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Scorpio Bulkers Inc (NYSE:SALT)
Q1 2020 Earnings Call
May 11, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Scorpio Bulkers' First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Chief Financial Officer, Hugh Baker. Sir, please go ahead.

Hugh Baker -- Chief Financial Officer

Thank you, operator. Thank you all for joining us today. On the call with me are Emanuele Lauro, our Chairman and Chief Executive Officer; Robert Bugbee, our President; Cameron Mackey, our Chief Operating Officer; and we have Michael Ferrante, our Chief Accounting Officer; David Morant, Managing Director; and James Doyle, our Senior Financial Analyst.

Earlier today, we issued our 2020 first quarter earnings press release, which is available on our website. The information discussed on this call is based on information as of today, May 11th, 2020, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today, as well as Scorpio Bulkers' SEC filings, which are available at www.scorpiobulkers.com and sec.gov.

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

There is also a short supplemental presentation with slides, which are available at www.scorpiobulkers.com on the Investor Relations page under Reports & Presentations. If you have any specific financial modeling questions, you can contact myself, James or Michael and discuss these offline.

Now, I'd like to introduce Emanuele Lauro.

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Thank you, Hugh. Welcome to all, and thank you for your time today. Before we start discussing and commenting our results, I wish to take the opportunity to convey to everyone, on behalf of Scorpio Bulkers' management, its directors, and employees, our deepest sympathies toward those who have lost loved ones or have been affected by the COVID-19. While we have been squarely focused on the health and safety of our staff, both offshore and on-board, we feel tremendous gratitude toward the healthcare workers, first responders and others who are on the front line of the response to this pandemic.

Getting to business, Scorpio Bulkers provides drybulk spot market exposure of our -- to our shareholders with a best-in-class fleet of modern Ultramax and Kamsarmax vessels. We have significant gearing to an improvement in the markets, and we have made a conscious decision to keep our future days open and unhedged. We have taken proactive measures to strengthen the balance sheet, giving flexibility to the Company with over $110 million in cash, liquidity at this point.

Our performance year-to-date has been challenged by specific one-time reasons. First, we have had a surplus of vessels in the Far East, as we look to reposition for drydocks and scrubber retrofits during the traditionally weak Q1 market. The need to reposition tonnage to the premium Atlantic market using backhaul voyages created a further drag into Q2, as trade further slowed down with the pandemic. Secondly, the rapid drop in fuel prices at the end of Q1 and early Q2 meant we were consuming expensive fuel for a good part of the period. With our spot strategy, we tend to have 30 days to 60 days of fuel on board at any one time. Therefore, historical fuel prices were a substantial negative contributor in the quarter, particularly, on our non-scrubber equipped fleets, but also on the numerous vessels that have entered drydock between December and January this year -- December 19 and January this year with expensive fuel on board, which they had to burn upon reentry into service in March or April.

While -- already the reappearance of some positive momentum, we can see that still in -- we can see that still in isolated pockets, April has been the record levels -- has seen record levels of Brazilian soybeans exports. South East Asia coal imports have increased notably in Vietnam; April imports are up year-on-year more than 150%; in the Philippines, up more than 120% year-on-year; Thailand and Malaysia respectively are up 37% and 26%; while our chartering strategy remains gear toward an improving market.

Management has taken several measures to strengthen the balance sheet. We have reduced our fleet size last year with well-timed sales. We've entered into several sale leasebacks on beneficial terms. We have reduced our discretionary capex by deferring further scrubber retrofits. We have reduced the current dividend by 75% to preserve further liquidity. And lastly, we have disposed of over half of our residual shareholding in Scorpio Tankers at a profit, providing cash liquidity of nearly $43 million. Our total return on the investment to date is around 30%. We are positive of future gains in this investment. So we expect to hold our residual 3.7% stake of STNG for the foreseeable future. Taken together with the measures above, our balance sheet now has the liquidity to allow us substantial flexibility in our decision making. We are positioned to withstand any weakness that may persist, and with our modern fleet, we are well set to capitalize on any upturn in the second quarter and beyond, as the global economy reaccelerates and the effects of the pandemic start to ease off.

I am done with my initial remarks, and I would like to turn the call to Hugh Baker.

Hugh Baker -- Chief Financial Officer

Thank you, Emanuele. I'll briefly summarize certain recent significant events and significant events during the quarter. But for more detail, please refer to this morning's earnings press release and the supplemental earnings presentation.

In March and April 2020, the Company executed sale leasebacks for two Ultramax vessels and one Kamsarmax vessel for approximately $67.3 million in aggregate, increasing the Company's liquidity by $33.6 million. In March 2020, the Company entered into agreements to sell the SBI Jaguar and SBI Taurus, which were 2014 and 2015 built Ultramax vessels, and the SBI Bolero, a 2015 built Kamsarmax vessel, for approximately $53.5 million in aggregates. Delivery of the SBI Jaguar and the SBI Taurus to the buyers took place in April 2020, while the delivery of the SBI Bolero is expected to take place later this month. In aggregate, these three sales will have increased liquidity by approximately $18.3 million.

In April 2020, the Company reached an agreement with certain counterparties to postpone the delivery of exhaust gas cleaning systems or scrubbers on 13 of its vessels by at least 12 months at no additional cost to the Company. This will delay the payments of between $20 million and $25 million of expenditures until 2021 at the earliest. As of today's date, 22 vessels have been installed with scrubbers. In May 2020, the Company sold 2 million shares of Scorpio Tankers Inc. for approximately $47.2 million. Of this amount, we will receive approximately $9.8 million in proceeds for the sale of 500,000 shares on May 12th, which is tomorrow. As of today, the Company retains a holding of 2.16 million shares in Scorpio Tankers, which is expects to retain. In April, the Company executed a one-for-10 reverse stock split. And today, the Company announced a dividend for the second quarter of $0.05 a share.

Finally, I'll mention our cash position at March 31st, which was $100.8 million -- sorry, at March 31st, our cash position was $50.2 million, whereas today, March 8th -- March 11th, it is $100.8 million. Our cash position does not include net proceeds of $6.2 million from the previously mentioned sale of SBI Bolero expected within May and also excludes the $9.8 million of proceeds from the sale of STNG shares that I just mentioned.

With that, I'd like to turn the call over to Robert Bugbee.

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Robert, are you in mute or have you dropped from line?

Robert Bugbee -- President and Director

Yeah, sorry. Just want to add a couple of things what Emanuele and Hugh was saying. First thing is that the -- that we can continue paying a dividend is a sign that we're in good shape with the banks, that everything obviously is in covenants, that the relationships are strong as that commonly is one of the first things that go if somebody is not in good shape. Second thing is, there is an observation. The cash that STNG hold -- that Hugh was talking about approximately $110 million plus the outstanding value of the STNG shares itself, virtually cost the present market cap of the Company. Secondly, we believe that, as Emanuele point -- that as Emanuele pointed out the spot fleet is ideally placed for a market that we expect to improve quite substantially. And we also -- by definition -- also feel that selling of assets is no longer provides value to the shareholder it has done before, as we would expect asset values to increase from that present real sort of rock bottom levels.

And that concludes the comments I have to make. So we'd love to open it up for any questions please.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Omar Nokta of Clarksons Platou Securities. Your line is open.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Hi. Thank you. Hi, guys. You mentioned the -- you've built up a very nice cash position at the moment plus a bit more coming with the sale of the vessel and the distinct settling tomorrow. And you've also shifted $20 million, $25 million of scrubber payments into next year at the earliest. You've done sale leasebacks and you've sold ships, so -- you mentioned you see yourselves retaining the STNG position, and you don't see any more asset sales for now beyond just what held for sale. And just wanted to confirm on that front, the assets held for sale, are those still the four Ultramaxes that you had announced earlier this year?

And then, just secondly, wanted to also ask how to further, say, sale leasebacks fit into this? I know those are more of a financing as opposed to sale, but just wanted to get some clarity on that.

Robert Bugbee -- President and Director

Sure. I think that -- look, I think we're a pretty -- a lot of things have happened in the last -- I mean, in the last week, and I think that we're indicating very strongly here that we don't think that these prices that -- one should be a seller of drybulk vessels while also indicating that we don't have to sell vessels any longer. And so you might very well get to a situation shortly where we may not feel that we will go ahead with those sales.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay. Alright. And then, I guess, maybe, Robert, we had -- over the past couple of months, the sale and purchase market has quieted down due to the COVID crisis and people being locked in. Have you seen that opening up? Obviously, you're able to deliver those two ships and [Speech Overlap].

Robert Bugbee -- President and Director

Yeah. I think -- I think some of our confidence or a large part of our confidence is a change. I mean, you can see that we've been active sellers of dry cargo vessels now for pretty well on a year. I mean, we have sold vessels regularly in virtually every quarter, in one form or another through that period. And -- but none of those sales have really involved what I would call very strong cash known buyers in the dry cargo market.

And the irony is that, over this last five or six weeks that we've seen a number of unsolicited offers from, literally, some of the all-stars of the private shipping world in dry cargo. These people are cash buyers. They see what happens in dry cargo in distress, such as what happened in 2015 or 2008, 2009, and that is that they have the wherewithal to go in, buy dry cargo vessels that are modern, hold them for whatever it takes a year or -- it doesn't matter so much for what their return is, and wait for what they see has historically always been inevitable recovery in a cyclical market, and they can read more than anybody that -- know the growth things that are going on. So that's been a big change, and that's something that is -- it's a time immemorial in dry cargo, the markets have been -- they're really bellwether signs when the cash buyers start to look to buy vessels, and this is what we've seen in the last five weeks. So that is another reason why we are confident that we see -- we're seeing the bottom being made in values.

The other thing is that, compared to other times, the public companies themselves, our competitors, are actually in much better shape than that they've been traditionally. Nobody has long unfunded new building order books. So, the irony is, there may not be so many sellers of vessels, there may not be so many bargains inverted commerce to have, because balance sheets are fundamentally better across the space.

Sorry, I forgot to answer the question on the leasing. That's always an alternative. We would see that as one of -- as another tool that we could add going through time, if we needed to.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Got it. Thanks, Robert. That's really good color on the -- on that and also the flavor of the S&P market. I did want to...

Robert Bugbee -- President and Director

Excuse. It's a huge change -- the huge change that was going on in the S&P market. Sorry, Omar.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Yeah. No, thanks, Robert. I did want to ask just one more, just on the scrubber investments looking in the table. The outlays of about $46.7 million, and on the debt schedule, it shows you have $58 million untapped, that's committed from your lenders. I know that is just down to $56-ish million after the Bolero, but that's still well above the $46.7 million that's due. Am I correct? And basically, all scrubber investments from here are 100% financed with the facilities?

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Hugh, would you like to take that.

Hugh Baker -- Chief Financial Officer

Yes, you're correct in that. I think we will, obviously, be adjusting the scrubber financing going forward to reflect the new revised schedule for our scrubber program. But obviously, all the scrubber scrubbers were essentially financed, and so therefore, we are going to see the scrubber program essentially get -- well the scrubber financing will be amended to reflect the new dates.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay. And is the amount financed, are you able to give a percentage of -- and what percent of remaining payments are locked up by the size of debt?

Hugh Baker -- Chief Financial Officer

I'd have to look in -- I'd have to take that question offline.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay. Appreciate it, Hugh. Thank you. And Robert, thanks a lot for the market color.

Operator

Thank you. Our next question comes from the line of Randy Giveans of Jefferies. Your line is open.

Randy Giveans -- Jefferies -- Analyst

Hi, gentlemen. How is it going?

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Good.

Randy Giveans -- Jefferies -- Analyst

Alright. The first question on the Scorpio Tankers' share sales. On January 27th, STNG shares were around $27. You stated at the time that STNG was significantly undervalued in terms of asking about selling STNG shares. That said, you sold about half of the STNG shares last week for, I guess, $19 a share. So a few questions. Why not sell those shares a few weeks ago or if that wasn't an option why not maybe so in a few weeks right when STNG is expected to rally with the current record rate levels, and also why sell half of the shares, why not maybe a quarter of them or even all of them? [Speech Overlap]

Robert Bugbee -- President and Director

I think they're great questions. I think on January 27th, even the United States' President thought that coronavirus was going to go away, but it didn't even exist in January 27th, and the markets themselves weren't in the situation they are now. So that's 2020 hindsight. The question related to SALT, it's preference would have been to, of course, to have held them. I mean, the SALT itself intends to hold the rest of the position because, it thinks that -- I mean, we previously stated that we think it's a good investment; it has been a great investment; already produced 30% return.

But there's also a very simple thing that had STNG, had SALT not sold those shares. Okay? And remember that SALT can't choose 13 -- SALT is a 13D affiliate owner. So it doesn't have the luxury of selling shares whenever it may want to. So you had a very tight scheduled to take that opportunity to do that. And looking at SALT's balance sheet, I think the difference is very simple that today we're announcing a balance sheet that is very strong in its cash position, very strong in its liquidity, very, very capable of dealing and keeping a fleet that we think should be kept on the spot market, because we expect the market to improve. Keeping a fleet together that's brand new best-in-class at the low point in the market, where we are saying there should be asset -- the asset depreciation that the S&P market is changing as we speak, and that's great, and we have no issues whatsoever.

Had we not sold the shares? Of course, we hope and we may even expect that STNG shares go up in value. Obviously, we do, otherwise, we would have sold more. You still have to be cognizant that today nothing is guaranteed. So here, STNG can make those sales, every STNG shareholder lender can sleep well at night and we can focus on running the Company again and looking forward, and that's the very simple position. It is zero to do with what STNG may think --what SALT may think about STNG. It is quite opposite, and the STNG thought it is all about SALT presenting a proper balance sheet to the market to be able to run its fleet spot in what they think is -- what we think is going to be an improving market.

Randy Giveans -- Jefferies -- Analyst

Got it. Yeah, I wasn't asking why not sell in January. The world was certainly different in January. And maybe if you'd [Speech Overlap].

Robert Bugbee -- President and Director

Yeah. But why not sell in January was no -- I mean January that's -- January was an age away, and January, at that particular time, nobody in the world was thinking relating to what could happen at the time, etc., etc. The market's fickle. I mean, STNG itself produced, on Wednesday, record earnings, record expectation for the second quarter. The rates are still extremely -- incredibly strong in the product market. But look what the actual stock market did. So SALT must think independently -- the Board is an independent Board, and it must think first on its own balance sheets and its own opportunity prior to maximizing any given value on one investment. But it has.

Randy Giveans -- Jefferies -- Analyst

Yeah. No, again, I was saying, I understand the timing as to not sell in January. The world was different then.

Robert Bugbee -- President and Director

Yeah. Exactly. I mean...

Randy Giveans -- Jefferies -- Analyst

The question is, but was there something specific about $43 million, Michael? Where did that numbers -- yeah, let's say [Phonetic] $2.5 million. Like how did that number come about?

Michael Ferrante -- Chief Accounting Officer

There is no real science to those perfect positions. But, frankly, having $100 million -- $100 million-plus of cash right now felt good.

Randy Giveans -- Jefferies -- Analyst

Great answer. Alright. Thank you very much. Last question, as you mentioned, to Emanuele, your 2Q quarter-to-date rates, they kind of underperformed the benchmark for a few reasons, positioning, fuel expense, what have you. I guess, two questions on this. There is a pretty big difference in Ultramax versus Kamsarmax. So it's most of those, I guess, fuel charges or positioning for the Ultramax vessels. And then secondly, how have rates been in the last, I don't, a week or so, compared to the quarter-to-date rates, just trying to get a sense of, kind of, current and maybe rest of quarter performance?

Emanuele A. Lauro -- Chairman and Chief Executive Officer

The rates, Randy, on -- I have not really moved in any directional way in the last week, right? You still have the indices with the Supramaxes making $4,800 a day today. So -- and it hovered around there for the past few weeks. So it had a low of, I think, $4,100 or something like that, and then came back up a few hundred bucks, but is nothing to write home about.

And yes, on the first part of the question in terms of Kamsarmaxes and Ultramaxes differential. I guess, it's just down to the positioning and to the fuel element which I was referring to in my opening remarks, and I'll have to look into it, into more details, but I attribute that to the fact that we have more Ultramaxes in that position compared to Kamsarmaxes.

Randy Giveans -- Jefferies -- Analyst

Alright. So it sounds like Ultramax rates are a little better now than your quarter-to-date and maybe, Kamsar's are a little lighter. Is that fair?

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Yeah, probably, that's a fair reflection. Yes. You have Kamsarmaxes, you have Panamax indices now at 6.2. Yeah, that's probably a fair reflection.

Randy Giveans -- Jefferies -- Analyst

Great. Alright. Well, that's it for me. Thanks, again.

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Thanks, Randy.

Operator

Thank you. Our next question comes from Greg Lewis of BTIG. Your question please.

Gregory Lewis -- BTIG -- Analyst

Yes. Thank you, and good morning, good afternoon, everybody.

Hugh Baker -- Chief Financial Officer

Hi, Greg.

Gregory Lewis -- BTIG -- Analyst

Hugh -- Hi. Hugh, I was just hoping you could give us some color on -- in the press release you kind of detailed expected debt amortization over the next few quarters. Just kind of wondering, is there going to be -- do you envision -- you're one of the hardest working CFOs in shipping, but do you see any ability to maybe refinance any of this debt to kind of maybe change that amortization schedule as we think about 2020 and maybe into the first half of 2021?

Hugh Baker -- Chief Financial Officer

Yeah. That's -- Greg, that's a very good question. I think that the -- we obviously -- if you go back sort of 3.5 years ago, we did successfully, in fact, twice agreed to defer our amortization with our lenders. I think that that is something that is beginning to appear in the drybulk sector. It's sort of started. I think that most of the drybulk companies, including Scorpio Bulkers, are better positioned to manage the downturn than they were 3.5 years ago. But I think that the banks would be very supportive if we were to make a request, and clearly everyone and the banks included are fully aware that we're in a different environment now than we were in January. And I can't say -- I don't want to create expectations. But I think that if we were to -- if drybulk companies were to have sensible conversations with the lenders, I'm sure that amortization relief can be provided, and certainly if we were to go down that road, I think we would get a very good hearing from them.

Robert Bugbee -- President and Director

I think, I'd like to add to that, Greg, just in general, here is that the -- as I said, in general, the public companies are in much better position than they were in 2015 without these large sort of unfunded or undelivered built new building books. The second is that there are companies like ourselves that have already proven to the banks that they can get through crisis that -- etc. And fourth, that those have proven -- well proven, well trodden methods of doing that in terms of amortization, which has been traditionally whereby you're willing to pay some cash in advance to your present amortization, and that's met by a delay on moratorium on some of the future amortization. And obviously, one of the moves that -- SALT has one of the benefits that SALT now has with all the cash that it has on its balance sheet in these present liquidity is it would have the ability to sit in front of a lender and be flexible or -- and say we are willing to do this for you, if you were to willing to delay amortization for us, for example. I think we just have to leave it at that for the moment.

Gregory Lewis -- BTIG -- Analyst

Okay. That's perfect. Got it. Thank you very much for the time.

Robert Bugbee -- President and Director

Thank you.

Operator

Thank you. Our next question comes from Jon Chappell of Evercore. Your question please.

Jonathan Chappell -- Evercore ISI -- Analyst

Thank you. Guys, I don't want to belabor the STNG sale. But given everything you said about keeping the dividend, position strength, the balance sheet, it just seems like the timing and the price just doesn't kind of match up with that position of strength. I get the uncertainty in preparing for the worst. But at a time when STNG was putting up tremendous results and the stock was getting punished, it seems like SALT kind of pile on a little bit with 1.5 shares at $19 [Phonetic]. So I'm just trying to figure out the timing of that. And I understand [Indecipherable] short period, but why are you [Speech Overlap].

Hugh Baker -- Chief Financial Officer

Sure. Okay, I think that's very easy one. You wanted to -- you are limited. You are very severely limited in your -- in the trading, OK? In trading both in time, time of calendar and time of dates. And the second aspect is, as I've said before, is that we -- it isn't a question of necessarily the timing of the STNG position. And the Company is liquid and has this balance sheet, because it just sold $43 million worth of shares. Had we not sold those shares, I think the questions today would have been quite rightly something along the following lines. So you've only got about $60 million worth liquidity. Your cash covenant is whatever it is, $30 million. We understand that you're optimistic for the future. But your fleet is spot and rates at present are running below all in breakeven. How long can you last doing this? How are you able to create flexibility, etc. So it is a much different position now that you've sold those shares.

So the correct decision for SALT was to sell those shares, and stock price is a very fickle. They could -- it's a -- yes, you could hung out for $2 or $3 or $5 or $10 more, but it would have been delayed SALT making its progress, and able to take its opportunity. And maybe we would have ended up depending on what happens in the stock market selling even more shares later, which we certainly wouldn't have wanted to do.

Jonathan Chappell -- Evercore ISI -- Analyst

Okay. Can you just help us understand the quiet peior then? Like when would the next restrictions? I understand you don't want to sell anymore, and you're optimistic in what you have in the balance sheet now. But it seems like the market has taken another turn for the worse in most asset classes. So in terms of [Speech Overlap] next level of worst-case scenario, when would the next quiet period kick in?

Robert Bugbee -- President and Director

Okay, what you -- that doesn't matter when the next quiet period -- you don't know when the next quite period is? The next quiet period would be whenever STNG itself could be doing something.

Emanuele A. Lauro -- Chairman and Chief Executive Officer

At the moment you have material non-public information, Jon. So the problem is that the Board of Scorpio Bulkers just did not -- First of all, we are selling at a 30% -- making a 30% profit on the investment over the period. Yes, it's not annualized. It's over 18 months, not over 12 months. But still psychologically the Board felt very comfortable with the investment. It's still holding half of its position. We don't want to run the risk of getting hold of -- being locked out by material non-public informations that will force potentially us not to be able to sell the shares. The Board has decided very consciously of taking the position of just put the cash on the balance sheet, and let's hope we are wrong selling here. It's as simple as that. But it was not a more difficult conversation at the board level. And that's about it, really.

Hugh Baker -- Chief Financial Officer

Yeah, I mean, you have to really understand that is how literally SALT could get shut out today if there was anything that STNG management was doing that it felt could -- should need to be disclosed. And that's not the right risk that SALT should take. SALT should not take that risk when effectively -- it should do what it has done, which is take the opportunity to move a mediocre balance sheet to a strong balance sheet. "Thank you. Move on." I mean, it sold 40 million shares in a week where was $700 million, $800 million volume.

Jonathan Chappell -- Evercore ISI -- Analyst

Understood. Thanks for the answers, guys.

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Sure. Thank you. Our next question comes from Liam Burke of B. Riley FBR. Your question please.

Liam Burke -- B. Riley FBR -- Analyst

Thank you. Good morning. Robert, you talked about. There seems to be active buyers in the market for assets for bulk asset -- bulk vessel assets. Would you anticipate COVID-19 driving up scrap rates to further increase the value of these assets?

Robert Bugbee -- President and Director

I don't think that -- I think our ships are new enough that the scrap prices are not going to affect -- aren't going to effect in the short term. Our prices, I think where scrap prices does matter is as we move through this period -- that gives a protection all the time in the sense that the -- if you start getting more increase in fuel prices, you start or you get a period of -- that's the positive way you put pressure on older ships, and if you get a weaker market, it acts as a safety valve, whereby older ships get removed quicker from the market, because, as you say, the scrap price goes up.

Liam Burke -- B. Riley FBR -- Analyst

Okay. And on the scrubber front, obviously, the spread between high/low sulfur fuel has been pretty tight. You're still comfortable -- with the investments you've made and then continuing them through 2021?

Robert Bugbee -- President and Director

Yeah, I think that in the longer term, we will -- we haven't changed the thesis related to scrubbers. And in many ways, as the world has greatest share going forward, potentially, Middle Eastern or Russian crude, that spread could rewiden and rewiden into a very significant level.

Liam Burke -- B. Riley FBR -- Analyst

Thank you, Robert.

Operator

Thank you. Our next question comes from J Mintzmyer of Value Investor's Edge. Your question please.

J Mintzmyer -- Value Investor's Edge -- Analyst

Good morning, gentlemen. Thanks for taking my questions.

Hugh Baker -- Chief Financial Officer

Good morning.

J Mintzmyer -- Value Investor's Edge -- Analyst

So -- apologies if it's already covered. I noted you push some of your good savings in capex in this tough environment. Is there any firm cancellation penalties or requirements in 2021, if you wanted to push them back further? Is that just kind of a gentleman's agreement or any other details on that?

Hugh Baker -- Chief Financial Officer

Cam, how would you like to answer that?

Cameron Mackey -- Chief Operating Officer

We just can't comment on it right now. We've been very focused, and there has been a lot of cooperation with the manufacturers of the yards to get these deferrals and what happens from here. It will be up to further discussions. We just can't provide you any more detail on that.

J Mintzmyer -- Value Investor's Edge -- Analyst

Understandable. I figured I'd try to ask. Look, I mean it's a challenging market in drybulk sector. You had to look around and raise some cash. So it made sense maybe to sell the STNG shares. What other sort of levers, can you pull? I mean, you have $100 million in cash that should get you through, I would imagine, most of this year. But if we wake up toward -- what are sort of the levers that you would pull?

Robert Bugbee -- President and Director

Well, I don't think [Speech Overlap] yeah, I can't. I think that you -- as we've indicated earlier in the call, and that's one of the beauties of taking the medicine and selling the part of the STNG shares now is that you are sitting with a lot of cash on the balance sheet more than you need and with great proactive position with lenders and other finances where the sale leasebacks or whatever. So this is the dynamic target. I mean the -- I think that it is dynamic and people looking at balance sheets in a static way normally don't sort of appreciate that. And I think there are levers that we can pull some -- couple we've outlined on this call, the sale-leasebacks, perhaps, amortization and other things, and that's it.

J Mintzmyer -- Value Investor's Edge -- Analyst

Yeah, definitely tough market. I appreciate that you're doing what you can. Thanks for taking my questions.

Operator

Thank you. At this time, I'd like to turn the call back over to Hugh Baker for closing remarks. Sir?

Hugh Baker -- Chief Financial Officer

Thank you, operator. We have no closing remarks. So I would like to thank everyone on the call, and look forward to speaking to you all soon. [Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Hugh Baker -- Chief Financial Officer

Emanuele A. Lauro -- Chairman and Chief Executive Officer

Robert Bugbee -- President and Director

Michael Ferrante -- Chief Accounting Officer

Cameron Mackey -- Chief Operating Officer

Omar Nokta -- Clarksons Platou Securities -- Analyst

Randy Giveans -- Jefferies -- Analyst

Gregory Lewis -- BTIG -- Analyst

Jonathan Chappell -- Evercore ISI -- Analyst

Liam Burke -- B. Riley FBR -- Analyst

J Mintzmyer -- Value Investor's Edge -- Analyst

More SALT analysis

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