Earnings call transcript: CoolCo Q4 2024 misses EPS, stock down 6%

CoolCo Limited reported its fourth-quarter 2024 earnings, revealing a shortfall in earnings per share (EPS) compared to analyst forecasts. The company reported an EPS of $0.3247, falling below the expected $0.3809. Trading at an attractive P/E ratio of 4.52 and offering a substantial dividend yield of 8.37%, the company surpassed revenue forecasts with $84.57 million against the anticipated $83.31 million. However, the stock fell 6% in pre-market trading, reflecting investor disappointment with the earnings miss.

InvestingPro analysis reveals several additional insights about CoolCo’s financial health and market position. Subscribers gain access to exclusive ProTips and comprehensive financial metrics that help make informed investment decisions.

Key Takeaways

• CoolCo’s Q4 2024 EPS missed forecasts, impacting investor sentiment.
• Revenue exceeded expectations, reaching $84.57 million.
• Stock dropped 6% in pre-market trading following the earnings release.
• Strong backlog and fleet modernization efforts continue.
• Market conditions remain challenging, with depressed spot rates.

Company Performance

CoolCo demonstrated solid revenue growth in Q4 2024, with total operating revenues rising to $84.6 million, up from $77.7 million in Q3. With a market capitalization of $387.31 million and an impressive gross profit margin of 77.84%, the company reported an increase in adjusted EBITDA to $55.3 million, alongside a significant rise in net income to $29.4 million from $8.1 million in the previous quarter. However, the average Time Charter Equivalent (TCE) rate decreased to $73,900 per day from $81,600 in Q3, reflecting ongoing market challenges.

Financial Highlights

• Revenue: $84.57 million, exceeding the forecast of $83.31 million.
• EPS: $0.3247, below the forecast of $0.3809.
• Adjusted EBITDA: $55.3 million, up from $53.7 million in Q3.
• Net income: $29.4 million, up from $8.1 million in Q3.
• Operating margin: 46%.

Earnings vs. Forecast

CoolCo’s EPS of $0.3247 fell short of the forecasted $0.3809, marking a miss of approximately 14.7%. Despite this, the company managed to surpass revenue expectations, achieving $84.57 million against the anticipated $83.31 million. This mixed performance highlights the company’s ability to generate revenue even as profitability metrics lagged behind expectations.

Market Reaction

Following the earnings announcement, CoolCo’s stock experienced a 6% decline in pre-market trading, dropping to $6.74. This reaction reflects investor disappointment with the EPS miss, despite the revenue beat. InvestingPro data shows the stock’s RSI indicates oversold conditions, while its beta of -0.79 suggests it often moves contrary to broader market trends. The stock’s movement places it closer to its 52-week low of $6.92, contrasting with a high of $13.68, indicating ongoing market volatility.

Get deeper insights into CoolCo’s valuation and market position with InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.

Outlook & Guidance

Looking forward, CoolCo anticipates maintaining similar revenue levels in Q1 2025, with potential upside if spot rates improve. The company remains focused on strategic growth and financial flexibility, despite challenging market conditions.

Executive Commentary

CEO Richard Torel emphasized the company’s strong backlog, stating, "We have more than $1,000,000,000 in firm backlog." He also noted the potential for market conditions to improve swiftly: "The swift onset of poor market conditions could be quickly reversed." Meanwhile, CFO John highlighted the earnings as an exercise in demonstrating the company’s performance rather than projecting rates.

Risks and Challenges

• Depressed spot market rates continue to challenge profitability.
• LNG supply challenges and project delays could impact future performance.
• The absence of a traditional winter market in 2024 may affect seasonal revenue.
• Fleet utilization and positioning voyages remain operational concerns.
• Market volatility could influence investor sentiment and stock performance.

Q&A

During the earnings call, analysts inquired about the suspension of dividends, which the company attributed to maintaining financial runway. Other questions focused on potential vessel acquisitions and the stabilization of long-term charter rates. Executives expressed a cautious yet opportunistic approach to growth amidst current market dynamics.

Full transcript - Cool Company Ltd (CLCO) Q4 2024:

Call Operator/Moderator: Hello, and thank you for standing by. I would like to welcome everyone to The Cool Company Limited’s Q4 twenty twenty four Business Update. I would now like to turn the call over to our CEO, Rishi Torel. Please go ahead.

Richard Torel, CEO, CoolCo Limited: Hello, and welcome to CoolCo’s presentation of the fourth quarter twenty twenty four. Thank you, Dustin, for the introduction. Please turn to Page three, CoolCo at a Glance. The quarter was decent, even though the chartering market for new business is another story. From a rate perspective, winter was canceled this year, and we’re contending with the lowest rates we have ever seen on our two spot market vessels.

We have a reasonably well spaced portfolio of charters and over $1,000,000,000 in firm backlog. This does not take away our exposure to vessels that come open over time. While rates languish as below economic breakeven on open days, we have decided not to declare a dividend. Instead of predicting the timing of when markets normalize and risk getting it wrong, not declaring a dividend at this time provides the combined benefits of financial flexibility and creating capacity for opportunistic growth. We have a good track record in this area, and it’s a kind of market where opportunities are likely to come along.

For the quarter, revenue was up slightly and the hard work of our chartering team enables us to guide towards similar levels for the first quarter twenty twenty five. We’re going to get into the drivers of this market and when conditions are likely to normalize in the presentation. While we’ve often talked about how the market will rebalance in theory, this quarter, we have some real data to show how it’s happening in practice. Turning to Page three and the quarterly highlights. Our portfolio of charters has provided solid support in the face of a rapidly deteriorating market.

We see the impact of this market on our TCE after the Kool Tiger delivered in October and undertook a positioning voyage to the Atlantic Basin before being faced with the spot market rates that prevail. The same applied on the Glacier as it delivered later in the quarter redelivered later in the quarter, I should say. The positioning voyage also had an impact on fleet utilization, and we shall see the same in the first quarter because of the positioning voyage on the Gale Saga. However, in stark contrast, the Saga has delivered onto its fourteen year charter and has recently lifted its first cargo from Cove Point. As mentioned, revenue increased for the quarter to $84,600,000 primarily because of fewer drydock days.

Adjusted EBITDA also increased modestly to $55,300,000 The backlog remains strong at $1,700,000,000 of which over $1,000,000,000 is firm. Turning to Page four, and we see the picture of the current market. It’s a market that requires agility, differentiated vessels and strong customer relationships. Rates are well below breakeven. It’s not unusual for them to be low at this time of year.

But what was unusual is the complete lack of a winter market. This year’s winter blew through the floor of anything we have seen for many years. The Tiger and the Glacier have been exposed to this market, but we’ve managed to keep them employed, achieving 92% utilization in the fourth quarter, and we expect to beat this in the first quarter of twenty twenty five. Sustained high LNG prices in Europe, the resulting trading patterns and the delivery of new vessels have put significant downward pressure on the near term chartering market. Adding to this pressure has been a number of sublets in the market.

These are vessels that are delivered ahead of the projects for which they are intended and are typically chartered out into the market without much consideration of rates, something that is negative for sentiment. With headline rates at these levels, longer term deals are few and far between. The spread between spot levels and the levels required to commit a vessel on a term basis are simply too great. Corteo is seeking to bridge such conditions through a combination of spot, short term and floating rate deals. John has a breakdown of our backlog of one of his slides.

In the next slide, we have our observations from the market. Turning to Page five, we see a list of new supplies in 2025. That was the case until Costa Azur announced a delay of a few months earlier this week, and you see that now slipping until 2026. While this story of delays is getting old, it does mean that precision around timing is important when thinking about the shipping market. The most significant near term projects we see in the market are Venture Global’s.

The first, Kluckischoe Pass, moves to commercial operations in April. And while the plant has been operating for some time, it’s only now that the vessels that were originally intended for lifting its cargoes will be doing so. Removing such vessels from the sublet market is going to help and the pattern will be repeated as more projects come online. Tacavitas is the other Venture Global project that will be a major contributor over the coming months. It’s up and running.

I think they’re up to around 15 cargos so far. Corpus Christi Stage three, trains one to four, is coming on stream steadily over the course of 2025. LNG Canada is a big project for the middle of the year. At the back end, we have a handful of projects, including the first of the Qatari Northfield expansion projects potentially. Because a number of these projects only start at the back end of the year, the tonne mile development is only expected to be 4% in 2025.

But 2026 is a different story where we see the full benefit of annual production flowing into the 17% expected growth. Michel, one of CoolCo’s customers, published its 2025 LNG outlook earlier this week and commented on seeing 600,000,000 tonnes per annum of demand by 02/1930, increasing to up to 700,000,000 tonnes per annum of demand by 02/1940. This demand will ultimately be a huge opportunity for CoolCo. Sheldon also had a list of the delay factors that we’re all too conscious of: geopolitical tensions, regulatory hurdles, start up risks, civil unrest, labor shortages and supply chain bottlenecks. None of these are going away and the industry needs to become better at factoring them into their fleet plans.

However, it is very reassuring to see Shell (LON:SHEL)’s two thousand and forty projection and how it is aligned with our long term view of the LNG market. Page six looks at the developments in idling and new belts. I have long said that steam turbine vessels leaving the fleet will eventually balance the market and we’re starting to see it in the data. The chart on the left hand side of the page shows how closely idled vessels are correlated with vessels reaching twenty years in age. What’s happening here is that vessels are rolling off their initial contracts and immediately being idled rather than drydocked.

All are now warm stacked at best and unlikely to play an active role in the market going forward. Number of vessels reaching twenty years in age is set to increase over the coming year, and these vessels are not being scheduled to lift cargos. This is enabling the customers to specify larger cargos for which our TFDE vessels are the ship of choice. The CorCo vessels are particularly attractive because of their size and also the upgrades that we’re in the course of progressing. These specifications make them ideal replacement vessels for the steam turbine vessels that are leaving the fleet, leaving us well positioned to take over such business.

Just as steam turbine vessels reach retirement, newbuild orders have all but dried up. This is only natural in the current rate environment and obviously a good thing for vessels that are already on the water when thinking about the years ahead. Moving to Page eight, we have some other factors that are explain the part of the other things that are impacting the market. And here we think about how changes could improve matters. The swift onset of poor market conditions could be quickly reversed.

And let’s think about how. Well, firstly, increased LNG supply resulting in lower prices will create demand in the price sensitive markets, especially Asian markets, which are more distant and therefore require more shipping. Geopolitics can have an impact too. China, at the moment, takes only 5% of U. S.

LNG volumes. And that clearly needs to adjust as trade rebalances. The return of limited Russian gas to Europe would result in less demand in Europe and would see U. S. LNG traveling further.

So again, something that’s positive for shipping. Floating storage could increase as a result of contango trades reappearing and that’s in a market where seasonality now can apply not just in the winter, but also in the summer. I think overall, it’s going to increasingly become the case that LNG shipping is a highly leveraged option on the trading dynamics connected to the increased LNG supply. The top right chart shows how TTF prices in Europe are dragging up LNG prices to levels that make it less attractive to the price sensitive markets. It also shows how the forward curve is flat and has very little money in it for traders.

Under more normalized conditions, volatility in this curve results in ships having option value and being used more for storage. And the chart below bears us out shows how this last winter, it wasn’t so much the case and vessels used for storage was 10 to 15 fewer than what we typically see at that time of the year. This added to the market softness and it’s something that we’ll monitor going forward. Now, moving to Page nine, and this is where I comment on the dividend not being declared. And here’s why.

Well, it’s fundamentally while rates languish below breakeven on open days. Our firm backlog of more than $1,000,000,000 across the fleet is reasonably well spaced, but this doesn’t take away our exposure to vessels that come up open over time. Instead of predicting the timing of when markets normalize and risk getting it wrong, we’ve not declared a dividend. This increases our runway in the event of delays to more normalized markets and provides capacity for opportunistic growth. The chart on the right hand side includes our breakeven levels for reference.

They, of course, reduce over time as debt is repaid at interest pools. We took this decision from a position of strength. We have more than $1,000,000,000 in firm backlog. We have $288,000,000 of liquidity at the end of twenty twenty four. We’re reporting strong operating results and we have no refinancings until mid-twenty twenty nine.

From here, John will take the quarter in more detail.

John, CFO, CoolCo Limited: Thanks, Richard. So, I’ll run you through the fourth quarter. Turning to Slide 10. In our earnings release, earlier today, we reported TCE revenues of $80,800,000 exceeding the guidance provided during our third quarter earnings call. This also marks an increase from the prior quarter’s $77,700,000 in TCE revenues, primarily driven by a reduction in drydock days.

Time and voyage charter revenues generated an average TCE rate of $73,900 per day across the fleet of Svelte vessels in Q4. This compares to 81,600 in Q3, mainly the result of the newbuild vessel entering our fleet in mid October, which operated in the spot market and one vessel finishing her contract during the quarter and also operating in the spot market. Total (EPA:TTEF) operating revenues of $84,600,000 surpassed both consensus estimates and Q3 levels. These figures include $3,100,000 in non cash amortization of net intangible contract assets and liabilities, along with around $700,000 in third party vessel management fees. Adjusted EBITDA for Q4 reached $55,300,000 up from $53,700,000 in Q3, reflecting the increase in operating revenues.

To note, adjusted EBITDA does not take into account the $3,100,000 in non cash amortization that I mentioned previously. Vessel operating expenses averaged $17,000 per day per vessel during the quarter, a decrease from Q3 and slightly lower than the full year average in 2024. Moving to Slide 11, where we show the bridge from Q3 to Q4 for both operating income and net income. Q4’s operating income was $38,500,000 slightly lower than the $38,900,000 in the previous quarter. This was driven by higher TCE revenues offset by higher OpEx due to the addition of the Kulteiner newbuild and its positioning expenses.

The operating margin remained strong at 46% of operating revenues. Net income for the quarter was $29,400,000 up from $8,100,000 in Q3. This increase was primarily due to a $23,500,000 swing in net unrealized gains on mark to market interest rate swaps. Turning to Slide 12. As of December 31, our backlog exceeded $1,700,000,000 including all extension options.

This equates to approximately sixty one years of backlog or an average of four point seven years per vessel across the entire fleet of 13 vessels. The average TCE rate of our firm backlog of approximately $1,000,000,000 is above $82,000 per day. The chart on the left illustrates our backlog distribution over the next two years, where near term coverage of consensus revenues remains robust, approximately 86% in 2025 and sixty five percent in 2026. Percent. Turning to Slide 13, where we show illustrative operating revenues.

It highlights the potential upside for 2526% revenues under different rate scenarios. Assuming an underlying rate of $20,000 per day for open TFDE days and an additional $20,000 per day premium for two stroke vessels, the revenue opportunity is significant. If TFD spot rates were to rise to $70,000 per day, the upside potential exceeds $60,000,000 in $25,000,000 and $100,000,000 in ’26. To emphasize, these are not projections of rates for the respective years, but an exercise meant to show the company’s performance in different hypothetical scenarios. Also note that the low end of $20,000 per day for open TFDE vessels, as Richard has mentioned as well, is an extremely depressed level in any historical context.

While such increases do not materialize overnight, it does underscore the increased earnings potential under improved market conditions. Turning to Slide 14. In today’s market environment, we are pleased to maintain a robust balance sheet with strong liquidity, no debt maturities until mid-twenty nine. Over the past year, we effectively restructured most of our debt through refinancings and also covenant harmonizations, reinforcing our financial flexibility. The unwavering support from our lending partners has been instrumental in this process, positioning us well for the future.

As of December 31, cash and cash equivalents stood at approximately $165,000,000 up from $142,000,000 in the previous quarter, largely due to the drawdowns under various financings. Adjusted EBITDA was mostly offset by debt servicing in the fourth quarter, but note that our debt servicing in each of the second quarter and the fourth quarter of each year includes semi annual debt repayments. So these two quarters always show higher debt service amount. In addition to the cash, we retained $123,000,000 in undrawn capacity under the RRCF that we secured in December. And in addition to not have any debt maturities until ’29, our average interest rate is well below 677% of our debt either hedged or fixed

Richard Torel, CEO, CoolCo Limited: on a net debt basis.

John, CFO, CoolCo Limited: To recap the presentation on Slide 15, in summary, we had strong revenues and operating results, reflecting strong chartering performance. The company delivered an adjusted EBITDA margin of 65% and an operating margin of 46%. Our fleet remains well positioned with majority of open days secured under the $1,700,000,000 backlog. Balance sheet is in good shape and should allow for opportunistic growth. On the strategic front, our asset purchases in previous years show our disciplined asset management approach to drive value creation.

Given the current depressed spot rates, which remain below economic breakeven and even operating costs, we maintain a prudent long term focus. Should rates improve meaningfully from these levels, free cash flow should become available to shareholders again. So, with the financial overview concluded, Richard, I’m handing it over back to you for some closing comments.

Richard Torel, CEO, CoolCo Limited: Thanks, John. The one thing I’d like to just emphasize that is the significant upside once rates start to improve and normalize. And with that, Justin, please can you open up the lines to questions?

Call Operator/Moderator: Thank you. And for our first question, this comes from the line of Brod Mortdecol from Clarksons Securities. Your line is open.

Frode Mortdecol, Analyst, Clarksons Securities: On the dividends, if I’m first out there, I noticed you mentioned, of course, it’s taken from a position of strength and it’s prudent to cut the dividend, which makes totally sense. But you also mentioned in the slide on Page nine

Richard Torel, CEO, CoolCo Limited: that you’ve considered the runway

Frode Mortdecol, Analyst, Clarksons Securities: in the event of delays, right? So maybe you could talk about that consideration given what you have in terms of backlog and the balance sheet you have? How would you consider the runway?

Richard Torel, CEO, CoolCo Limited: Sure. Yes. Obviously, the runway is something that we’ve felt the need for as rates have come down and we felt the need for a longer runway and hence the decision that we took. And of course, what we typically do is look at where we have significant refinancing needs, which in our case are way out in 2029. And we have a balance sheet which can basically accommodate whatever the market flows are at us between now and then.

Now our expectation is that things will get better way, way, way in advance of then. But if they don’t, then we can accommodate it.

Frode Mortdecol, Analyst, Clarksons Securities: But the CapEx you had in terms of upgrades and stock like that, how’s that looking from now on?

Richard Torel, CEO, CoolCo Limited: It’s looking very good for a couple of reasons. And the it’s only something that’s actually been incurred on one vessel so far, which is now back on the water. The other vessels are going in and out of the yard over the next few weeks and months. But on the vessel that we upgraded, we have been making upside in excess of $5,000 a day. And that means under the terms of its contracts, the total upside has been $10,000 a day and we’ve been sharing that with the Jatra.

So, there’s real money in those upgrades. And I think almost more importantly in this market, it makes the vessels that much more attractive to charterers and it helps with the employment of the vessels. So either way, we’re getting good value out of those upgrades.

Frode Mortdecol, Analyst, Clarksons Securities: Okay. On the market, I noticed the layup slide you had on steam. But how would you consider the TFDE economical decision to either layup or idler ship? What’s the lay up cost today if you wanted or somebody in the industry wanted to lay up a ship?

Richard Torel, CEO, CoolCo Limited: It depends whether it’s a sort of cold stack or warm stacking, I guess, in drilling terms. You save a bit of money if you get a warm stack, because you can reduce the number of crew on board and you obviously need less consumables. So, there is something of a savings there. Does that answer the question or are you thinking about it slightly differently?

Frode Mortdecol, Analyst, Clarksons Securities: No, I guess, you haven’t really considered doing that, I guess. It seems like people are trying to keep the ship cool, right? And then hoping for a turnaround, but at some point, I guess, people need to consider idling a ship for a while.

Richard Torel, CEO, CoolCo Limited: Yes. I think, yes, what you referred to there, Frode, is like the first step. The first step is, at what point do people say we’re not going to take heat and allow the ship to warm up. And we haven’t reached that stage on any of our ships, but we know others that have. And the issue with that and what makes people very reluctant to do it is that the kind of ship back online again costs about $500,000 because you need to get it called.

And you can do the math. So these kinds of rates, you need a jolly long contract in order to amortize that kind of amount of that kind of expense. So we are seeing a lot of vessels which have got warm and that applies across almost all asset types. So that’s kind of the first step. And the next step is actually laying up properly where you go to an anchorage and then you finally get to the step where things literally get mothballed and nothing other than the older steam ships are in that kind of position.

Frode Mortdecol, Analyst, Clarksons Securities: Okay. That’s cool. Great color. Final question I had is on scrapping. Why haven’t we seen more scrapping on the old steamers yet?

Richard Torel, CEO, CoolCo Limited: I tend to look at idling more than scrapping because I just think there’s a backlog building. And whether they’re idling or scrapping, they are effectively out of the market for all intents and purposes.

Call Operator/Moderator: Our next question comes from the line of Liam Burke from B. Riley. Your line is open.

Liam Burke, Analyst, B. Riley: Thank you. Hi, Richard. How are you today?

Richard Torel, CEO, CoolCo Limited: Fine. Thanks, Liam. How are you doing?

Liam Burke, Analyst, B. Riley: I’m doing fine. Thank you. I think it’s, I mean, pretty much consensus that 2027, the supply of LNG carriers are going to be awfully tight. Some people are speculating there will even be a shortage. In your prepared comments, you said that charters I mean, there’s very little discussion on any kind of long term charter.

Understanding that a year and a half from now possibly there’s going to be a tightness of supply, why aren’t there more discussions about this or charters trying to grab assets while they can?

Richard Torel, CEO, CoolCo Limited: Well, at the moment, the bid ask spread is quite large. And now talking a little bit about our runway, I mean, I think the actual charter is they view themselves as having a bit of runway as well before they have to worry too much. So they are there and they’ve been sitting on their hands. We’re seeing a few signs. They might be starting to,

John, CFO, CoolCo Limited: I

Richard Torel, CEO, CoolCo Limited: don’t know, want to wriggle their hands free. But it’s very early stages as of now. I think fundamentally for these guys, a longer term deal is going to be still in the high 80s. And it’s very, very difficult to get to your management a deal at that kind of level when they’re looking at the press and they’re seeing the spot market at levels that it is today.

Liam Burke, Analyst, B. Riley: Okay. You also mentioned the current state of the spot market, which I mean is pretty indescribable at this point, is creating opportunities for assets coming online. Have you seen an attractive pipeline and how would you manage balance attractive asset values with having to own this vessel through an unpredictable period of tough times?

Richard Torel, CEO, CoolCo Limited: Yes. And that’s the balance you have to get right, obviously, if you want to get down that path. It’s exactly the way you got to think about it. And then the added sort of complicating factor in the LNG space is that there is a liquid market for these assets. So it’s not like drybulk and tankers where the deal is happening day in day out and you’ve got reference points.

So, we’ve got in our mind what prices make sense for what kind of vessels. We’ll have to see if we get into sort of a landing zone for a deal. But obviously in this kind of market, it’s quite possible that we do. And if we find the right kind of deal, it will be a nice opportunity to grow the business and create some more value.

Liam Burke, Analyst, B. Riley: Great. Thank you, Richard.

Richard Torel, CEO, CoolCo Limited: Thank you, Liam.

Call Operator/Moderator: Thank you. Our next question comes from the line of Komet Balens from Value Investors Edge.

Komet Balens, Analyst, Value Investors Edge: Most has already been covered, but I wanted to follow-up Most has already been covered, but I wanted to follow-up on Frode’s question on the dividend as well as on Liam’s last question. You mentioned that part of the reasoning for cutting the dividend was also to set you up to potentially acquire some vessels on the road. And could you give us some more commentary about how you currently view the trade off between potential growth, let’s say, and repurchases? It’s

Richard Torel, CEO, CoolCo Limited: a good question. And there’s sort of three things that you’ve got to consider. You’ve got the growth and then you’ve got distribution via repurchases and then distribution via dividend. We have very much left the repurchase program in place. So, we do believe that there’s value to be created there.

And of course, that is something that you can move on quite quickly when the time is right. And ultimately, I think it’s what any sort of growth opportunity is going to be measured against.

Komet Balens, Analyst, Value Investors Edge: Makes sense. Thanks for the color. You also mentioned that vessels used for storage this year have been kind of lower than in previous years. And I was wondering, on top of the lower volatility in the ETF, have you seen any other large drivers for the trend?

Richard Torel, CEO, CoolCo Limited: No. I mean, I think it is very much a well, I mean, it is there’s a very flat curve that’s driving that trend. Now, why have we got a flat There’s a few reasons. I mean, I think we’ve gone from a market which was very much focused on the winter season. Now you have a bit more of a winter season and the summer season.

That’s because the air conditioning demand in more emerging LNG markets, which in itself doesn’t make the sort of contango go away because you still got the shoulder periods in between. But I think what has created some of the issue this year is that it’s the refilling of storage in Europe. And that has sort of elevated the price of the LNG in periods when maybe you wouldn’t normally have expected to be quite so high, which of course has taken away that container that the traders like to trade around.

Call Operator/Moderator: And your next question comes from the line of Nynos Thompson from Fearnley Securities.

Nynos Thompson, Analyst, Fearnley Securities: Just quickly on Cool Tiger, and I guess it ties a bit into the other questions. But is it the most likely outcome that you’re going to enter some sort of an index deal and then at a fixed rate at a later stage this decade? And or are you looking at other sort of setups? And if it’s the index with fixed, at what point do

John, CFO, CoolCo Limited: you think that charters are willing

Nynos Thompson, Analyst, Fearnley Securities: to commit on fixed charter rates, Thomas, is it 27, is it 28? Where do you see sort of the demand for that?

Richard Torel, CEO, CoolCo Limited: Yes. I think that having a floating type deal is a good way to bridge any valuation disconnects between the owners and the charters. So we could well go down that route. We do think there’s quite a lot of demand for 2027 and certainly 2028 for longer term business. But that’s the kind of business where people charters are still sitting on their hands, but I feel they need to lock that in quite yet.

But of course, vessel is eligible for that business and maybe something which combines that kind of deal with something floating in the short term is something that I could definitely foresee. And then you’ve got the other category of charterers who actually do have near term demand, but of course, they’re wanting to use their bargaining power at the moment to try and get a very, very good deal. So, our job is to try and flush that out a little bit and maybe call that bluff. But when you’ve got a market of fellow owners looking to compete for business like that. It takes real discipline on the part of the market to actually win those businesses at a half decent rate.

John, CFO, CoolCo Limited: Yes. That’s good color. Thanks.

Richard Torel, CEO, CoolCo Limited: Thanks, Bill.

Call Operator/Moderator: Thank you. And seeing as there are no more questions in the queue, that concludes our question and answer session. I will now turn the call back over to our CEO, Rich Tyrell, for closing remarks.

Richard Torel, CEO, CoolCo Limited: Thank you, Dustin, and thank you for everybody who started to the call and for those who asked some excellent questions. For those who will be in Norway next week, I’ll be at the DNB conference to see you there. And then for those which are or those who are attending the Capital Link at the March in New York, I’ll be there also. So hopefully, we’ll see a few people at those events. And if not, catch you next time.

Thank you.

Call Operator/Moderator: The meeting has now concluded. Thank you all for joining. You may now disconnect.

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