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International Seaways, Inc. (NYSE:INSW)
Q2 2020 Earnings Call
Aug 7, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, welcome to the International Seaways Second Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to James Small, General Counsel. Please go ahead.

James D. Small III -- Senior Vice President, Chief Administrative Officer, Secretary and General Counsel

Thank you. Good morning everyone and welcome to International Seaways earnings release conference call for the second quarter of 2020. Before we begin, I would like to start off by advising everyone on the call with us today of the following. During this call, management may make forward-looking statements regarding the International Seaways or the tanker industry, which may address, without limitation, the following topics, outlooks for the crude and product tanker markets, changing oil trading patterns, forecasts of world and regional economic activity and of the demand for and production of oil and other petroleum products, effects of the ongoing COVID-19 pandemic, Company's strategy, purchases and sales of vessels and other investments, anticipated financing transactions, expectations regarding revenues and expenses including vessels charter hire and G&A expenses, estimated bookings and TCE rates in the third quarter of 2020 or other periods, estimated capital expenditures in 2020 or other periods, projected scheduled dry-dock and off-hire days, the Company's consideration of strategic alternatives, the Company's ability to achieve its financing and other objectives, and other economic, political and regulatory developments around the world.

Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances.

Forward-looking statements are subject to risks, uncertainties and assumptions, many of which are beyond the Company's control, which could cause actual results to differ materially from those implied or expressed by those statements. Factors, risks and uncertainties that could cause International Seaways' actual results to differ from expectations including those

Described in our annual report on Form 10-K for 2019, in its quarterly report on Form 10-Q for first and second quarter of 2020, and in other filings that Company has made or may make in the future may make with the U.S. Securities and Exchange Commission.

With that out of the way, I would like to turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois?

Lois K. Zabrocky -- President and Chief Executive Officer

Thank you very much, James, good morning, everyone. Thank you for joining International Seaways earnings call to discuss our second quarter 2020 results. Before we discuss our strongest quarterly results since our inception, please turn to Slide 4 for an update on our COVID-19 response.

We are continuously working to serve and keep safe our onshore and at-sea professionals. First onshore, we've maintained full staffing capabilities with our employees all working remotely since March 16th. We will continue to evaluate our return to our New York and Houston offices, based upon our highest priority, the safety of our staff. Our commercial and technical operations, finance and administrative departments, continue to run smoothly. We completed the quarterly close on time, all SEC reporting requirements have been done without delay. Seaways ability to operate smoothly during this challenging time is a testament to the team's dedication and we thank everyone for their continued hard work and commitment to Seaways.

Regarding our crew, we've implemented strict measures on all of our ships to ensure the safety of our seafarers and we have had no COVID cases to date on board. We are implementing these procedures not only when they are on board, but also while we are traveling to and from the vessels. As we discussed last quarter, global travel restrictions have made it exceptionally difficult to rotate our crews. We continue to support industry efforts to designate seafarers as key workers and to allow them to return home to the families after many months at sea.

To meet this important objective, we have deviated vessels where possible, to help facilitate safe and effective crew changes. Given that many of our dedicated crew members have been on board vessels for longer than the original contract. The situation remains incredibly dynamic, as an example, one of our VLCC crew was disappointed to have a full-flight of relievers from Angola to Singapore canceled by the airline at the last minute. We are working now on finding the next best opportunity to get deep-sea freight.

Another example with an enormous amount of effort and co-ordination across the three continents, we were successful relieving 20 seafarers at Reunion Island in the Indian Ocean. We thank all of our seafarers for their professionalism and their commitment throughout this extremely challenging circumstances. From an operational standpoint, we have not yet seen material cost increases due to COVID-19. While we have confronted certain challenges including difficulty arranging Sire inspections from the oil major customers and other inspections, as well as delays transporting spare parts. Our operations are running smoothly.

Going forward, and especially as we continue to operate amid the global pandemic, our priorities remain, the safety of our onshore and at-sea professionals and providing best-in-class service to our leading energy customers. If you'll turn to Slide 5, we review our second quarter 2020 highlights and our recent accomplishment. Our quarterly performance was very strong. We're pleased to have posted our second consecutive quarter of record earnings, while continuing to implement our disciplined and accretive capital allocation strategy, unlocking value for our shareholders.

Turning to the first bullet, we highlight our significant operating leverage and success capitalizing on the robust rate environment, in the second quarter. We once again generator our highest quarterly net income as a public company. For the quarter, we earned a net income of $68.5 million, excluding items related to an impairment and the gain on the sale of vessels, or $2.39 per share. Our second quarter adjusted EBITDA was $96 million, representing a year-over-year increase of $75 million and quarter-over-quarter increase of $22 million. With our strong results and during the time when we continue to return capital to shareholders. We ended the quarter with $184 million in total liquidity, including cash and our $40 million undrawn revolver.

Moving to the next bullet. Our strong Q2 results have extended into the third quarter, notably, with significant exposure to the VLCC market and to the mid-sized tanker sectors. We have already booked over half of our third quarter revenue days at profitable rates. Additionally, we capitalized on the elevated market in the second quarter and we entered into favorable time charters, which strengthen our earnings prospects moving forward.

Specifically, we secured four VLCC time charters, for periods ranging from seven to 36 months at an average of $73,000 per day. We have positioned International Seaways to optimize revenue, during the time, when rates have come off their high.

Lastly, we further executed on our disciplined and balanced capital allocation strategy with an intense focus on providing returns to shareholders. We maintained our balance sheet strength and enhanced our capital structure. Specifically, in addition to the repurchase of $10 million of our shares in the first quarter, we completed the repurchase of an additional $20 million of our shares during the second quarter. This brings our total purchases to just under 5% of our outstanding shares. We believe this was an attractive opportunity for Seaways to unlock value, given our stock valuation relative to our NAV.

We took further steps to de-lever the company and we are in the process of repaying the full $40 million outstanding under our transition term loan facility in August. This will reduce our already low cash break even by an additional $1,800 per day to under $15,000 per day. Once the repayment is made, we will have 14 unencumbered vessels with more than $200 million.

We continue to have one of the lowest leverage profiles in the public shipping sector with our net loan to value further improving to 38%. Our liquidity has allowed us the flexibility to continue to deploy capital to best serves shareholders. In June, we paid our regular quarterly dividend of $0.06 and our board has approved another regular quarterly $0.06 dividend to be paid in September. Our priority is to continue optimizing how we allocate the capital throughout, the cycle, In addition to repurchasing close to 5% of our outstanding shares, which we discussed a moment ago. This is including capitalizing on attractive asset values at the bottom of the cycle, prepaying $40 million of debt and providing shareholders with dividends totaling $0.12 since implementing our policy this year.

In order to ensure that we remain well-positioned to act opportunistically, subsequent to the end of the quarter, the company's Board of Directors authorized a new $30 million share repurchase program for Seaways. Turning to Slide 6, we provide an update on oil supply and demand. The economic impacts of COVID-19 have reduced the demand for oil.

Recently the IEA has taken a more positive view on demand restoration, increasing their demand forecast to 92 million barrels per day for all of 2020 and 97 million barrels per day for 2021. This is largely driven by the strength of Chinese demand and delays at discharge ports in China, which are due to the logistical issues dealing with record imports. And this has reduced the effective VLCC fleet size. While down from 100 million barrels per day achieved in 2019, the IEA forecast represents a significant increase from previous estimates and reflects demand for oil in the second half of 2020, given that large segments of the global economy were abruptly halted earlier in the year, in response to COVID-19.

On the supply side, after extending agreements to curb production in June, OPEC has agreed to ease these cuts and is expected to produce an additional 2 million barrels per day in August. Regarding U.S. shale production, the EIA estimates a 2 million barrels per day reduction in August from its peak in March due to pressures from low oil prices. During the second quarter, we saw strong demand for floating storage due to a steep oil price contango. However, as can be seen in the chart on the right hand of the slide as global oil demand recovers and production decrease, the price contango flattened and this de-emphasized the need for new floating storage, while inventory destocking began.

Although, we remain positive on the long-term outlook for the tanker market, the combination of June OPEC, production cuts, reduced demand for floating storage and inventory destocking, we -- have pushed rates down from the highs that we saw earlier this year.

On Slide 7, an update on ship supply. Overall, the tanker orderbook remains historically low. You can see this on the chart at the top right hand of the slide. Only 10 Vs have been ordered in 2020 to date and 31 were ordered in the full year of 2019, uncertainty regarding the current market as well as decarbonization and a lack of suitable propulsion systems to meet decarbonization goals continue to temper new ordering.

Moving to the bottom half of the slide. The VLCC fleet is aging with nearly a quarter of the existing fleet now over 15 years old, as depicted in the chart at the bottom right. Ships 20 years or older have grown by nearly 3 million deadweight from last quarter, an increase of 19%. As we have noted consistently and previously, once vessels reach 15 years of age, they are more expensive to operate with significant investments required to continue to trade. As ships reach ballast water treatment deadlines, even greater capital expenditure is necessary.

Scrapping has been limited during the last 18 months, due to the market recovery, but the potential for scrapping has been building based on the aging fleets. There have been no VLCCs scrapped thus far in 2020. As rates moderate, scrapping is likely to increase.

I'll now turn the call over to Jeff to provide additional details on our second quarter results. Jeff?

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Thanks, Lois, and good morning everyone. Let's move directly to reviewing the second quarter results in more detail, but before turning to the slide deck, let me just summarize the consolidated results.

In the second quarter, we achieved adjusted EBITDA of $96.3 million and as Lois mentioned, this was our second consecutive record quarter. Net income for the second quarter was $64.4 million or $2.24 per diluted share, which compares to a net loss of $16.5 million or $0.57 per share in the second quarter of 2019. However, excluding the impact of a $4.1 million charge for impairment and gain on sale of vessels, net income was $68.5 million or $2.39 per diluted share.

Now let's go to the deck starting with Slide 9. I will first discuss the results of our business segments beginning with the Crude Tankers segment. TCEs for the Crude Tankers segment were $106 million for the quarter, compared to $45 million in the second quarter of last year. This increase primarily resulted from the impact of higher average blended rates in all of the VLCC, Suezmax, Aframax, and Panamax sectors. Now looking at the Product Carriers segment, TCE revenues were $29 million for the quarter, compared to $17 million in the second quarter of last year. This increase again results from the impact of higher average daily rates earned in all of the LR1, LR2 and MR fleets.

Overall, as reflected in the chart top left, consolidated TCE revenues for the second quarter 2020 were $135 million, compared to $62 million in the second quarter of 2020. The increase was principally driven by substantially higher average daily rates earned across the crude and product carrier fleets this quarter, compared to last year's second quarter.

Looking at the chart, at the top right of the page, adjusted EBITDA was $96 million for the quarter compared to $21 million in the same period of 2019, and again, the increase was principally driven by higher daily rates. On the bottom half of the page, if we look at the results sequentially, i.e., quarter-to-quarter. Consolidated TCE revenues and adjusted EBITDA for the second quarter were up, from the very high first quarter but increasing by $15 million and $22 million respectively.

Now, if we turn to Slide 10, we provide a review of Q2 rates and Q3 to date. Let me discuss our bookings in Q3 thus far, which are very healthy, particularly in the larger vessels. Looking at the far right column, we've booked 67% of our total available VLCC days at $64,500 per day on our modern vessels and $59,200 per day, overall. 56% of available Suezmax days at approximately $30,900 per day. 45% of available Aframax LR2 days at an average of approximately $14,200 per day and 43% of available Panamax days at an average of approximately $19,000 per day.

On the MR side, we've booked 48% of our third quarter days at an average of approximately $13,200 per day. As Lois mentioned, these rates reflect the fact that we opportunistically locked in four of our VLCCs on time charters at an average of $73,300 per day for the entire quarter. In balance in the quarter, of course, you should keep in mind that spot rates today are lower than we have booked thus far in the quarter but overall, we're looking at a healthy quarter.

Now if we could move on to Slide 11. The cash cost TCE breakevens for the 12 months ended June 30th, 2020, as well as our estimates for going forward are illustrated on this slide. International Seaways overall breakeven rate was $19,700 a day for the 12 months ended June 30th, 2020. These rates are --the all in the daily rates, our owned vessels must earn to cover vessel operating costs, dry docking costs, cash G&A expense and debt service costs, which includes scheduled principal amortization as well as interest.

As Lois mentioned earlier on the call, we entered into four highly attractive time charters, specifically we've executed three VLCC time charters -- three year VLCC time charter for $45,000 dollars per day and an another time charter for 18 year old VLCC for one year for $53,000 per day. We also executed, two seven month VLCC time charters, at an average rate of $100,000 per day with the vessels delivered in May. The combined rate of those four time charters has taken together, as I just mentioned, is $73,300 a day on average.

And so, taking into consideration distributions from our FSO and the fixed time charter revenue, the overall breakeven rate for the last 12 months drops to $17,400. But then, if you go all the way to the far right of the page, we've included all in daily breakeven rates for the forward 12 months ended June 30th, 2021. Taking into consideration the contributions from our FSO JV, the four time charters I just mentioned, and also the full prepayment of the $40 million outstanding on the transition term loan facility that Lois mentioned earlier, which lowers our interest expense by $1.2 million. The overall breakeven rate drops further to $14,600 per day.

At this time I'll also take like to take the opportunity to reaffirm our cost guidance for the year for modeling purposes. For the remainder of 2020, we expect regular daily opex, which includes all running costs, insurance management fees and other similar and related expenses for our various classes, as always, to be as follows. For VLCC it's $8,400 per day, Suezmax another $1,700, Aframax $8,100, Panamax $7,900 and NMRs $7,500 per day, excluding any potential impact attributable to COVID-19. For details on projected drydock capex and off-hire days by quarter, please turn to Slide 16 -- or you can refer it on Slide 16 in the appendix for an update there.

Continuing with cost guidance for your modeling 2020 full-year interest expense is expected to be $37 million after taking into account the pay-off of the transition loan in mid-August, which is composed of $33 million of cash interest expense and the balance a non-cash component is $3 million of amortization -- of unamortized discounts and also deferred fees of $1.3 million, related to a mark-to-market charge for interest rate collar, those are non-cash charges. So, I would also give you guidance that additionally, after the pay-off of the transition loan, our debt will call for a $15 million, it's scheduled quarterly principal payments beginning in Q3, which is down from $20 million per quarter previously.

For 2020, we expect cash G&A to be in the region of $23 million of which there has been about $5 million of non-cash items, which is relatively in line with last year. Finally, we expect about $5 million in equity income from our JVs and about $20 million for depreciation and amortization per quarter. Now if we could go to Slide 12, for our cash bridge, moving from left to right, we began the second quarter with total cash and liquidity of $150 million. During the quarter, we generated $96 million of adjusted EBITDA. This amount includes $5 million in equity income from the JVs, which is non-cash, so therefore deducted to reach a cash figure but then add back the cash distributions from the JVs, which this quarter were $2 million.

We expect -- we expected $17 million in dry docking and capex, cash interest and principal payments that was $30 million, I am only taking into account the $22 million that was cash return to shareholders in the positive impact of working capital and other non-cash charges of $11 million, the net result was that we ended the quarter with $144 million of cash and $40 million of undrawn revolver, yielding total liquidity of $184 million.

Now if we could go to Slide 13, I'd like to briefly talk about our balance sheet. As of June 30, 2020, we had $1.8 billion of assets, compared to $523 million of long-term debt and $81 million short-term. In addition, as mentioned, we had a $40 million revolving credit facility, that remained undrawn as of June 30th. As you can see on the right side of the slide, our net debt to total cap stands at 30%, for our net loan to value of our conventional fleet stands at 38%. As you -- footnote 1 tells you take that -- that is not taking account the value of our FSO, if you include that in book value of the net debt number drops to 34%.

I'd also call your attention to footnote 2. Since its Q2 in the books, our LTM EBITDA $266 million means that debt to EBITDA is just 2.3 times and therefore, as footnote 2 indicates with the metrics -- that kind of metric means that our margin will drop from 260 basis points to 240 basis points on the core facility. Now finally, before turning the call back over to Lois, I'd like to briefly discuss our share repurchase program. During the first six months of the year, we repurchased $30 million of shares, specifically, during the first quarter of 2020, we repurchased 490,592 shares at an average price of $20.41 per share for a total cost of $10 million. During the second quarter, we repurchased 926,700 shares and an average price of $21.37 per share for a total cost of $20 million. For year to date total of $30 million, which represented nearly repurchasing nearly 5% of our outstanding shares.

In August, our Board authorized a renewal of the share repurchase program in the amount of $30 million. That concludes my financial remarks, I'd now like to turn the call back to Lois for her closing comments.

Lois K. Zabrocky -- President and Chief Executive Officer

Thanks a lot, Jeff. We're excited with our second quarter earnings, we generated our second consecutive quarter of record, taking advantage of the robust market and we further implemented our disciplined and accretive capital allocation strategy, our substantial operating leverage was evident in the second quarter. This enabled us to generate are highest earnings per share since going public and end the quarter with $184 million in total liquidity, which includes the $144 million in cash.

The strong second quarter results have extended into the third quarter and we're pleased to have booked over half of our revenue days at healthy rates. In addition to attractive spot bookings, we've capitalized on the elevated market and we entered into a number of highly profitable charters ranging from seven to 36 months and averaging $73,000 per day through the third quarter. During a time when rates have come off their highs, this success positions us to optimize our revenues. Finally, our success executing on our disciplined and balanced capital allocation strategy has allowed us to provide a return to shareholders, while ensuring our balance sheet and our capital structure positions us well for the long term.

Complementing our repurchase of $20 million worth of shares in this quarter, our payment of our regular $0.06 dividend during the quarter as well as the approval by the Board of another regular quarterly dividend of $0.06 to be paid in September, we are prepaying the full $40 million outstanding under our transition term loan facility this month. This will reduce our already low breakeven by an additional $1,800 per day to under $15,000 per day.

We entered the third quarter with a net loan to value of 38%, ample liquidity and flexibility to continue to further implement our capital allocation. Consistent with our focus on acting opportunistically our Board authorized a new $30 million share repurchase program, which will provide us with additional opportunities to unlock value for shareholders. We've also booked almost 70% of our Q3 VLCC days at a fixed rate of $58,000 per day.

Going forward, we remain positive on the long-term outlook for the tanker market and our priority is to provide safe, reliable service to our leading energy customers and to ensure the safety of our onshore and at-sea professionals, as we continue to operate in the challenging COVID-19 environment.

Thank you very much. And we'd now like to open it up for questions.

Questions and Answers:

Lois K. Zabrocky -- President and Chief Executive Officer

Hello?

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Operator?

Lois K. Zabrocky -- President and Chief Executive Officer

I think our operator must not have electricity.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

May be, you could send her a note.

Operator

Sorry about that. Sorry about that. Just my computer froze. Okay. We will now begin the question-and-answer session. [Operator Instructions]. Our first question is from Greg Lewis from BTIG.

Lois K. Zabrocky -- President and Chief Executive Officer

Good morning, Greg.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Well we may have to go on to the next caller. There is Greg, there you are.

Lois K. Zabrocky -- President and Chief Executive Officer

I can't hear Greg, can you?

Operator

One moment. I'm having technical difficulties. Let me get some help.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

We appreciate everyone's patience.

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah, absolutely.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Yes, well, it looks like there's technical difficulties with the Q&A queue let's hang on for a minute or two, at least, Lois...

Lois K. Zabrocky -- President and Chief Executive Officer

Yup.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

And see if the conference call organizer can reassemble the queue.

Lois K. Zabrocky -- President and Chief Executive Officer

Okay.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

So for all of you listening I appreciate your patience and see if we can get back our questions here in a minute.

Well since it's all being transcribed, Lois. I'm wondering what we should, we should be discussing in order to fill up the dead air while we're waiting for the system to work again.

Lois K. Zabrocky -- President and Chief Executive Officer

Yes, I'm wondering if we should be questioning one another.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Although at some point will.

Lois K. Zabrocky -- President and Chief Executive Officer

The question coming in on the email, Jeff...

Operator

Okay out next...

Lois K. Zabrocky -- President and Chief Executive Officer

Okay, go ahead.

Operator

The questions I had some problems with the questions, so please get back on the queue. The person I have up is Omar Nokta from Clarksons. Please go ahead and the others please chime back, I'm so sorry.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Hey guys, can you hear me?

Lois K. Zabrocky -- President and Chief Executive Officer

Yes, Omar.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

We can.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay. Now, this has been exciting. I have been without power since Tuesday, so I completely understand whats the -- challenge.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Hang in there OK. Go ahead.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Yeah. so listen, you guys, you've given a good amount of detail in the call. I did have a couple of questions on the fleet but just maybe before that, I did want to ask about the $40 million of upfront payment on the transition facility and just so I understand it, you've paid $40 million this month and then that reduces quarterly payments to $15 million. How long does that $15 million average go on for?

Lois K. Zabrocky -- President and Chief Executive Officer

Jeff why don't you go ahead on that.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Thanks, Lois, that's our good protocol. Yeah, it will go on, for the -- principal amortization will go on the Sinosure facility and on the core facility. So if you go to that chart that has the balance sheet, it will continue with those levels until they mature. So that's pretty much going to be the run rate, Omar, $15 million a quarter.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay, and then that $15 million also it's inclusive, you'll also have that payment in the third quarter. So it's $40 million plus $15 million-ish?

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

That's right.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay. All right and then..

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Yeah, that's right, yeah exactly. Yeah, OK.

Omar Nokta -- Clarksons Platou Securities -- Analyst

And then just OK, maybe just a bit more broader and just kind of thinking about how things are set up and I understand clearly that we are in this uncertain environment with the pandemic, and we're in the soft part of the oil -- tanker market or oil market in general, clearly, you guys have generated a lot of cash over the past three quarters, you've refinanced, delevered, you built up a sizable cash balance, you've started the dividend and you've been very active buying back stock, and on top of that, you've got the $200 million of unencumbered assets. So, really a plenty of flexibility and I just wanted to ask, what are your updated thoughts on the VLCCs the older ones built in '02, '03, you've got three of them. That we've noticed that one of them is obviously earning a nice contract this quarter, or for the next, I think it's 12 months, but generally, we've seen the other two really, a real separation between the earnings of those versus the modern vessels. And so just thinking, as you keep thinking about the longer-term story at International Seaways and keeping just the existing market footprint, what's your thought of just selling those two or three VLCCs and then taking the proceeds, replacing them with three modern VLs, and so you're not putting any strain on the balance sheet, you're just simply rejuvenating the existing footprint.

Lois K. Zabrocky -- President and Chief Executive Officer

That's a great, a great lineup Omar. I mean obviously the, when we talk about being 70% or 69% booked in the third quarter, at $58,000 a day, that includes those three older vessels as you know in this quarter, absolutely their spot earnings have been about 24 day on the three older vessels, the one that's on time charters is almost $52,000 and then if you go back and look at Q1 they were actually the older vessels earned just as much as the modern ships.

So I would say that, we have done well with these ladies and we're generating a lot of cash on them. That having been said, we indeed will opportunistically look at marketing these over two ships as appropriate and look to be, take advantage of the best opportunities we can. And when you recap, quite beautifully there the things that we've been doing, you see we've been buying back shares, I love this $15,000 per day, below that for cash breakeven in this environment, all of those things are really strong and as we go through this part in the cycle then we will turn our eyes toward regenerating the fleet. It might be a little bit early at the moment, but that's something that we will definitely look at, when we think that's the right way, the best way to deploy our capital.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay, thanks, Lois that that makes sense. And just a follow-up and maybe just a final question about the fleet and clearly you guys have a preference in the Vs and you've got it in the Panamax, the MRs, however, you've got four of them, and they seem a bit non-core especially the earnings power seems to be very range bound in that particular segment. So it's either you have a bunch of MRs or you charter a bunch in, what are you thinking about that piece of the business, do you monetize those ships in the near term or you still just want to hold on to them. I know that there is probably no debt on them. How do you think about those vessels?

Lois K. Zabrocky -- President and Chief Executive Officer

I would say that you've seen us with our actions prioritize and will continue to see us prioritize the -- we like the larger crude sector and we also find a home in the mid-crude sector, as you noted on the Vs and on the Panamax, Suezmax, Aframax. So that's where we remain committed, definitely more opportunistic on those MRs, where steadily over the last few years we have declined our core owned ships and even our time charters in that sector.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Yeah, so I -- well move more to come presumably.

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Yeah. Just to give further -- I think you asked, they are a part of that -- some are part of the core fleet and once that are -- so there is a little of that are.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Okay, thank you. Thanks, Jeff. All right. And thanks Lois. That's it for me.

Lois K. Zabrocky -- President and Chief Executive Officer

Thank you.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Operator.

Lois K. Zabrocky -- President and Chief Executive Officer

Well, if we don't have another question, definitely one came in on my email from Randy Gibbons asking about lightering and our second quarter on lightering was quite strong. They had something like $2.5 million EBITDA in lightering and we really saw a very high volume, a lot of, not only crude lightering but also product lightering which was a result of the contango situation and crude and product being stored on ships in the U.S., Gulf as well as heavy volume at Panama and the West Coast. Let's see. Do we have our operator, or no.

Operator

Yes. So I've stepped in while we had a connection. Do you want me to take the next question?

Lois K. Zabrocky -- President and Chief Executive Officer

Yes, please, sir.

Operator

Okay, thank you. Our next question comes from Greg Lewis of BTIG. Please go ahead.

Gregory Lewis -- BTIG Research -- Analyst

Yeah, hey, thanks, and good morning everybody and hey, Jeff and Lois. Lois, I guess I just -- my first question is around and Hey, congratulations on the Q3 bookings. It seems as we look at where reported spot rates are, just kind of curious how we should think about that. It seemed like -- it seems like an upcycles vessels tend that never actually are in those kind of high levels that are being reported, kind of curious like how we should be thinking about it now, where we're, kind of, in trough levels, how we should think about the performance of the ships versus, kind of, those reported these rates?

Lois K. Zabrocky -- President and Chief Executive Officer

Well, absolutely and first of all, thank you for your positions. I really appreciate you getting back here, we had you there in the funny little -- so, thank you so much. It's much appreciated. Indeed, when the market is running and you're seeing VLCC rates being reported at over $100,000 per day. What happens is that the market is running up and it's -- the vessels that are in that window that are able to fix those rates, I mean, overall it's very strong and you will see that in order for us to secure 30% of these are four out of 13 on these time charters that we've got, we pulled plum positions. Right. So those were a lot of May lifting dates in order to lock-in on those two seven months charters on these Vs, a $100,000 a day. So that was something-- it's really almost the spot decision when you're doing something six -- seven months on a VLCC, because that's really only a couple of voyages. But, likewise, I would say with what's booked in Q to date, for the third quarter you also see, you don't see the market on these today is $20,000 to $25,000 per day, you don't see Q3 booked at that, because we've had vessels that have been delayed. And discharging, we've been able to secure higher rates going into the quarter. The open days on the vessels are indeed lower at present, but Q3 is always your lowest demand quarter. So I think that the market, particularly on the Vs has held up remarkably for the type of demand destruction that we have seen.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Lois. Can I can I jump in, Can I take Greg.

Lois K. Zabrocky -- President and Chief Executive Officer

Ofcourse.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

I think Greg may also mean, and you can tell us, Greg, that in the some of the crazy volatile up quarters, and with rates really, six figure rates like Lois, has mentioned in Q1 and Q2, you get the report from the services of rate and none of the peer group reports that top taking rate for the whole quarter. So you wonder what people really capturing when you read those headline rates and but when the rates are like we're lowest and I mentioned now, in the 20s, it's probably that we in the peer group, are probably getting rates that pretty much reflect what you're reading from whatever benchmark you're picking up. Right. So yes, as far as looking at where things are today, if you're looking at the spot rates that's probably where things are trading.

Gregory Lewis -- BTIG Research -- Analyst

Okay, great. Yeah, Jeff. Thanks, thanks for that. And then I guess, Lois, you didn't -- just because it is going to drive that your capital allocation decisions, it's going to drive how you think about deploying and renewing the fleet, I think you, you kind of like alluded to and I'm just kind of curious if you could share your thoughts in terms of where you think we are in the cycle? It's not, and realizing that there's a lot of mini-cycle -- there has become a lot of mini cycles within bigger cycles over the last few years, just kind of curious how you're thinking about that.

Lois K. Zabrocky -- President and Chief Executive Officer

It is very interesting because when you look at destocking previously, it took 18 months.I am not -- I'm thinking that the destocking on this one, may be a shorter period because truly the demand destruction was not -- did not arise from anything other than COVID and we bounce back fairly quickly and you know the markets will stay down as we go through the destocking. But that could be six months could be 12 months, something like that and you know it's important for us to be ready and just to make sure we take our actions during that part of the cycle. So we're watching very closely. And I'm thinking that it may be shorter rather than longer.

Gregory Lewis -- BTIG Research -- Analyst

Okay, everybody. Hey, thank you all -- Go ahead, Jeff.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

No, and just. I think what we talked about it internally, what Lois is, and that when that little mini-cycle of the destocking caused by the restocking of -- which is caused by COVID when that end, we're back to fundamentally really well-balanced tanker market with a even lower order book than we saw at the beginning of this year when things started out so well. So...

Lois K. Zabrocky -- President and Chief Executive Officer

Absolutely.

Gregory Lewis -- BTIG Research -- Analyst

Okay. Yeah. Perfect, thank you very much guys. And I hope everybody's gradually getting power back, I got mine back yesterday.

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah, no, we are powering through it without power

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

This good to hear Greg. Operator, do you have the next question?

Operator

Yes. Our next question comes from Randy Giveans of Jefferies. Please go ahead.

Randy Giveans -- Jefferies LLC -- Analyst

Howdy, Lois Jeff and David how are you all?

Lois K. Zabrocky -- President and Chief Executive Officer

Good, how are you doing Randy?

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Good.

Randy Giveans -- Jefferies LLC -- Analyst

Doing all right. Yeah, obviously congrats again another record quarter and accretive uses of cash through the share repurchases prepayment of the $40 million transition term loan facility. So, well done on that. Now with that, why did you choose to repay the transition facility instead of maybe the more expensive 8.5% senior notes? Was it solely got unencumbered the ships are just the larger principal balance. And then, what are your plans for that kind of 8.5% senior notes?

Lois K. Zabrocky -- President and Chief Executive Officer

Go for it Jeff.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Well sure. Thanks Randy. We looked at the both. The 8.5% notes, which are just $25 million in total amount became callable at any time. So it is lower, or I guess in June, at the end of June. So that's definitely an option. That option is still out there. We can call it -- effectively, you had to call it in whole, because that's sort of the minimum listing requirements in New York Stock Exchange. So we thought about it, but we decided, along with our Board that we would prioritize the transition loans as being the first thing that we would take them because well as they are second most expensive or price loan, it is secured. It was low loan to value, a really -- as the name implies a temporary loan that we did as part of facilitating the refinancing our old term loan B. If we had as much cash in January, as we do today, we wouldn't have needed transition loan at all. So it just seem logical to us to remove that, as you mentioned, you get 12 more unencumbered ships to go to, We already, that's 14 unencumbered ships worth $200 million in today's market and even at scrapped they're worth half of that. So tremendous optionality and flexibility of having unencumbered vessels. It's really like gold, if you're ship owner. That's a good thing, we can sell them as Lois alluded that's gradually part of the plan or we could borrow against them if we needed to or wanted to. So all that kind of optionality and then meanwhile, the 8.5% unsecured is a relatively good price for unsecured and we always can take a look at it quarter by quarter and make that sort of the next -- could be the next capital allocations, i think, but we also want to have dry powder for further allocations like further share repurchase. So hope that answers your question, Randy.

Randy Giveans -- Jefferies LLC -- Analyst

Yeah. No it does, for sure. And then I guess secondly, looking at the crude tanker market, what kinds of changes have you seen in vessel movements, here in recent months, are there certain regions that maybe have been busier than others and then I guess also same question on the refined product side of the business.

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah, absolutely Randy, I mean you can see in the Q3 earnings on the Aframax, i mean definitely Libya being completely down and not having been able to restore, I think, they are like 100,000 barrels a day versus they were well over 1 million barrels a day, that hurts regionally the Western Aframax market. I would particularly say on the product carriers, you've just seen such incredible volatility the LR2s had really, really were super-stars there for a while and then came down dramatically, you're seeing naphtha now priced higher than LPG and that backed out some of that naphtha demand and kind of hurts some of the larger product carriers. So those are the couple of ways we've seen some of the trends manifesting themselves.

We've still seeing over or close to 3 million barrels a day, still crude exporting out of the U.S. Gulf and I think that has also helped the larger crude market hold itself up a bit going through this period.

Randy Giveans -- Jefferies LLC -- Analyst

Perfect, well, cool, I know it's been a long crazy call. So that's it for me. But obviously keep us the great work, especially with the share repurchases and getting your crew back home. I know it's a priority.

Lois K. Zabrocky -- President and Chief Executive Officer

It really is Randy and I want to thank absolutely everybody for your patience here on the call and through these challenging times. So we look forward to making our capital allocation decisions for our shareholders in the absolute and most optimal way and thank you for supporting Seaways. Thank you very much.

Randy Giveans -- Jefferies LLC -- Analyst

Absolutely.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Hey Randy.

Operator

Our next question comes from Ben Nolan of Stifel.

Benjamin Nolan -- Stifel -- Analyst

I thought you are cutting me off their Lois.

Lois K. Zabrocky -- President and Chief Executive Officer

No. Yeah, I realized that we have other one in the queue, I apologize Ben.

Benjamin Nolan -- Stifel -- Analyst

All right. Like Randy said, it's been a unique call. I have two questions. Number one is, and it relates to the $30 million of additional buyback authorization that you got, obviously, it was a terrific quarter with lots of cash now in the balance sheet and taking, sort of, a tactical shotgun approach to what you're doing with that, but thinking through, sort of, from a longer-term perspective, the eventual need to, or desire to grow the business with, pairing that with the liquidity of the shares, preserving cash for potential opportunities, how, maybe you could talk through how is it that you came to want to reup the $30 million of buyback and at what point do you say OK, well, now we need to transition to thinking about liquidity and long-term growth, kind of, or anything else.

Lois K. Zabrocky -- President and Chief Executive Officer

Ben that's a great question. I mean the easy -- the easiest answer is that at Seaways we consistently like to have a full toolbox of our buyback ready, our program authorized, so that even when we see that that's the right capital allocation decision, we can exercise that. And I would simply say that for us right now this, in environment of COVID-19 has been very tricky. And I think that we are very actively and very carefully looking at what's the best way to allocate our capital and then I'll flip it over to Jeff, maybe for a little more detail.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Yeah, thanks, Lois. And I think it ties into a question that came up before, an explanation you've giving Lois, about the cycle we're in and we're in a destocking cycle, but it's not easy. As I think we've used the expression, it's a little fog in the -- view from the bridge is little foggy about how long that cycle is going to last. Because it involves factors that no management team can control, what's OPEC going to do, how's demand going to return, things like that.

So that's why the capital allocation decision is quarter-by-quarter and don't paint yourself in the quarter is our view. And so, and as you know, we've always sort of taken a balanced view on things that's kind of our style. And so we absolutely like having the program reup, so we have the flexibility to do it if it makes sense and we are also keeping in mind the needs -- other needs that we have eventually for renewing our fleet, etc. So we'll weigh all that stuff quarter-by-quarter and also how the cash is building, based on how the destocking is going. So I think it's, I think that's the best answer we can give you, Ben, as we -- we've all the tools in place to just evaluate continually.

Benjamin Nolan -- Stifel -- Analyst

Okay. And now this is a, sort of, a tying question and I apologize this is very open-ended and I usually don't like to ask open-ended questions, but here we are, close to six months into this, really sort of bizarre situation and I know that you guys are pretty critical thinkers. I'm curious, from your perspective, how -- if you're thinking about your business differently, both from a, sort of, asset allocation perspective and how cost perspective, how you're running the business and then in conjunction with that are there changes that you sort of can envision in the industry. I mean does scale matters more than it used to or I don't know I again, I apologize, I know it's very open-ended, but would love to hear your thoughts.

Lois K. Zabrocky -- President and Chief Executive Officer

Well, Ben, I would start that from a tactical perspective and the conversations that I've been having with Bill, on the technical side, it's been a bit easier for him to sell me on some of these efficiency improvement items like the Mavis[Phonetic] stock and investment in super sleek paint for our VLCCs because we're really focusing on increasing our efficiency and meeting our decarbonization target. So this is really a big effort and we will increasingly have a focus on that and you see that the business, the business will continue to change, I mean that lower ordering book is really, as owners keep having to see OK, what's going to be the next effective technology, that isn't just an intellectual idea but that can actually be manifested and I think that that's really going to affect fleet development.

So you start with what can you tactically do to improve the efficiency of the vessels that you own. And then you look at, OK, how is the industry going to change and what will be the proven technology that's really going to suit our needs going forward. So I think that really even during COVID-19, when you have all these urging issues and everybody is huge effort to coordinate crew repatriations that you still have to have your eye on the ball, and we do as to how the industry is going to change in regards, in the next 10 years.

Benjamin Nolan -- Stifel -- Analyst

Okay,

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

And I -- Go ahead Ben with your follow on.

Benjamin Nolan -- Stifel -- Analyst

JEff...

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

No it's all right.

Benjamin Nolan -- Stifel -- Analyst

No, I was just, maybe also I guess, to be a little bit more specific. Are you guys, can you envision doing things from a cost perspective that maybe you wouldn't have done in the past. Or does again, the scale matter more than maybe it used to or not. I don't know, it's maybe some of those sort of macro-level question.

Lois K. Zabrocky -- President and Chief Executive Officer

I do think scale is important, I do think that you get operational efficiencies, you get -- from the pools we often get commercial efficiencies but scale without a doubt continues to be important. And just in your liquidity of the shares traded and for all of us buying to get attention from shareholders. So anything that we can do to differentiate ourselves and to put ourselves forward, we're really looking at the market, and then, Jeff, you wanted to add something, go ahead.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Well, I think that actually I think your previous comment about looking at at major stocks. And slip pay, and things like that, those are in addition to being carbon emission focused, are sort of cost related, And so we're spending money to save money and to decarbonize. So you got to sweat the details, that's a tactical kind of as you said Lois, but then strategically, Ben, we always spend time thinking about the big picture and where we can move to. I think we're likely to stay a tanker company, just to put that out there, but there is a lot, there is a lot of things to consider as Lois touched on from in terms of where you're going to move and how technology is changing, and how we can respond to that.

So we try to have a balance of sweating the details and make a tactical decisions, but with a lot of consideration given to what's next, we can't give you an answer other than that, we do understand the values of scale and we do understand the value or the importance of how trends are changing and you don't want to have stranded assets, you want to put your money in the right place for the next 20-30 years and not just the next two years. So there is no one answer, but other than the one I gave about staying in the sector probably, but to -- we're looking at everything.

Benjamin Nolan -- Stifel -- Analyst

All right, I appreciate it. Thanks. Jeff and Lois.

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah. Thank you.

Operator

Our next question comes from Liam Burke from B Riley.

Liam Burke -- B. Riley FBR -- Analyst

Thank you. Good morning, Lois, good morning Jeff.

Lois K. Zabrocky -- President and Chief Executive Officer

Good morning.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Hey.

Liam Burke -- B. Riley FBR -- Analyst

Jeff, I want to beat the capital allocation subject to death here, but longer-term, do you have a either in terms of debt to total capital or some other metric, an ideal capital structure for the business, understanding you're operating a high fixed cost business here.

Lois K. Zabrocky -- President and Chief Executive Officer

I mean, Jeff. I'm going to let you compose your answer there for a second because I would suggest that your ideal leverage is going to depend upon where you are in our cyclical business and that it's not always the same answer. And then, Jeff, this is your expertise.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Thanks, Lois. Sure, look, we have no problems starting with 50% leverage if it's OK, we're going to buy a vessel or a few vessels on block, or whatever, 50%, 55%, that can take advantage of the situation. But, we think there is an advantage to working down on your leverage from there and Lois is absolutely right, like net loan-to-value is a number that's very tricky, because it depends on what could be 50% net loan-to-value at the peak and it could become quickly 75% loan-to-value and then the company has gotten into trouble with that before. So that's why we like starting with our level to maximize the benefit of your equity when you're acquiring vessels and then working it down, but we don't have a set in stone target, we just think it's good to work it down to lower levels because then you can always relever to help you make a capital allocation decision that's smart whether that's buying a vessel because you've got to the right time to do it for a few vessels or doing more share repurchasing or whatever it.

So I think we would like -- I would just say that and maybe if it helps, I kind of like where we are. How is that one.

Liam Burke -- B. Riley FBR -- Analyst

Fair enough. Lois the time charter rates that you secured in the quarter are strong, looking, sort of, longer-term, do you see opportunistically moving in time charter market as you see the cycle to reduce volatility or how are you looking at the time charters now?

Lois K. Zabrocky -- President and Chief Executive Officer

You know right now the time charter flow has really ebbed and charters are reluctant to step out. We are again in the lowest part of the demand cycle for the year and as we head into Q4, you may, you may see that the rates run and charter step out for term business. But right now it's a little bit apathetic I would say.

Liam Burke -- B. Riley FBR -- Analyst

Great, thank you.

Operator

Our next question comes from J Mintzmyer from Value Investor's Edge.

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

Good morning Jeff, good morning, Lois and David. Congrats on a fantastic quarter.

Lois K. Zabrocky -- President and Chief Executive Officer

Thank you.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Thanks, J.

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

Yeah, so a lot of this has been touched and I realize the call is getting a little bit long with the glitches here, but just a quick question, not looking for too much detail, but there is a enormous spread that right on the VLCCs between the modern tonnage in those small ships, a massive spread, right, how much of that is specifically, kind of, I guess you would normally expect due to the age of the ships and how much of that was just like positioning, not looking for exact answer, but just kind of broadly speaking.

Lois K. Zabrocky -- President and Chief Executive Officer

The VLCCs are obviously by scale the most attractive vessel to hold storage on and the most economic, right. So they were the first to really ramp up in the storage market and then the Chinese have just been voracious in their imports into China within the Chinese crude market they have their own benchmark and you're still in contango over there. So while it may not be a situation where you're putting extra Vs on if you are holding a V and storage off China you're not in a big rush to discharge. So you know, the Vs have had a few advantages that the rest of the market did not share in the last eight weeks.

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

Yeah, thanks, Lois. I guess that didn't phrase it quite correct. I was just asking about the VLCCs themselves between the age profile, there is a huge disparity between the 15 plus and the younger ones.

Lois K. Zabrocky -- President and Chief Executive Officer

No, absolutely. Sorry for that. Yeah, I mean as soon as you get some softness in the market if you are highly flexible, less than 15-year-old VLCC, you're going to be preferred, you're going to be more flexible on a lot of the Western trade and the older vessels are going to be left with those charters that are willing to take vessels that are over 15 years old. And even when you look at it within our portfolio those ships are still highly cash flow positive considering what their asset values are at this point and what their book value is.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

There's only -- Llis if i cloud just chip in, there is only two of them it's actively in the spot. Time charter

Lois K. Zabrocky -- President and Chief Executive Officer

Yeah and the third one is-- yeah.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

So that's a little bit of a sort of sampling error, not error, but sampling effective two older vessels, but as you say Lois, they're still they are pulling their weight, sort of, the capital that we have right now.

Lois K. Zabrocky -- President and Chief Executive Officer

Right.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

So and although they do their time and when it's the right time, they will move on out of the fleet.

Lois K. Zabrocky -- President and Chief Executive Officer

Well and Jeff, if you look at the first quarter, they in a running market they will earn as high as modern tonnage and we have seen and we could have some helping us in Q4 and then you'll see a shrinking of that vast variance as the market strengthens.

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

Thanks, Lois. Thanks, Jeff. Sounds like yeah -- sounds like are not really statistically significant, but there obviously is a big spread between the two classes. We covered a lot of the leverage stuff. I just had a quick sort of question for Jeff. I noticed you've swapped a lot of that stuff out on LIBOR earlier in the year, and you got great swap rates at the time, right. But the swaps have came down right in price since then, can you remind us, I don't know if you have this in front of you a rough estimate of what your total all in bank debt cost is, it looks like it's around 4%, which is hard to believe, is that right or can you remind us of that?

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

I think if you include, I mean, now you've got the spreads are 240 going to be going forward on the Sinosure and 2 sorry, on the core facility and 200 on the Cynosure, and then you got the LIBOR, and if you include the swap we're still going to be between 4% and 5% for those because of having done some swaps earlier on, while at the Sinosure credit facility came with a swap. So that was what we have done. We just did something in this quarter. It's in the queue, go look it up, like that talks about taking advantage of the lower rates that we have now by extending out in time the swap that's on the Cynosure credit facility otherwise it would have expired in 2025 we pushed it out to 2027 and that has effect on saving about 40 basis points of where LIBOR swapped into there.

So I think you're probably right that with the 8.5%, only being $25 million that they are probably all in cost is probably around into the 4% and 5% range as you said.

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

Thanks, Jeff. Yeah, it is a legacy facility, it looks like right on the Sinosure, but I did see the blending and that was pretty impressive out there. To 2027 I think it was like 2.3% or something. So, good job on that. Last question for you, FSO joint venture Euronav, it comes up for renewal in 2022. I know previous commentary we danced around it a little bit with Euronav as well. Kind of the broad expectations that those have a life still about 20 to 30 at least. Now that was a little bit prior, to some of the recent carnage in the market, we've seen. So I guess a little part one on that is -- are those FSO still steady and operating full utilization and all that. And then I guess Part 2 is when do those negotiations and discussions began? Are we already in that phase or is that like a year out.

Lois K. Zabrocky -- President and Chief Executive Officer

So for a part one of that, Jay, I mean those FSOs have had been on the field since 2010 without one day of off-hire and so they are both highly efficient units and they really improve that quality of that crude exports. So they've been extremely highly serviceable on that field and we do expect them to continue to have at least another 10 years of life or 12 till 2032. And then we are constantly in touch with our customer and when we give you more solid detail, we'll do that.

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

Thanks a lot. I realize you, you probably said as much as you can. Thanks again Lois and Jeff. It's just excellent to see such great capital allocation and a pure eye toward per share returns right and good allocation there. Thanks again.

Lois K. Zabrocky -- President and Chief Executive Officer

Thank you.

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Thanks, Jay.

Operator

And that concludes our question-and-answer session. I'd like to now turn the conference back over to Lois Zabrocky for any closing remarks.

Lois K. Zabrocky -- President and Chief Executive Officer

Well there go, again once again thank you guys really for sticking with us here. We had a few technical difficulties on the call, but it's 2020, it's that kind of a year. We had a great quarter and we're looking forward to another great quarter in Q3, and thank you so much for your support of Seaways. Thanks a lot.

Operator

[Operator Closing Remarks]

Duration: 69 minutes

Call participants:

James D. Small III -- Senior Vice President, Chief Administrative Officer, Secretary and General Counsel

Lois K. Zabrocky -- President and Chief Executive Officer

Jeffrey D. Pribor -- Senior Vice President and Chief Financial Officer

Omar Nokta -- Clarksons Platou Securities -- Analyst

Gregory Lewis -- BTIG Research -- Analyst

Randy Giveans -- Jefferies LLC -- Analyst

Benjamin Nolan -- Stifel -- Analyst

Liam Burke -- B. Riley FBR -- Analyst

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

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