doesn’t really put us on any pressure as to when the recovery will come whether it’s second half, third quarter, or early 2018.

As Emanuele intimated, the combination with the increased liquidity combined with -- I think everybody on this call will be favorable to that first quarter guidance we’ve given, had some very strong relative performance in the Handymaxes and the chartering guys did very well in a difficult LR2 market.

But, I mean it’s a market like this that really shows our commercial platform and our customer relationships and the fleet quality. We’re seeing, despite the fact that inventories are still high, we are seeing those inventories coming down. There has been a decline from the peak to normal to the 2014 level or something like 50% in the OECD industries.

And that’s a little -- maybe a little bit more advanced we think, because where we’re getting stock building is -- remaining stock building is in the United States. In a way that’s a good thing, because as the United States that exports, we want to see the rest of the world’s inventories come down.

Five months ago, we had lots of ships in the world that were storing products; that’s no longer case. And it’s a good dynamic that the U.S. is creating its export potential while the rest of the world inventories are coming down.

We do not have a forward view of when these two lines are going to meet, when enough will be enough and you get that demand and supply coming into line. The fundamentals for certainly from the end of this year into 2018 are really pretty incredible. I think that the banded fleet distribution understates what is happening on the supply side.

We have various combinations of environmental legislation this year coming to effect, plus we get the first year, especially once we get into the second half of aging in the MR and Handy fleet. The Handy fleet itself really understates the crisis that’s in. I mean, there’s hardly anything on order in that fleet.

And there are number of fleet ships coming through the end of the period.

So, we have this for the situation where we’ve set the Company up so that we can deal with whatever, the time period it takes if the recovery to great earnings; it can also take advantage of things either way, and whatever it wants to do with various instruments or opportunities.

And I think it’s worth reminding that the way this is setting up with refinery anticipated growth as the world keeps together and continue to get demand.

Once those inventory run down, there is really no reason why this Company can’t get back certainly earning what it was earning in 2000 -- not big steps to get back to earnings what it earned in 2015. And with the incremental vessels that would have been delivered that’s more like $2 a share than the $1 something we earned in 2015.

And that’s the way we’re looking it. We’re looking at this as little. We are playing cautiously, allowing ourselves optionality for the next nine months or so. Then, there is argument that the market could strengthen before that. It’s still relatively imbalanced.

And it’s really not -- if you do your analysis, much of a step to get back into really fantastic cash flows and earnings. With that, I think we’ll open the discussion..

[Operator Instructions] And we’ll take our first question from Doug Mavrinac with Jefferies..

Thank you, Operator. Good morning, guys. Robert, I just had a few follow-ups, and my first one was on the topic that you just said in your comments on, and that is kind of how the market fundamentals remain intact. So, Friday, the IEA came up and said that 2016 global oil demand grew by 1.6 million barrels a day.

And if we see, at least that pace of growth in 2017 and maybe more, depending upon what happens in the U.S., and we know that there is fortunately zero fleet growth in 2018.

Can you remind us how seasonal factors play out in the products tanker market? And you mentioned -- we know about the inventory overhang, but how that can potentially play out heading into a very strong 2018, because, second half of this year is only few months away? So, can you kind of give some of your thoughts on how this year could play out, even just seasonally and then maybe kind of fundamentally as well?.

Well, I think we’ve seen that -- look, in the short-term, you’re playing is very difficult game; we have very little visibility on the short-term while we’re going through this destocking. I don’t think you need that market balance. You just need the signs that things are going to be there and then the traders get in and get active.

And we’ve seen what happens. Dry cargo market was going to be blown away. It’s still a cyclical industry. Coal prices were expected to be blown away; iron ore were expected to be blown away. The product market itself is actually much more balanced than any of those three markets we’ve described.

I mean, of course, we’re not happy with what we’re guiding for first quarter or did in fourth quarter, but that’s significantly above OpEx, G&A and interest. So, it’s not like the product market itself is in crisis. It means that as soon as you get any change in this position, the rates will really move and move very hard, upwards.

And yes, that’s the sort of thing. And that could happen, forgetting the seasons; that could happen regardless of which season where.

It’s just that you have -- your answer and you’re kind of straight model is that you could have this happen in three months; it could happen in six months, but your probability doesn’t [ph] become overwhelming as you start to get into the end of 2018….

Got it; very helpful. Thank you..

Sorry, the end of 2017, end of this year..

Yes. It’s very helpful. And then, Robert, my second question is and this is thing that actually first jumped out of me, on the earnings release, was the guidance for 1Q, and it was the strength in the LR2, LR1 and MR and Handy markets.

And so, my question for you there is, when you look at that relative strength, both as it relates to 4Q, but also as it relates to some of the broker provided rates chart for the quarter, when you look at that relative outperformance, how much of that is just your ECO ships doing better in a arising fuel price environment? How much of it is full performance; how much of it is just the brokers not still providing, representative rates; or is it some combination of all of the above?.

It’s four things. Obviously, with the higher fuel -- that benefits the modern ships; the second, the quality and the operation of those ships off the big platform. In weak market, it’s where the strong pools actually do their job because it’s right, they should be getting the first scores from the customers et cetera.

And then, the other third part of it is, yes, the indexes just don’t reflect it’s going on. I mean, I doubt actually that any one of you have a Handymax -- Handysize and ice-class Handysize index at all that most of you look at.

I would really doubt whether more than 10% of the analysts actually have any idea at all what ice-class Handy has been doing. The second thing is that we have commented many times that the one way LR2 index is not reflective.

And then finally, the fourth thing is that it’s the stuff that frankly you guys are never going to work out and we’re not going to reveal, and that is that we do have very strong relationships with certain key customers in root that will allow for the utilization and voyage choice to be better than any of those indexes in a weak market..

And then, just final question, as it pertains to you guys in particular, obviously you guys said new $172 million of credit facility; you’ve got $90 million of cash on the balance sheet. So, when you look at your upcoming CapEx commitments, you’ve got all of that covered.

And then, you said on the sale leaseback that you all did gives you a bit of extra cushion. So, when we think about the -- we’ve seen the inflection point coming, we don’t know exactly when it’s going to be.

So, when we think about additional leverage that you have to pull, how should we think about maybe additional sale leaseback opportunities or targets in term of generating even additional cushion to, if for whatever reason, the inflection point is a little bit more prolonged than people expect?.

We’ve already -- I think there is one thing covering -- you are covering for a lot of these eventualities we are already covering for a little bit longer than expected. And I’ve also alluded that we’re not -- what you are seeing today is not actually where we’re going to end up.

I mean we have an expectation over the next week that we would do some more similar activity to what we’ve seen to be in pretty efficient positions to really see even more liquidity.

But, there is no -- we’re not expecting an implosion of the rates, because it’s -- that’s still reasonably okay, and we’ve got to where it was all going forward to handle that..

The next question is from Greg Lewis from Credit Suisse. .

So, just following up on Doug’s question on the sale leasebacks, clearly, this is something that is more in the market, it’s more companies are talking about billing it.

Were these -- what do we think is driving this new appetite from, I guess not even from your position but who are these suppliers of this capital? And is this a group of new investors that are looking to do sale and leasebacks? And just any color you can provide there because it seems like the appetite is pretty strong for additional sale leasebacks virtually across the tanker industry?.

Well, I think we’ve got two things going on. First of all, if we look at the commercial lending side, I mean, across shipping, the commercial lenders, even though capital is tight, even there are constraints, where they’re seeing good quality companies, good quality balance sheets and good quality assets, they’re still willing to lend.

I mean, we can see that in the bank announcements we’ve said. Well, now those guys, look at what those guys are lending at and their margins.

There is a huge arbitrage between what the commercial lenders who see our balance sheets every day, and they of course weren’t surprised with our first quarter guidance, and what for example our convertible paper is trade again, or for that matter our baby bonds are trading at.

And then there are group of people in the middle who are saying, look, if I can get asset-backed security somewhere between what commercial lenders are charging and what the paper is, well, that’s a pretty good deal. So, first of all, the dynamic is there with this big arbitrage.

Then, the third aspect of it is that this is again a -- there are non-American divers institutions willing that make that play. In fact, there are American institutions willing to make that play; they’re just a little bit more expensive than the overseas and that’s really what you’re seeing being played out. .

Okay, great. And then, just one follow-up on -- you mentioned the ice-class Handymax performance, which was pretty strong.

What is that driving? Is that just weather driving that, is there the delays, and where should we be looking for -- where are those vessels trading that are getting those better rates?.

The first thing -- they are primarily trading Northwest Europe, Europe Mediterranean. And the first thing you should look at is that there are not actually many ships that are being ordered in that area, not many ships that delivered. So, you’ve got a supply side that is pretty constrained.

They’re also working almost every day exclusively in very highly environmentally sensitive regulated areas or even some of the existing fleet is moved away.

And you do have aging in that fleet and also we have something like 18% in our pools of the entire market itself, not talking about the high-quality ice-class ships; I’m just talking about the entire market on the water itself. So, yes, of course, by the notion [ph] of ice-class, they’re benefiting from a cold Europe and winter.

Against that, they could do -- they could have done a lot better, again, if you hadn’t had the OPEC sanctions and if you hadn’t had Russia sanctions and if you hadn’t had Russia cutting down on their exports. So, based on particularly -- well, I think, because their own dynamic in -- it’s fine; we’re happy with them..

Okay, perfect guys. Thank you for the time..

We’re happy to keep them nice, quiet, and silent at the moment..

The next question is from Amit Mehrotra with Deutsche Bank..

Hey. Thank you, Operator. Thanks for taking my question, guys. First one is I guess obviously, on the dividend. I’m sure, it was a difficult decision.

But Robert, Brian, if you could just offers us some color in terms of like what’s happened in the last three months that -- because I think on the last conference call, Robert, you were pretty bullish and pretty adamant that the turn was coming. And you haven’t really had a significant reduction in asset values; I mean they’ve been weak.

The rate profile has been lackluster but it hasn’t really been like scary bad.

And so, the question I had is, is that like what made you guys wake up one morning, I guess over the last three months and say, oh God, we’ve got to cut the dividend, 92%? If you can just offer us some color on that, so we can glean like what’s going on in the organization, maybe from an asset value standpoint that maybe we’re not fully appreciating outside? Thank you..

Sure. There is nothing going on, on the asset side value. I think that the values in the market like this at the moment, are kind of an almost so what. I really don’t think I could ring up Anthony Gurnee at Ardmore and say to him, hey, vessel value or Amit Malhotra’s value metrics, I’ll offer you that price and he’s going to sale me the ship.

This isn’t going to happen.

They’re not being priced up, they’re being priced up to stress at the lower end of the open market, the older ships, the 2004s, 2005s, which are obviously -- they’re obviously facing issues with the regulations and priced off the fact that well, if nobody could get a -- if nobody is ordering a ship, then new building prices must be low, so then they are discounting that way.

But in practical terms, I just don’t think you can buy good quality ships for the prices that are being used in the calculations. So, we’re not seeing the same asset stress, the lenders aren’t seeing the asset stress. We’ve got proof of that in the refinancings.

But, what happened is -- it actually wasn’t a very difficult decision by the end of the day. You’re not being paid for the dividend. You have amazing confidence and real excitement about the prospects of this industry going forward as we approach the end of this year. You have risk to the upside, anyway during this year.

And you’ve had your own experience where kind of it’s the classic point at the moment. If we go back to our sister company sold this time last year, I mean everybody was length over hard -- oh my God, you’ve got to sell the company, the stock is going down, sell rating, sell rating, dry powder is coming to the end.

We’ve just about got that point now in the product side. And you’re not being paid for the division. I think that you’ve got -- I don’t want, I’m a shareholder in STNG.

Why on earth do I want to be paid, paying a dividend at the moment, when the opportunity, little bit of delayed gratification tells me there are just so many better uses of that capital than just paying myself back a dividend..

Okay. Let me just ask you a couple of more follow-ups Robert to that. One is, is that you raised -- the Company raised successfully a bunch of really critical financings during the quarter over the last couple of months. Did the banks at all maybe talk about the reservation about….

No, there is nothing in -- we could have paid the dividend today. There is nothing....

Okay. That’s fine..

This is the whole -- we have an obligation that’s -- I think we announced our -- what did we announce. We announced the KEXIM [ph] finance and the SSH finance way back in January the 10th.

The Company had the banks but the stipulation in the terms to do or the board had met and said we have to do ex -- we would have to announce the decision on the dividend at that point, okay. So, everybody did this based off what was going on back at the time in the models..

Okay..

The actual dividend meeting, the management proposal to the Board literally came very, very shortly before the earnings release..

All right. Let me just ask a couple of quick….

We didn’t wake up same time -- we didn’t wake up one morning on the own, wake up one morning, we’ve had shareholders suggesting to us, top shareholders suggesting to us for months that they would prefer, because they see how great the fundamentals are, a better allocation of proceeds by coming the dividend..

Okay..

We’ve had people -- we’ve had marginal buyers who are looking at the companies saying look, we’re new to shipping, we trust this, we see this but we would be much more happier if we sold this. This is not a wake up one morning. .

Okay. Fair enough..

We’ve had a change of government in United States if you haven’t noticed. I mean, our last conference call, I think the odds were 99 to 1 that Hillary Clinton would win the election.

And now, the environment is such that it is better to make sure we first put ourselves in a flexible position to gain from what we think is going to be industrial growth and allocate capital towards that..

Okay. Fair enough. Brian, let me just ask you one housekeeping. I know the available financing wasn’t listed in the table, but I just ask because you’re just finalizing those, those two facilities..

Correct..

Can you just give us, out of that 230 I guess or 228 million that’s left over in terms of what needs to be paid, how much of that will be like new debt and much of it largely just come from the cash balance of the Company? Thank you..

258 left to pay and then 230 of debt -- from the start of the year and as you said that portion of that was a rebate. So, that’s it from January 1st, if you look at it from that point of view..

So, from January 1st, there is 30 million of incremental equity, the cash balance needs to funded, rest will be debt.

Is that right?.

There’ll be -- so it’s 258 to be paid, 230 of debt, so 28 will be from cash..

And next is Jon Chappell with Evercore ISI..

Thank you. Good morning. Just a couple of follow-ups to the prior ones; first one on liquidity side.

So, now, with the sale and leaseback, the other levers, nearly 8 million your saving from the new dividend run-rate, how conservative are you going to be -- you talked about you don’t need to do anything kind of drastic, whether the recovery is second quarter, third quarter, early next year? How conservative do you want to be with kind of retaining that new found liquidity versus stock that’s trading arguably and significant discount to NAV, bonds that I think are below par; is there a better use of capital in form of other return of capital to shareholders than the dividend and that part of thought process?.

I think thought process was first recognized by cutting the dividend that will give us a concurrent amount of optionality. I mean everybody your side would like to have a clear roadmap, but so much of what you’re asking is dependent upon the pricing of the various alternatives, combined with also there are opportunity or run rate.

So, obviously we’re going to sit there and count the days down, and everyday we’re going to go, was today a positive day. Well, today is going to be a positive day, the rate structure that starts that is going to be a positive day; you’re one day forward. What you don’t know of is you just don’t know what your securities are going to be priced at.

But, I mean, at -- the pre-opened, obviously we’re trading below an NAV. Obviously, the convert is trading at a ridiculous spread to what the lenders know the balance sheet better. But, we don’t have to watch. I mean today, unfortunately, we are not allowed to buy anything….

What we hear about is that this is -- you said, you could have paid a dividend this quarter if you wanted to, you are not getting paid for it..

We’re not going to go and order new buildings if that’s what you’re worried about?.

No, of course no. Well, of course, I’m always worried about that but no, not in this particular case. What I wanted more clarity on was that this wasn’t so much a position of weakness’ it was a position out of -- there were other opportunities and here we sit with these other securities that probably….

Well, I think you have -- people have just to be fair with themselves. The nice thing is they’ve underestimated potential liquidity. I mean, I read some of the reports and it was first of all, they were assuming we would -- some of them, we would lose $0.05 to $0.10 of cash in the fourth quarter more than we have.

Second, it was questioning whether or not we’d actually get the finance in place for even the new buildings, not long rolling debt from 2017 to 2021. And there was no idea of the flexibility we could obtain through the sale leaseback. But, this is a wan to; nobody has pushed us to have to..

Yes, understand. The other follow-up I had was on the Handys. You mentioned, you want to keep the sound and quiet, wherever you said it was but kind of difficult now when you’ve chartered in seven of them.

So, can you just talk to the thought process behind charting those in? It seemed that as the fleet was growing on a known basis, there was a little bit less reliance on charter in.

How unique of an opportunity was that and how do you see it kind of vis-à-vis the market fundamentals that you just laid out?.

I think this is an interesting, really interesting opportunity because off those seven ships, we’ve already had three in on time charter at a rate about $3,000 a day higher than what we’ve now done. And we had a situation where somebody -- we clearly have better credit. Without going into detail, the regional was not as strong as seen.

And we had the opportunity to not just renegotiate downwards the vessels that we had but take on these other four in a market that are great quality vessels, in a market that has to be pointed out is becoming more and more supply challenged. And most will -- it’s not just your normal time charter or whatever.

I mean, we hold purchase options over these vessels..

Yes, I know this, up until the end of 2018.

Correct?.

Yes..

The next question is from Fotis Giannakoulis with Morgan Stanley..

Robert, I want to ask you about how do you view this capital allocation that you mentioned. And at what point shall we expect, and if we shall expect dividend to return? Obviously, you mentioned about the low order book, falling inventories at the same point in the market will get better.

I’m just trying to understand how do you view the capital that is going to come in, will be allocated between restoration of dividend policy and the acquisition that’s just completed?.

I think, it’s a great question, Fotis. I mean, clearly, by keeping a nominal dividend, the Board is basically reaffirming that the Company would like to pay a dividend.

Now at that point, where we’re through this we have visibility or whatever, again it becomes that -- it becomes a little bit -- the easy one is, okay, the stock trading above net asset value, the market is strong, yes, of course, I think you would go to the Board and ask to raise the dividend.

The less easy one is market strong, like for example, what happened to OMI, the market is strong. The Company still isn’t really trading above net asset value, your forward bookings are really strong, the market is accelerating.

Well, we kept a fairly normal dividend there of 2, 3, 4% or whatever but we didn’t really march it up, but what we did was buy 32% of the Company back in 14 months. So, it really depends, when you get to that point of cash flow recoveries at each point, where is the stock trading at the different points.

But you would want to, you would obviously -- it would be great to have your cake and eat it [ph] and we try and tend to -- we’d like to be able to do that..

Just as a follow-up, first of all, if you would, pretty fair to maintain your discretionary dividend policy or you might consider of linking your dividend to earnings like many of your peers in the tanker sector heave already done? And second, how do you view this higher dividend when the market strengthens, vis-à-vis the exercise of the options of the bills of your reassignment with bareboat-in vessels?.

Again, the exercising options would depend on the time. I mean what you hope is that we get to the middle of 2018 or the end of 2018, and the markets are where we think they’re going to be strong.

The ice-class is a much more in demand beast, and you in the money and you exercise the options, and it does -- won’t actually take you much equity to exercise those options at that time, because your strike price will be lower than where the value is. So that’s sort of a one-stop more incidental position.

I think the question related to your floating dividends, we’ll consider that going forward, all types going forward later. But I can honestly say that was not part of the decision recently with the Board. When you come to later having surplus cash, obviously you will make all forms discussion with the Board..

Thank you, Robert..

And we would be happy to have you in if you have strong preferences to discuss that with us..

Happy to do that, although this is clearly your decision.

One last question about the differences that you might see between MRs and LR tankers, how much of the current weakness that we have seen the last few months is also attributed to the start of the deliveries on the crude tanker space, particularly for the MRs and as for the LR vessels in the Middle East? And also, how do you view the exports in -- from the U.S.

developing, people are talking about a steeper drop in refinery turnarounds going forward?.

Yes. Again, it’s very, very hard in the short-term to work it out, but it’s a reasonably good dynamic, the U.S. overall has the export capacity. It’s good that South America’s demand is going up; it’s good that Asia’s demand is going up. I think that it would be nice to blame every parts of the weakness on the LRT market on the crude oil deliveries.

But we’re also getting some bonuses at the moment, because many of the older LR2s are being shifting into crude oil markets. They’re unable to compete in the LR2 market and they’ve been moving out of the LR2s into the crude. And that’s going to make it very difficult, if not impossible for them to come back.

Clearly, yes, LR2s are being affected by some of the deliveries at the moment. But, I don’t think that’s something to complain about. We’ve being proved that issue before. I think overall, I’ve listened to a lot of conversations as to whether the MRs will outperform; the LR2s or whatever.

But over time, you may have one side outperforming the other for a few weeks, but over time, they’ll just get arbitrate. You just cannot have a strong MR market in a weak LR2 market for a very long, or a strong LR2 market in the weak MR market for very long..

Next question is from John Humphreys with Bank of America Merrill Lynch. .

Hi. Good morning, gentlemen. I just wanted to touch on the charter day and looking out to 2018 and 2019, and the new deliveries, you have it.

The expectation is to have some of the chartered in vessels in 2017 sort of roll off and have the new builds replaced, so that fleet would be sort of where it is today, or is the expectation to maintain those chartered in, adding the new build and really see the fleet continue to grow?.

We don’t really sort of use the word replacement because the fleet is really new. So, every single one of our chartering strategies is, do we think overall we’re going to make money on time chartering the shipping. So, we really do think that the curve could move up very sharply in 2018-2019, like really sharply.

So therefore, we are willing to tolerate either a lots or a breakeven on taking a time charter that is either two or three-year charter from 2017, 2018, 2019 or four years 2020, or even five years 2021. And we’re also willing to tolerate that by chartering in ships one option, one option, one.

So, right now, the chartering quality is not an expression of where we want to be in 2018, 2019 in terms of any particular number. It is we believe, this is the time to put risk on. This is same as the shareholder needs to buy the stock. You can’t hang around and wait until November or December.

Once the market starts to recover, this earnings and cash flow of this Company is really going to rip. So, you cannot hang around and wait to buy the stock. And the same way is if you’re going to put risk on in terms of time charters, you can’t hang around and wait until everything is fine, you have to start now while people are nervous..

Got it. Thank you. And that leads into the next one, Robert. And I appreciate that sort of what you talk about in second half 2017, what you expect is, when I was looking at regulation and refinery adjustments, really saw a stronger recovery a little bit later in 2018 and 2019.

If you could just sort of walk me through where I am -- or maybe I’m wrong, and why it’s not a 2018, 2019 firming story and it’s more a second half 2017, early 2018?.

I can’t do that; I’ll do it offline. There was so much wrong in your guys’ last piece that I just -- we don’t have -- but I’m happy to talk to James, our analyst, offline to go through the differences if that’s okay..

I mean, it sort of sounds a little bit earlier in your commentary kind of... .

We’ll go over it offline. I mean you’re seeing now, you guys published….

No, no, not what we said. I’m saying what you see in second half….

We’ll go over that offline.

Okay?.

Okay. Yes. And then, just sort of later in the -- what sort of key, if could you just reiterate those key drivers later in the year where you really see this tick up. What….

It’s simple, at the end of the year, you’ve got a lot of things going forward. A, you’ve got the regulations that are coming in August; B, you’ve got one more year of demand growth; C, you’ve got a real slowing of the delivery book.

In a twofold mechanism at the end of the year, one in new building order book in certain categories just both diminishes materially; second, you don’t actually have many ships that want to deliver in November, December because of age; third, you are turning again into a seasonal stronger period. So, that’s why..

Next is Noah Parquette with JP Morgan..

Thanks. All my questions have been answered..

Thank you..

We’ll go next to Spiro Dounis with UBS.

Hey. Good morning. Thanks for taking the question.

It might be a tough one to answer here, but just wondering if you could share any additional thoughts you’ve got on I guess the border adjustment tax, if that becomes long, how that impacts imports and exports of refined products here out of the U.S.?.

No. No comment..

No comment. Got it..

There are financial geniuses, well more-qualified than us trying to work out what the policies are going to be. We’re not going to comment on hypothetical..

Okay. Maybe we’ll do this way. If the U.S.

was incentivized to export more products, where do you think it goes, one of the most likely markets where the biggest deficits right now as you seem them, given our refining footprint?.

I’ll make it even simpler. If the U.S. is incentivized to export products, it would be good thing because to export, it has to take it by sea..

Okay. That’s all I was looking for. Second one, just around the MR sale leaseback negotiation. I think it’s still under, so I am not sure how much you can disclose here.

But, just wondering is there any sort of purchase obligation that we should expect in there?.

I think we’ve disclosed what we can disclose as a courtesy everybody if they can see what is really going on. And then, I am sure, we will give a fully transparent detailed position when we are able..

And the next question is from Magnus Fyhr with Seaport Global..

Yes. Sorry about that. Just one question left. Well you be able.

It’s not likely to fall asleep on one of our calls, Magnus..

Well, when you get in the queue so late in the call, it’s hard not to. Anyway, do you -- will you be able to quantify the impact of the fire at the [indiscernible] and do you have any update there on the status currently.

I mean, I am sure it took a little bit away on the LR2 market in the quarter -- the guidance for the first quarter?.

Yes. It’s clearly taking a little bit away from the LR2 market at present. And to the extent that that comes back, it’d be very positive the LR2 market. I mean, we haven’t really stressed it on the call very much because we don’t want to make excuses for what’s going on now rather we want to guide people to the longer term fundamentals as we see it.

But yes, it will be great when that comes back up..

And then do you have any -- quantify how much was done? I think it was like 400,000 barrels, I mean any…?.

We’ve got about the same type of information as you have. Timing is literally whoever you talk to on any given day. We haven’t got a good handle on that..

With no questions left in the queue, I’d like to turn the call back to Brian Lee for any additional remarks..

I want to thank everyone for joining us today and we look forward to speaking to you soon. Thank you very much. Have a good day..

This concludes today’s call. Thank you for your participation. You may now disconnect..