On the right side of Slide 10, we show our historic adjusted EBITDA bar, our last 12 months bar essentially 2023. And an annualized adjusted EBITDA based on this quarter’s results. In addition, the EBITDA bars to the right show the effects of an increase in adjusted EBITDA based on incremental increases in average charter rates of $1,000 per day to give some further perspective. Then on Slide 11, we cover the important topic of our vessels scheduled drydocks. We have 17 vessels scheduled for drydocking during 2024 with an expected total of 399 off-hire days and with total drydocking CapEx anticipated of $22.9 million, all of which is fully budgeted. Some more detail on the expected timing and costs of these drydocks is shown below, noting that one vessel has already successfully completed its docking in January of this year.
Also, as we have announced before, we will take these drydocks as opportunities to install energy-saving technologies on those vessels at a cost of around $4.8 million, with many of those technologies having a very short payback period. Finally, we also provide here some guidance on 2025 and 2026 scheduled drydocks for those that are interested. And with that, at the end of a good quarter and at the end of a very strong year and with a great foundation set up for 2024, I’ll stop there, and I’ll hand over to Oeyvind to give you an update on our commercial position. Thank you.
Oeyvind Lindeman: Thank you, Gary, and good morning, all. Let’s move to Slide 13 to take a closer look at the recent developments of American gas fundamentals. The U.S. reported 210 million barrels of natural gas liquids production at year-end, which is up 10 million barrels since of last earnings call. This is a meaningful increase, but why is it important? Well, remember, one barrel of natural gas liquids consists on average 42% of ethane, 45% of LPG, and the remaining natural gas liquids. U.S. domestic consumption of ethane and LPG is relatively flat. And therefore, any additional production is more or less solely aimed for export markets. As a consequence, American midstream companies are investing in additional gas processing plants, fractionators and terminal expansions to allow for the increase in production.
This is good for gas transportation. In general, it is great for Navigator and our growing ethane and ethylene business. The graph in the middle shows global handysize demand measured in volume transported. The volume includes LPG, ammonia and petrochemical cargoes. As you can see, the total tonnes carried dropped during the last months of 2023. This is mostly due to disruptions at the Suez and Panama Canals. Many of the handysize petrochemical voyages were rerouted. Longer voyages reduce frequency of loading operations, which in turn reduce volume. However, as we can see, for the first two months of 2024, the total volumes is more or less tracking historical seasonality. If you look at handysize ethane and ethylene exports specifically, we see a positive development.
The right-hand graph shows a positive counter seasonal development. We see more exports from the U.S. of these cargoes compared to previous years. It tells us that despite the longer voyages, U.S. ethane and ethylene remains highly attractive to international buyers. The updated ethylene arbitrage between U.S. and Europe and Asia is shown on the left graph on Slide 14. Growing NGL production puts pressure on the domestic price of ethane. Ethane price, which is the lower line, continues to slide. U.S. ethylene prices represented by the gray line on the left-hand graph, and European and Asian landed price is shown by the two top lines. As we can see, the arbitrage between the continents has widened since last earnings call. This is positive, of course.
It is also needed to cover additional freight due to the longer voyages. However, as you see on the middle graph, ethylene export volume declined somewhat. This is counterintuitive. The explanation lies with the restricted transits at the Panama Canal. The number of gas carrier transits through the canal went rapidly downhill from September of last year onwards. The vast majority of vessels, including ours, were rerouted via Cape of Good Hope when bound to Asia. The duration of our round trips from Houston to Asia increased by 50%, which in turn stretched vessel availability at Morgan’s Point export terminal. From a shipping perspective, this is not a bad thing, though. What is interesting to comment on is that of ethane exports, rerouting of larger ethane vessels, which service take-or-pay supply contracts, created a demand for handysize vessels.
We fill the cracks that open in their supply chains. This is a nice increase in the handysize ethane volumes, and you can see that on the right-hand graph. Our earnings days mix on Slide 15 reflects the flexibility in our fleet. 42% earnings days are derived from petrochemical cargoes, 20% from ammonia, leaving only 33% from LPG when taking into account the non-utilization factor for December. Canal disruptions and knock-on effects to logistics do cause fluctuation in utilization. And utilization is a dynamic metric. It also includes unforeseen technical issues and downtime across the fleet. We have mentioned in the past, when you heard Mads, he mentioned it too, and I will take the opportunity to mention it again that utilization around and above 90%-mark represents a very good market.
Around this level, we are in an environment where freight rates are relatively healthy. These healthy freight rates are shown on Slide 16. There was a knee-jerk upswing in the third-party market assessment immediately after the Panama Canal issues, particularly for the green ethylene index. The assessment has now settled more in reality at quite robust levels. What we can say is a semi-refrigerated and fully-refrigerated vessels coming off time charters are being renewed at higher rates than we have seen for many years. What typically ruins the shipping part is oversupply of vessels. We have said it in previous calls, and it remains valid today, we have clear visibility of supply coming into the segment over the next few years. It is low at 7%, shown on Slide 17.
