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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Greetings and welcome to the Dorian LPG Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Additionally a live audio webcast of today's conference call is available on the Dorian’s LPG's website, which is www.dorianlpg.com.
I would now like to turn this conference over to Ted Young, Chief Financial Officer. Thank you, Mr. Young, please go ahead.
Thank you, Lora, good morning everyone and thank you all for joining us for our fourth quarter and full-year 2022 results conference call.
With me today are John Hadjipateras, Chairman, President and CEO of Dorian LPG Limited; John Lycouris, Chief Executive Officer of Dorian LPG (USA); and Tim Hansen, Chief Commercial Officer. As a reminder, this conference call webcast and a replay of this call will be available through June 2nd, 2022.
Many of our remarks today contain forward-looking statements based on current expectations. These statements may often be identified with words such as expect, anticipate, believe or similar indications of future expectations. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward-looking statements are subject to known and unknown risks and uncertainties and other factors, as well as general economic conditions. Should one or more of these risks or uncertainties materialize or should underlying assumptions or estimates prove to be incorrect, actual results may vary materially from those we express today.
Additionally, let me refer you to our unaudited results for the period ended March 31, 2022, that were filed this morning on Form 8-K. In addition, please refer to our previous filings on Forms 10-K and 10-Q where you'll find Risk Factors that could cause actual results to differ materially from those forward-looking statements. Please note that we expect to file our full 10-K for the 2022 fiscal year in the near future. Finally, for your reference during our formal remarks, please refer to the earnings supplement that we posted this morning on our website.
With that, I'll turn the call over to John Hadjipateras.
Thanks, Ted. Good morning and thank you for joining John, Ted, Tim and me to discuss our fourth quarter financial year 2022 results. The Baltic VLGC index averaged about $57 per ton for the period January through March. As of yesterday, rates had improved to $94.8 per ton. Global exports increased 1.7 million tons in the first four months of this year, compared to the same period last year, or about 5% with the Middle East, the main contributor to global export growth, up 13% year-on-year. Tim will give you more details.
The price spread between heavy fuel oil and low sulfur fuel oil is currently around $230 per ton, providing a good return on our investment in scrubbers, as John will illustrate shortly. Our new bunkering manager with the chartering operations departments are making considerable impact on sourcing best quality, and best price bunkers for our fleet and our pool fleet. And it’s May short-term energy outlook report the EIA estimated that U.S. LPG exports will grow 6% in 2022. It expects the trend to continue with exports increasing 15% in 2023, driven by continued production growth and lower domestic demand. Our outlook for the next quarter and the remainder of the year remains sanguine.
In recent weeks, Panama Canal congestion has increased weighting days, which is good for overall fleet utilization. There are only two new building VLGCs scheduled for delivery between now and the end of June, three in the third quarter and seven in the fourth. We are faced with new challenges resulting from the invasion of Ukraine in addition to the continuing and significant disruptions due to COVID.
Our crewing operations, HSEQ and other departments have worked comprehensively to facilitate crew changes to ensure that our seafarers are working well together and that their families are safe. 87% of our seafarers are fully vaccinated, 298 out of a total of 870 were vaccinated at U.S. ports. Our tech and performance teams are assessing solutions ranging from traditional newest docks combined with Bus Count fins to more innovative technologies like air lubrication under the haul and advanced battery systems. We believe a combination of retrofitting the most promising hardware and engine power limitation will safeguard the competitive earnings advantage of our ECO ships and comply with new emission regulations. John will say more about this.
We began evaluating LPG as fuel seven years ago, and 10 of our vessels were built retrofit-ready. The additional cost to opt for dual fuel for a new building is not great, but to retrofit existing ships is still in our opinion uncertain. Remaining on the subject of ESG, I am pleased to note the launch this week of the All Aboard Alliance. This is an initiative under the ages of the Global Maritime Forum that with other industry leaders, we participated in developing. Its purpose is to collaboratively confront the challenges of making a sustainable maritime industry by implementing policies, procedures and leadership practices, which promote diversity, equity and inclusion in our businesses.
With a strong balance sheet the age profile of our fleet our new building and the time charter of three dual-fuel new ships delivering in 2023, Dorian LPG is well-positioned with fleet renewal flexibility, allowing us to continue pursuing an optimal capital allocation strategy. Including the recently announced $2.50 per share dividend and our two $1 dividends paid in the last 12-months, as well as our stock repurchases and self-tender, we will have returned over $400 million to our investors since the IPO. Our capital allocation strategy is a balanced mix of return of capital and sensible investment in our business. Ted will tell you more.
Ted, over to you.
Thanks, John. My comments this morning will focus on the recent capital allocation events, our financial position, liquidity and our unaudited fourth quarter results.
Fourth quarter was very busy from a financing perspective. We completed four refinancings during the quarter for the Copernicus, Cratis, Caravelle and Chaparral, and one financing subsequent to year-end for the Cougar. Four of these transactions have purchase obligations, while the Chaparral financing has only a purchase option. In addition to attractive terms in advance rates, we really like the longer tenders and profiles that are available to us in this market with the tenders for these deals ranging from seven to 10 years.
At March 31, 2022, we reported $236.8 million of free cash, which is roughly where our cash balance sits today. Since March 31, we prepaid $25 million of debt under our 2015 AR Facility and refinanced the Cougar, which generated about $30 million in net proceeds. We will be paying out roughly $100 million of cash next week for the dividend that we announced in early May. Pro forma for these transactions, March 31 cash would have been $141.7 million, which is a comfortable level for us.
With the debt balance at quarter-end of $670 million, our debt to total book capitalization stood at 42.1% and our net debt to net total capitalization at 32%. We have no refinancings until 2025, ample free cash and undrawn revolver and one debt-free vessel, plus we have a significant measure of financial flexibility.
For the coming year, we expect our operating cash cost per day, that's OpEx, G&A, interest in principal to be approximately $23,000 per day, excluding the outlay that we made in May for our new building. For the discussion of our fourth quarter results, you may also find it useful to refer to the Investor Highlights slides posted this morning on our website.
Before going into the details of the quarter's results, I'd like to put the strength of this quarter into context. We earned roughly a third of our EBITDA during the quarter of nearly 50% of our net income. These results were achieved despite the turmoil caused by the tragedy in Ukraine.
Turning to our fourth quarter chartering results, we achieved the total utilization of 89.3% for the quarter with a daily TCE, that's TCE revenue over operating days of $43,372, which yields a utilization adjusted TCE, that's TCE revenue per available day of about $38,750. Again, we're using the definitions of operating days and available days as we define them in our filings.
Our spot TCE per available day, which reflects our portion of the net profits of the Helios Pool was $39,147 for the quarter and the Helios Pool overall reported a spot TCE, including COAs of approximately $39,313 available per day for the quarter. Our daily OpEx for the quarter was $9,370. OpEx increased somewhat sequentially as we experienced higher crew costs, driven mainly by travel costs and medical expenses, which is fairly understandable given the current COVID environment. Our time charter in expense for the two TCN vessels remained stable at $5.4 million.
Total G&A for the quarter was $7 million and cash G&A that is G&A excluding non-cash compensation expense was about $6.2 million. G&A skews higher in the fourth fiscal quarter, the first calendar quarter of the calendar year, because of certain statutory accruals that we must make, those bleed out during the year, but it does affect the fourth quarter G&A a bit.
Our reported adjusted EBITDA for this quarter was $54.1 million, including a $3.8 million gain on the sale of the Captain Nicholas. We look at cash interest expense on our debt as the sum of the line items of interest expense, excluding deferred financing fees and other loan expenses and the realized gain lost on our interest rate swap derivatives. On that basis, total cash interest expense for the quarter was $6 million.
With the new financings that we've completed, we expect quarterly cash interest expense will increase to about $6.8 million on a run-rate basis. That run rate won't kick in until the quarter beginning July 1st, because we only have a half a quarter with the Cougar. We continue to benefit from our hedging policy in the favorable pricing of our Japanese financings, leaving us with a current blended interest cost of about 4%. Although we currently hold a roughly 90% economic interest in Helios, we don't consolidate its P&L or balance sheet accounts, which has the effect of understating our cash and working capital.
To give you some additional insight around that, as of May 25th, 2022, the pool held roughly $13 million of cash. The dividend of $2.50 per share that will be paid next week brings to $4.50 per share in dividends that we have paid in the last year. We also repurchased 50,000 shares of stock following the quarter end. Together with our open stock market repurchases and our $113.5 million self-tender offer, we've now returned over $400 million to our shareholders, since our IPO.
The significant dividend payments in the last year underscore our Board's commitment to a sensible capital allocation policy that balances market outlook, operating and capital needs of the business, and an appropriate level of risk tolerance given the volatility in our sector. With a strong freight market backdrop, we remain cautiously optimistic about our cash flow generation over the coming months.
With that, I'll pass it over to Tim Hansen.
Thank you, Ted, and good day everyone. Thanks for dialing in. The first quarter of 2022 demonstrated that VLGC fundamentals remained healthy. LPG production worldwide increased and as the Asian import demand. This happened amid -- and despite volatility brought on by an excessive period of commercial inactivity in China and the Russian Federation's invasions of Ukraine.
Global seaborne LPG Transport for the first quarter was the highest on record in the first quarter, up about 400,000 metric tons, compared to the previous record in 2020. North American exports continue to increase on the back of record-setting production levels. Middle East export volumes also showed growth, particularly from the United Arab Emirates, Qatar, and Saudi Arabia. The export volumes for the first quarter are the highest since 2019. This indicates that the OPEC+ production cut reversals have indeed had a positive impact on the LPG Transport.
Demand for VLGC shipping during the first quarter followed the trends of previous first quarters, namely the January's demand is high; February is low; and March is a period of recovery. The BLPG1 index indicating the market freight for the Middle East to Asia averaged about $57 per metric ton during the first quarter. This equals a time charter return of about $31,400 per day on an ECO-type non-scrubber vessel excluding idle time. This compared to $59 per metric tons or about $40,500 per day TCE on a similar vessel during the fourth quarter of 2021.
The BLPG3 index indicating the freight from U.S. Gulf to Asia averaged about $100.5 metric tons -- per metric tons during the first quarter. This equals to a time charter return of about $36,700 per day, again on ECO-type scrubber ship. This excludes idling time and also excluding Panama Canal waiting time in ballast. This compared to about $103 per metric tons or $45,300 per day in TCE on a similar vessel during the fourth quarter of '21.
The East of Suez markets saw the BLPG1, again the benchmark AG to Chiba route holding the firm sentiment from the end of 2021, carrying over into January. The Lunar New Year period in February impacted the freight markets negatively with many far Eastern players being inactive. Increasing geopolitical tensions due to concerns about Russian troops not leaving from the military exercises in Belarus further strengthened the market sentiment in February.
All the while, bunker prices continue to increase. Time charter earnings fell below cash breakeven levels during this period after the shock of the new war in Europe subsided, there was a lot of activity in the East freight market during March to compensate for the lull in February, but also to secure tonnage when many VLGCs began to ballast towards the west.
Western Suez markets were firm to most of January and falling towards the end of the month as the arbitrage narrowed on the back of rising Belvieu prices. The rising Mont Belvieu prices was anticipated as this is a seasonal event reflecting increased domestic demand in North America during the winter. There is more uncertainty about the impact of new restrictions of the new Panama locks being implemented in January. What eventually transpired was that many charters targeted the vessels balancing two American low ports via Suez Canal via Cape of Good Hope. This additional ton miles to the market increased the shipping demand in January.
The significant increase in bunker prices after the commencement of the war in Ukraine eroded the commercial upside for vessel owners to ballast the long way to the West, however. Although the reduction of longer ballast to North America reduced ton-miles, delays in the Panama Canal continue to absorb worldwide VLGC utilization. The commencement of the war exacerbated the effects of the seasonal lull in February. Fixing activity was subdued in February most -- much like in the East Coast [base] (ph) the geopolitical tensions. The unforeseen knock-on effect of the war’s commencement was increased fixing activity in March and an expansion of Transatlantic voyages. March was one of the busiest months for stock fixing on a record for VLGCs. 19 cargos were committed to a European discharge, compared to only 11 in March of 2021.
With Russian pipeline imports and smaller-sized gas ships imports from Russian sources, no longer viable, several European importing countries turn to VLGC loadings in North America. Imports into Sweden, Finland and Germany increased likely for re-export on smaller Chinese destinations in Northwest Europe. Also with naphtha exports from Russia facing restrictions and thereby raising naphtha prices as the chemical players in Europe turn to LPG as a preferred feedstock.
For the previous quarter, it was forecasted that the first quarter of 2022 would see firm VLGC demand, increased North American production and Middle East exports to be positive. This [Technical Difficulty] transpired as can also be seen on Page four on our presentation. Also here, you can see the increased congestions in the Panama Canal, which we forecasted, but the impact was less severe than we had anticipated. Going forward, these trends are assumed to continue with the market having adopted to the new normal since the start of the war.
With that, I will hand over to you, John Lycouris.
Thank you, Tim. Last quarter's geopolitical events of war in the Ukraine, the Russian oil embargo and position of economic sanctions and increased risk of recession to the world economies have caused volatility in the world financial markets, which have resulted in a significant increase in crude oil and gas prices, due to supply dislocations and anticipated fuel shortages for most of the European countries.
Since our last earnings call in early February, fuel prices have jumped more than 25% currently, having reached well over 30% at the end of the first quarter. The average spread differentials for bunker supply at the ports of Singapore, Rotterdam, Houston and Fujairah for low-sulfur fuel oil and high-sulfur fuel oil have progressively widened during that time from about $150 a ton to about $200 per metric ton at the end of the quarter and to about $230 currently. The low-sulfur marine gas oil 0.1% sulfur prices stand 42% higher since our last call, indicating shortage in the markets for this kind of product.
For a vessel consuming 40 metric tons a day at sea, the fuel differential for the scrubber vessels can translate to roughly $8,000 per selling day. These economics are maximized on long-haul voyages, because vessels need not burn more expensive low-sulfur fuel oil or marine -- low-sulfur marine gas oil fuels at sea or in emission-controlled areas or during port stays when loading or discharging.
We are pleased to note that our original expectations continue to be validated not only with our selection of the hybrid multi-loop scrubbers as opposed to open single loops, but also with our investment payback estimates having paid back more than 60% of equipment capital expenditure installation costs. We are retrofitting various energy-saving devices to improve the performance and reduce the engine power requirements for our vessels, which will result in lower emissions and reduce the effect of compliance towards the EEXI/CII regulations next year.
Meantime, we await the proceedings of the IMO MEPC 78 June session to decide among other things on alternative methods of engine power limitation that will be available to vessels for EEXI compliance. Besides the overridable EPL, there are non-overridable EPL and sub-par limitation proposals that may prove valuable alternatives. Regardless of the mode of EPL chosen, the younger, more efficient ships would generally be less impacted giving them greater trading flexibility than older tonnage.
Given our experience with scrubbers, we are also looking at carbon capture and storage technologies and their potential application to the marine industry in the future. We are discussing several potential solutions. However, our immediate objectives are implementing marine technologies that already exist and which can provide immediate results, while studying innovation -- technological innovation and marine applications that become available commercially and feasible financially.
The gross monitoring optimization of energy construction of border vessels to support our vessel performance and emissions reduction initiatives is ongoing. Our performance department team has introduced a crew feedback module, which is an online tool that provides crew with real-time vessel performance indicators, as well as fleet-wide indicators. This will assist, guide and engage our seaboard personnel in seeking to optimize fuel consumption and provide comparative results from sister vessels to the fleet onboard and ashore.
There have been further significant regulatory updates for the maritime sector since our last report. We have reported on the European Union announcement in July 2021 that the maritime transport would be included in its EU Emissions Trading Scheme System and that in January 2022, the EU legislator had proposed several amendments to that July 2021 proposals, which went beyond what the IMO had proposed and agreed to during their MEPC 77 meetings.
Last week, the Environment Public Health and Food Safety Committee of the EU parliament voted for a basket of amendments to accelerate the maritime sector's inclusion to the issuance trading system. The initial three-year phase-in period is proposed to be revoked. Instead, shipping companies must deliver EU allowances for 100% of their inter-EU voyages and their -- and 50% of their inbound and outbound EU voyage -- emission voyages right from 2024. Those inbound and outbound voyages are to -- rise to 100% emission allowances. The scope -- this new scope will come to include other greenhouse emissions besides CO2, such as methane and nitrous oxides.
Finally, a clause is proposed to allow ship owners to pass emission cost to the commercial operator of the vessel. All the above measures signal EU's intention to lead the race to decarbonization and outpace the IMO in the process. The accelerating focus on energy efficiency will likely force owners to make hard decisions about the cost of investing in the upgrades of older tonnage and on their ability to compete in the main trades. We think it is likely that several owners will find it more economical to scrap all the tonnage, particularly those several generations older rather than be burdened with increasing stricter environmental regulations, which will penalize high fuel consumption, smaller capacity and non-ECO engines.
For vessels that are newer, we believe that investments will be imperative and therefore the owners with access to reasonably priced capital would be positioned to make the necessary investments and achieve reasonable returns. Our decision to invest in scrubbers was possible because of our financial strength and has helped us generate very solid results, which gives us confidence as we look forward and evaluate the next wave in marine technology advancements.
At Dorian, our goal is to continue improving our greenhouse gas footprint, eventually reaching a zero emissions target, and we are optimistic that our fleet will be among the best positioned to meet the demand of charters, regulators and shareholders.
And now I pass it over to John Hadjipateras.
Thank you, John. We're happy to take questions. Lora, do you want to see if there are any questions for us, please?
With the prepared remarks completed, we will now open the line for questions. [Operator Instructions] Our first question comes from the line of Brian Reynolds with UBS. You may proceed with your question.
Hi, good morning everyone. Just curious if you can talk about just the Russian invasion of Ukraine and how it impacts the global flow of LPG? We've seen some upward revisions in the U.S. LPG export expectations and expansion announcements recently. And curious if you can talk about how much of that is due -- is just due to displacement of Russian LPG and the demand for it versus just natural organic growth that may have not been baked in before?
I'll let Tim answer that. But I can tell you, for example, that we have had -- we've performed the voyage from the U.S. Gulf to actually from Marcus Hook to Finland, which is something that we've never done before. So that was an indirect result of the conflict, I believe. But Tim can give you more details.
Yes. I think as I mentioned before, also we did see increased activity into Europe. And we've looked at various analysis of what they come to -- of the consumption in especially Poland and Ukraine, which is using LPG for car fuel. And overall, we see a demand for around four VLGC cargos a month into Europe in addition to what is normally -- has been going in there to cover this demand. And this is all kind of new demand in the way that it is previously come in on rails and trucks from Russia, so we just shifted into seaborne demand.
In addition to that, as I mentioned, in naphtha prices have been high. And as you've seen on the fuel prices, especially on the spread from heavy fuel to low-sulfur fuel oil, there's a lack of clean fuels, which have caused naphtha also to be very expensive and LPG shifting into that space for the [cargos] (ph) in Europe. Also, we have seen some LPG actually being reinjected into the LNG stream in Europe, due to the high LNG prices and lack of demand from LNG. So we estimate it sort of roughly to four to five VLGCs per month on a regular basis of that demand.
Great. That's super helpful. Thank you for the color. And then maybe a small one follow-up, just curious if you could talk a little bit more about the future propulsion technology. I think you talked about how scrubbers ended up improving your payback period and pulling that forward. But wondering looking forward is there any more consideration of dual-fuel technology or anything else, just given -- and then maybe just talk a little bit about the bunkering market just given that we're seeing low inventories across the refined products market globally. Thanks.
Yes. Tim will answer you on the question on the bunkering market, and then John will give you a bit of background on your -- the rest of your question. But on the question of dual-fuel, we've kept this open all the while because the economics are changing all the time. And so far, we're happy with what we've done scrubber-wise. And we feel that we -- having the optionality and not having done dual-fuel to-date, where -- it's a positive, but we still have the optionality for that. And as you know, we opted for dual-fuel on our new building, as well as the three ships that we -- new buildings that we chartered in. But yes, Tim will tell you about the bunker market, and then John will tell you a little bit about efficiency and all that stuff.
Yes. On the bunker side, as John Lycouris also mentioned that the spread has widened and as I mentioned, there's a shortage of clean products, I think at the moment in Singapore, we see a spread of around 340 or something between low-sulfur and heavy-sulfur fuel oil. And we are seeing the supply difficulties around the world, and we see that continuing for a considerable time as long as the war in Ukraine has effect, which it might prolong after the war hopefully ends.
And then I think with the high oil prices, which we will likely see going forward and these spreads will remain on heavy fuel and low-sulfur fuel. We have seen lately LPG prices coming off and coming back into the space where it becomes economical to use LPG fuel as well. All while it's still less advantageous than burning heavy fuel at the moment, it has definitely increased its competitiveness over the last couple of months.
Great. Appreciate all the colors, guys. Thanks [indiscernible]
[Operator Instructions] Ladies and gentlemen, that's the end of today's question-and-answer session. I would like to turn this call back over to Mr. John Hadjipateras for closing remarks.
Terrific. Thank you, Lora, and thank you, everybody, for dialing in and for questions and hope you have a good summer. We'll talk to you next quarter again. Thank you. Bye-bye.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.