Svein Moxnes Harfjeld - Co-CEO Trygve Munthe - Co-CEO Eirik Ubøe - CFO

Jon Chappell - Evercore ISI Spiro Dounis - UBS Magnus Fyhr - GMP Securities Fotis Giannakoulis - Morgan Stanley Mark Suarez - Euro Pacific Capital Charles Rupinski - Seaport Global Noah Parquette - JPMorgan Lucas Dahl - ABG Amit Mehrotra - Deutsche Bank Chris Damas - BCMI Research

Good day, ladies and gentlemen and welcome to the Third Quarter 2015 DHT Holdings Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Eirik Ubøe. Please go ahead, sir. Eirik Ubøe: Thank you. Good morning. Before we get started with today’s call, I would like to make the following remarks. This conference call is also being broadcast on our website at dhtankers.com and a replay of this conference call will be available on the website. In addition, our Form 6-K, evidencing this news release, will be filed with the SEC. As a reminder, this conference call contains forward-looking statements that are governed by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include statements regarding DHT’s prospects, the outlook for tanker market in general, expectations regarding daily charter hire rates and vessel utilization, forecast of world economic activity, oil prices and oil trading patterns, expectations regarding seasonal fluctuations in tanker demand, anticipated levels of newbuilding and scrapping and projected drydock schedules involve risks and uncertainties that are more fully described in our filings made with the SEC. Actual results may differ materially from the expectations reflected in these forward-looking statements. I’m today joined by Svein Moxnes Harfjeld and Trygve Munthe, Co-CEOs of DHT Holdings. I will now turn the call over to Svein.

Thank you, Eirik and good morning to all and thank you for following DHT. Our EBITDA for the quarter came in at 54.8 million. Net income for the quarter was 27.5 million, equal to $0.30 per basic share. Our VLCCs operating in the spot market achieved time charter equivalent earnings of $59,600 per day in the third quarter. As of today, we have booked 65% of our spot VLCC days for the fourth quarter, a time charter equivalent earnings of $62,100 per day. In accordance with our capital allocation policy, we will pay a cash dividend of $0.18 per common share for the quarter. It will be payable on November 25 for shareholders of record as of November 17th. Including a dividend for the third quarter we will then have paid cash dividends for 23 consecutive quarters. Further and part of our capital allocation policy, we prepaid $26.8 million of bank debt in October. The $26.8 million consist of $22.9 million remaining outstanding under the DHT rule credit facility that had final maturity in May 2016, as well as $3.9 million under the RBS credit facility. As of September 30th, our cash balance was $158.2 million. Adjusting for debt repayment of $26.8 million and the $65.8 million earmarked for the remaining pre-delivery installments for the newbuildings to Hyundai, one could say we have a quarter-end pro-forma free cash balance of $66 million. Through the two debt prepayments done over the past two quarters, we have covered almost a third of the way towards our target of debt to total assets of less than 50% on a pro forma basis, assuming delivery of all the new buildings. At the end of the first quarter 2015, the ratio was 56.4%, of course we now have brought it down to 54.5%. And with that, I will hand it over to Trygve.

Thank you Svein. Before we start with the Q&A, we just wanted to highlight that we think we are about to enter a very exciting time for DHT with our earnings power and related dividend capacity set to expand considerably. Firstly, our six new buildings are starting to hit the water with the first vessel delivering this month. The next in January, the third in April and so on. This growth is fully funded, hence no additional shares will be issued. The daily cash cost for these ships i.e. Opex and debt service is less than $20,000 per day. So in today's market environment, these new ships will give a substantial boost to our cash flow, net income and dividend capacity. Secondly, we'd like to point out that three of our existing VLCC time charter contracts are expiring in December, January and March, respectively. The current rates for these three ships are on average in the low 30,000s per day. So clearly these ships are set to contribute more to the bottom-line whether they enter the spot market or are extended in the time charter market. So again, the delivery of the new buildings combined with their exploration of the three time charters will meaningfully expand the earnings power of DHT. And with that operator, we would like to open up for questions.

[Operator Instructions] Our first question comes from Jon Chappell of Evercore ISI. Please go ahead.

Thank you, good afternoon guys. You mentioned the two different options that you have for the three VLCC contracts that are expiring in the very near term. I remember in calls past you spoke about kind of holding off on further time charter coverage unless you can either get longer duration for some of those contracts or higher rates. Can you speak about the current liquidity in the market today for two to three year contracts and if they’re approaching the rate levels that you would find attractive in the move forward with us.

Yes, thanks Jon. I think to be precise, what we said was to do additional business we would like to see longer terms. On these three that are coming up or expiring it could be a case where we would extend with the existing clients. And then to your question regarding liquidity and rate levels and so forth, we see that there is reasonable liquidity in the two-year and one-year periods. And we assess rates for one year to be somewhere around $50,000 per day. Two years in the mid-low 40s, three years have been down a little bit and then once you get out to five years is getting a very limited again. So we don't really think that that picture has changed dramatically the past three months.

Okay. Now, you guys don't give a ship-by-ship kind of breakdown at least in the press release. I know that there is a fleet list on the website, but I think we’ve seen in some broker reports some potential to your contracts for some of your vessels. Have you re-chartered anything, maybe any of the recently expired contracts and some of the VLCCs for two-year terms or is that kind of still up in the air?

It's the latter. That’s still up in the air.

Okay. And then regarding the capital structure, I think Svein mentioned kind of the pro forma look at your net debt to capital once you’ve taken delivery of all the vessels. I mean, given the cash flow that the ships are generating today especially those in the spot market, it seems you can get that down to your target level quite quickly. So how do you kind of think about the next move with the excess cash that you are generating once you hit your target yield? Do you foresee a change to the dividend policy in the relatively near future kind of ratcheting that up if no opportunities exist for further growth or do you think that asset values have kind of lagged the cash flow generation in the market right now and further growth would be primary use of cash?

Thanks, Jon. You are right, we are certainly on track to reach the target balance sheet that we would like to and in this market, it grows rather quickly. Our dividend policy or capital policy says minimum 60%, so far us there is a potential and once we hit that target to expand, I think this in the combination with the two things that Trygve addressed that our new buildings coming into operation and the potential repricing, then all those three ships expiring, this could bode well for more capital being returned to shareholders.

That makes sense. One last quick one, just to get everyone involved. I think one of the Suezmaxes is coming off of the time charter and is undergoing drydocking or special survey. How long is that going to be out of commission for this quarter and then are there any other drydockings either in the fourth quarter or early in the ‘16 for the fleet that we should be aware of?

In this quarter, it’s only the DHT Trader that is undergoing drydock and you could see up to 30 day off-hire on that ship. There is nothing else for this year. We have for next year scheduled seven drydock and special surveys and they are spread through the air. That is essentially one of the Suezmaxes and 6 VLCCs of different vintages.

Got it. All right, thank you very much for your time, guys.

Thank you.

Our next question comes from Spiro Dounis of UBS. Please go ahead.

Hey, Svein and Trygve, thanks for taking the question. Just want to follow-up on something you announced two months ago that you are considering or you did put a Suezmax up on the sales block. Just to I guess feel out what you could get for the asset, of course cash flows there have been fantastic, so no rush to sell, but I just want to – can you offer any updates on that front and whether or not you are considering putting anymore up on the sales block?

I think on the DHT Trader we didn't really see any attractive proposals coming our way, so it was a pretty easy decision to pull the ship from the S&P market and continue to Trader and as Svein mentioned, she is currently in drydock and going through her third special survey. So we think she is going to be able to contribute significantly to cash flow going forward. Beyond that we really don't have any plans to put any ships up for sale.

Okay, no that makes sense. And then just quick one on VLCC rates. It's been pretty volatile I guess here in the back half of 2015, especially in the fourth quarter seemed pretty big moves up and down. Hitting 100,000 and then going down to 40,000 and just wondering two things on that fact. First, do you view it as a good thing I guess that rates are this volatile? Is it indicative of a tight market? And I guess second is, what would be your strategy to manage that volatility? It seems like joining a very large pool would capture the market average, but just wondering if that’s something you even want.

I think this is part nature of the business. [ph] This is the way the tanker market is. There is a lot of short-term volatility. If you flip it around and look at quarterly earnings over the first three quarters for this year, I think it has been pretty consistent from 60,000 to the low-50s to the very high-50s now in the third quarter. So on a 90-day perspective it’s not all that volatile at all. And as far as joining approval, we don’t really see any benefit in doing that. We think that we have plenty of clout and presence in the freight market. And I don’t think our earnings on the spot fleet year-to-date is any inferior to the competition.

That’s it for me. Thanks guys.

Thank you.

Our next question comes from Magnus Fyhr of GMP Securities.

Hi, guys. Just a question on the VLCC markets, follow-up on prior question. You guys had some repositioning just during the second half of the third quarter. Did any of those carry into the fourth quarter just looking at the net average rate you guys you mentioned you booked for the fourth quarter?

That will be due to the nature of the trading of all these ships, long voyages, some ships going from east to west and vice versa. And so there will be some variances going in and out the quarters and I think it’s important and to Trygve’s point to look at the average over the quarters and year-to-date, so there is then as such somewhat limited volatility. So I think that’s really where the market should focus.

Okay. And just on your capital allocation, you mentioned maybe stepping up the dividends. How about buybacks? I mean, as the stock is still trading at a discount to NAV, is that something you guys would consider? Eirik Ubøe: I think once we get to the right structure on the balance sheet, it would be something that we would be – would evaluate at the time, but I think it’s a bit premature to give any hints in that direction at this point. But of course, if you are trading at meaningful discounts and you think it’s a sound investment it make sense.

Okay. That’s all I had. Thank you.

[Operator Instructions] Our next question comes from Fotis Giannakoulis of Morgan Stanley. Please go ahead.

Yes, good morning guys and congratulation for the great quarter. I want to ask you about the market year-over-year how the cycle is developing for us? How long do you think that this strong crude tanker market is going to last and how does this impact your investment decision? And at the same time, if you can also comment on the November and December loading programs in the Middle East, we have seen this tremendous volatility. Three, four weeks ago, the rates, they were significantly lower and within a few days they doubled. What do you attribute to that and how do you see the next couple of months developing?

I think to the – in the first part, Fotis, on the tanker market going forward, we are obviously in a very healthy environment. There is some concern on the buildup of the order book and as everybody knows, there is a step up in the schedule of deliveries towards the end of next year. But I think if you look at most recent IEA report and compare their demand numbers for the first half of this year to the second half next year is the step up providing 2.7 million barrels per day. If that happens, I think we are all fine. Then we can observe these ships and remain in a healthy freight environment even with next to no scrapping. So we are fairly confident that this is going to continue that we will be in a rewarding and attractive market environment.

And regarding the short-term?

And when it comes to the winter, we certainly think this is healthy and there has been a little bit of a card game between stockers [ph] and owners as it relates, and that adds to the volatility if you like. But overall you see that when it has been quiet for a few days or a week, certainly then it pops back with a number of cargoes and resetting the [ph] demand. There has been some turnaround of refineries in these and that’s also coming to an end. So, this combined with the normal seasonality in the winter, with some weather delays and all that, we think this winter looks very healthy.

Thank you, Svein. And I understand that part of this volatility of the last few months is attributed to the unstable Iraqi production, do you have any view on how the export schedule looks like for this current month?

It’s been a bit erratic coming up its terms Basra and so there hasn’t been really a clear pattern to read. So, but it was quiet for a while and then certainly it came out with a number of cargoes again. So, it’s a bit hard to read, but I think in general, it does looked at least a lot of cargo to be shipped and this turnaround season is behind us. People have been looking to also take more cargo from West Africa clearly than longer voyages which again bodes well for the market.

Thank you. One last question for me, I want to ask about the sale and purchase market, we saw that it is looking to sell some assets, is this something that you have reviewed? Are there any assets at the reasonable prices out in the market? And overall, how do you view the potential of consolidation in the market we have for very -- for companies, large companies with large VLCC fleets in the public, in the US public market? Are there any thoughts or discussions on how do you view the market in the next couple of years developing? How many players do you forecast there will be?

It’s a bit hard to predict. I think you’ve seen some private equity financed fleets that they’ve been looking to either exit or get themselves into the public domain. So we had a bit of that, I guess generally to some extent is the result of that and coming out, Princimar sold their fleet to Teekay, [indiscernible] fleet. We are certainly following everything that goes on, but I think as we have stated earlier, it’s less likely for us to really expand and invest at this point, concentrating on executing and the commitments that we have and we already have significant growth in the business as it is today, which is already fully funded. In terms of size, I think investors need to look at liquidity in the stock and our company has really very good liquidity. I think it’s on the one crude tanker company in the public space that has higher liquidity or traded volume in dollar terms on a daily basis than what we have. So, it’s certainly a good opportunity for investors to move in and out of the stock. So when it comes to operational size, we certainly think that we’re big enough and I think our commercial performance and our OpEx levels are both very sharp and we think that that in itself is the driver just to get bigger.

Thank you very much. Appreciated. Good answers.

Our next question comes from Mark Suarez of Euro Pacific Capital.

Good morning, guys and thanks for taking my questions here. Maybe, we can touch on asset values first and the relationship between second hand and near bulk prices. I know that you mentioned in the past some of the older VLCCs might have accelerated, I’m seeing how you see that price acceleration or if you still see it in the fourth quarter and then how will you describe prices and where you think that trend is heading as we see square values going down, especially in the start of the year versus secondhand values.

Clearly, the newbuilding prices are under some pressure. It’s tough to be a shipbuilder these days. It’s soft non-existent demand from quite a few sectors. So some of them are getting on to fill up their capacity. Foreign exchange rates have also put a bit of a lid on how far prices could move to the north. So we don’t really expect any inflationary pressure on new builds in the short term. So where we are today are perhaps marginally downward is our assessment of that market. On second hands, [indiscernible] of course influenced by everybody's outlook for newbuilding prices. So, it has been very stable and sideways for quite a while now and we haven't really seen any changes to that in the recent past and we don't expect it in the near future either. In the other end, there has been step up, but quite frankly not that many transactions taking place.

Got you. So, you haven't really seen any renewed interest in the S&P so far in the fourth quarter for VLCCs and Suezmaxes in the second-hand is that correct, especially in the older vessels?

Yes, that's correct. I think it’s also fair to you know one has to remember here that on the private side of our industry and it is predominantly a private industry, one of the leading broking houses in London said that some 70% of the guys that own tankers are also involved in dry cargo and there are some sectors like dry cargo that are not doing too well at the moment. So, the cash generated from the very strong tanker markets is then typically not today used to reinvest or buy new ships is funneled into other sectors that are not performing so well. So, we think that limited capacity really on the private side to go and invest and drive asset prices in the short term despite very good earnings. I think what’s important and for the investors to recognize is the business a great opportunity because you are buying at [indiscernible] buying shares that are not inflated and you get access to very healthy earnings and also dividends. So this is a great opportunity for the financial investor.

Okay, great. And then going back on newbuild resales, have you seen any increased activity in newbuild VLCCs, Suezmax resale or maybe some opportunities you think might be worth pursuing given the --

There is very little activity. There are some potential newbuilding contracts that can be acquired, but I think it's really is very quiet. I mean we saw recently one of our peers elected not to declare options to acquire some forward contracts, so I think that market is quiet and at best sideways.

Okay, and then finally I know you mentioned some of the VLCCs potentially re-extending those TCs. You think there is an opportunity to maybe go into some have more attractive profit share arrangements given where the market at if you are to extend those TCs, if you will?

There are some people that are [indiscernible] about doing profit share based transactions and as you may know, one of our long-term time charters does have a profit-sharing element in it. To us that's not sort of the one and only recipe for success. Quite frankly, we think that with the combination of some fixed income and then some spot participation you are essentially getting the same.

Okay, fair enough. Thanks for your time, as always.

Our next question comes from Charles Rupinski of Seaport Global.

Good morning, and thank you for taking my question. Most of my questions have been answered, I just maybe was curious to get your take on following up a bit on a macro for the winter. Are you seeing a lot of poor congestion and is this playing into the maybe playing into the strength of the market going forward over the next couple of months. And also, just curious regarding vessel speeds, are you seeing anything as far as the charter is wanting to have the laden leg slower, are vessel speeds ticking up and is there something we should be concerned about? Thank you.

I think there are in the market where we are today, which is very healthy and that's a reflection of a lot of cargo being moved, it essentially means also you are having some pressure on the general system. And you do have delays in China, we are also now learning in Korea there are delays. So of course that's tying up capacity. This combined with typical weather delays that you will experience in the transit Bosphorus straits and also in the US Gulf will just add pressure on the general market and be a positive we think. When it comes to speed, the laden speed is very stable, it’s around 30 knots and I think in most refineries, they’ve planned their logistics and then there are also the floating [indiscernible] that the cargo in transit essentially is around that. So that’s not really changed and when it comes to [indiscernible] speed, I think today it makes sense to go as fast as you can and I think most owners are certainly doing that. So there is no hidden capacity in the fleet today by adding speed and that’s really a good thing. It means that the market is helping on its own fitting.

That’s very helpful color and I appreciate it. Thank you.

Thank you.

Our next question comes from Noah Parquette of JPMorgan. Please go ahead.

Okay, thanks. My question has been answered. I apologize if I missed it, but did you give guidance for how much of the fleet you’ve fixed so far in Q4 and at what rate?

Yes, we have fixed 65% of spot days for the fourth quarter at TCE of $62,100 per day.

62,000, you said.

Yes, correct.

Okay, thank you.

The next question comes from Lucas Dahl of ABG.

Thank you. Hi, guys. I was wondering, you mentioned some of the tanker money is being fueled into the dry bulk segment. Do you see that as a sort of a restrictive argument for people putting the newbuilding bottom in Q4 if the market is very healthy as you predict?

Lucas, could you rephrase that. I am not sure we understood it.

I was – you sort of talked about capital not being easily available because some people are using the money they are making in the tanker market to fund dry bulk business. Do you see that as a limiting argument for people not ordering more newbuilds over the next couple of months if you get it right on the market throughout the winter season?

Yes. And also one explanation for why asset prices in general are being trailing the earnings, so yes.

I think another important element and I think some other people have been commenting on that is that we think that some of the recent ordering activity for newbuilds have been driven by regulatory changes and desire to secure newbuilds with the tier 2 type design to avoid additional CapEx that tier 3 would mean, so this is right. We would expect newbuilding activity to really taper off now and maybe the order book will not move much, but time will tell.

And given the recent slight uptick in the oil prices and the forward curve, do you see any more possibilities for an increase in floating storage in 2016?

The contango is currently not wide enough, so we have not really seen a lot of increase to have oil stored on ships.

Okay. And finally on your cost on the G&A, what you have achieved in Q3, is that sort of the level that accounts for the integration of Samco et cetera, is that something we could consider a run rate going forward? Eirik Ubøe: Lucas, I think the G&A will revive a little from quarter-to-quarter and we previously guided at G&A, I think that still stands and it has been a cash G&A for the quarter of about 3.5 million and non-cash of 1.5 million to 2 million, so a total of 5 million to 5.5 million per quarter.

All right. Thank you guys.

Our next question comes from Amit Mehrotra of Deutsche Bank. Please go ahead.

Yeah, it’s Amit Mehrotra from Deutsche Bank. Thank you very much. Good morning, afternoon everybody. I just had a question on the share price relative to net asset values. The vast majority and you know better than I do, the vast majority of the tanker companies are trading well above NAV and that makes sense just given the level of strength of cash flow and the discipline, more disciplined cash return policy. And Euronav in the past said this type of premium is sustainable because it’s essentially the price investors need to pay for the liquidity of investing in a shipping company and also maybe there is some the markets discounting some improvement in asset values. So sort of against that backdrop, I just have a couple part questions. One is, can you just provide sort of your view on the value proposition for investors for institutional investors to buy tanker company equities in generally trading at 20% to 30% above net asset value in most cases. That’s my first part. The second part is, do you expect this discount to narrow as a result of asset values improving and are really just people waiting for maybe after the second quarter of next year to see if the strength that we are seeing is sustainable? And then hopefully, we see a nice leg up in asset values. And the last part quickly is just why do you think DHT gets less love from investors, vis-à-vis its valuation relative to NAV because it just doesn’t really make a whole lot of sense to me given the capital structure and sort of the relatively prudently conservative capital structure. So I apologize for the long-window question, but if you could provide any insight on that, I’d appreciate. Eirik Ubøe: I think you’re absolutely right that our price relative to NAV has been lower than some of the other names out there. We like to believe that the main reason for that is that a fair amount of our capital has been “dead” and as much as it’s been raised when we entered into the newbuidling contracts with Hyundai and it’s not being productive over the past several months. But that is changing now. We are taking delivery of the first ship here in a week or two and these ships are going to start performing and generating cash flow and earnings for DHT. So we think that that would be the main catalyst for us to sort of catching up with the field in terms of the relative pricing. In addition to that we have also had some fixed income, which is different to most of our peers and so that as we alluded to earlier on the call those contracts are set for some sort of repricing either by new time charters or entering the spot market. So we think this is a juncture where there is potential for DHT’s earnings to expand significantly, and hopefully the markets will appreciate that.

And can you just answer the first part of that question in terms of just generally how you think about institutional investors buying into tanker equities in general at a 20% to 30% premium to net asset value because that’s sort of the big hurdle now as we look because the equities have responded so well. Generally, how would you sort of frame that story? Eirik Ubøe: I think in general, as people have talked about that asset prices have not appreciated to reflect the earnings. So in a way, you’re maybe not investing at the premium, and it’s actually at the discount relative to the earnings that are being generated by the space at large. So I think investors should really focus on the earnings of all these companies and try to skew more to the multiple game more than just the NAV game.

All right. Okay, very good. Thank you very much, appreciate it.

[Operator Instructions] Our next question comes from Chris Damas of BCMI Research. Please go ahead.

Yes, good afternoon gentlemen. I have a question on how those earnings are achieved. In Q2, you had a 56% of the spot VLCC fleet booked for Q3 at $81,000. Just by the math, the remaining 44% must have been booked at $32,364. You recall that the rate was at $64,000 when you made the call on July 29. And then we had August that was a bungee jump. So what does that actually mean? I excuse myself of a basic question, I am commodities analyst. When you say it’s been booked at spot, does that mean there is a daily index or the board has been booked for a month or two months or – and I know Goodwood manages most of the VLCC spot, so could you tell me how that $32,000 evolved on the rest of the fleet in that volatile Q3? And I know, utilization was almost 99 – over 99%, so was it due to dry dock?

When we talk about percentage booked that means a number of days that we have secured income for the spot fleet. And when we book, that means we book a cargo and that can be a 30-day round voyage, it could be a 80-day voyage, it depends really on which geographical direction we play the ship. So it’s not a daily index as such. When you trade the ships from east to west and west to east, there is one leg that is referred to typically as the backhaul, normally then generate lower earnings than the other direction, which is then referred to as the front-haul. So if you have periods coming in and out of quarters with more of the one leg -- less of the other one that could come out with some volatility in earnings, but hence we think it’s important really to look at what we actually earn for the quarters on average, that’s really the key. Secondly, sorry.

The 81,000 you referenced and I think Trygve gave a cryptic comment that of course we don’t expect it to reach 81,000 for various reasons. That 81,000 today, the 62,100, does that include the ballast run or any demurrage where you’re basically waiting to load?

It includes the ballast leg, demurrage is not necessarily included because that’s forward event. That will happen if you’re delayed imports. But demurrage will be included in the actual earnings that have been generated in each quarter.

The 81,000 you’re talking about and today’s 62 would average both the back and the front legs of the voyage?

Right.

And Goodwood is managing this business?

No, just to clarify that, so Goodwood Ship Management is a company that we own 50% of and they do the technical management of our ships, which means crewing, maintenance, repairs, spare parts, et cetera. The saving the ship and fixing the cargo is done in-house in DHT in our Oslo office.

Right. One last quick one, the six ships that are being specially surveyed, are they going to require ballast water management systems to come up the spec next year?

Not really. So these rules are not yet been rectified. So there is still lack of clarity of these regulations, but importantly, our four most modern ships, they already have ballast water treatment installed and all our six newbuildings. So half of our DHT fleet has ballast water treatment plants installed already.

Thank you very much. Good quarter.

Thank you.

As there are no further questions at this time, I’d like to hand the call back to the host for any additional or closing remarks.

Thank you, operator and thanks to everyone for your continued interest in DHT. Thanks a lot and have a good day.

Thank you. Ladies and gentlemen, that will conclude today’s conference call. Thank you for your participation and you may now disconnect.