2009-11-27 08:14:09 -
London, November , 27, 2009
Highlights
* Independent Tankers reports net income of $4.3 million, equivalent
to earnings per share of $0.06, for the third quarter of 2009.
* Independent Tankers reports net income of $11.4 million, equivalent
to earnings per share of $0.15, for the nine months ended September
30, 2009.
* The UK tax lease for the VLCC British Progress will be terminated
in the first quarter of 2010.
Introduction
Independent Tankers Corporation Limited (the "Company" or
"Independent Tankers") was incorporated in Bermuda on January 18,
2008 and the shares have traded on the Norwegian over-the-counter
market since March 7, 2008. Independent Tankers' business is mainly
concentrated on the ownership and operation of crude oil tankers on
long term bareboat contracts, which include certain cancellation
options to major oil companies. Independent Tankers owns or leases in
six VLCCs and four Suezmax tankers. All vessels are financed through
bonds in the US market and some of the vessels are also subject to
financial lease arrangements. The main shareholder is Frontline Ltd.
("Frontline") with an ownership of approximately 83 percent.
Third Quarter and Nine Month Results 2009
The Board of Independent Tankers announces net income of $4.3
million, equivalent to earnings per share of $0.06, for the third
quarter of 2009. This compares with net income of $3.2 million,
equivalent to earnings per share of $0.04, for the second quarter of
2009. The main reasons for this increase are a reduction in
depreciation expense of $0.5 million following the upward revision of
the estimated residual values of the six VLCCs and foreign exchange
movements.
The average daily bareboat rates earned in the third quarter by the
Company's VLCCs and the Suezmax tanker Front Voyager were
approximately $25,100 and $7,800, respectively, compared with
approximately $25,400 and $7,900, respectively, in the preceding
quarter. The decrease is explained by fluctuations in days between
the quarters.
Net interest expense was $5.5 million (second quarter 2009: $5.3
million). At September 30, 2009, all of the Company's bond debt of
$325.8 million is at fixed interest rates ranging from 6.68% to
8.52%.
The Company has reclassified some of its restricted cash balances to
long-term. These balances relate to the restricted cash that are
segregated for the settlement of long-term lease obligations. The
amount reclassified as of September 30, 2008 to conform to the
current year presentation was $226.9 million.
For the nine months ended September 30, 2009 the Company announces
net income of $11.4 million, equivalent to earnings per share of
$0.15 (2008 comparable nine months $10.0 million, equivalent to
earnings per share of $0.13). Net interest expense was $16.0 million
(2008 comparable nine months: $16.7 million).
In November 2009, the Company has an average cash breakeven rate for
its VLCCs and Suezmax tanker of approximately $19,100 and $4,200 per
vessel per day, respectively.
Charter Development
The VLCC British Pioneer is currently on a market related charter to
BP Shipping Limited ("BP") under which the Company's ship owning
subsidiary receives the greater of $20,000 per day or a spot market
rate. The market related rate, while calculated quarterly, is
cumulative on a four year basis or shorter if BP terminates the
charter earlier. The Company has not accrued any market related hire
as of September 30, 2009.
Other Matters
In September 2009, Dresdner Kleinwort Leasing gave notice of
termination for the UK tax lease for the VLCC British Progress. The
leasing agreement will be terminated effective January 15, 2010. At
September 30, 2009 the obligation under the lease was $69.9 million
and the termination will be cash neutral for the Company. The Company
will acquire the vessel concurrent with the lease termination and the
existing bareboat to BP will remain in place.
74,825,166 ordinary shares were outstanding as of September 30, 2009,
and the weighted average number of shares outstanding for the quarter
was also 74,825,166.
The Market
The average market rate for VLCCs from MEG to Japan in the third
quarter of 2009 was approximately WS 36 or $15,600/day. The second
quarter returned $20,600/day at the same WS rate, albeit with an
$80/mt lower fuel price. The average rate for Suezmaxes from WAF to
USAC in the third quarter of 2009 was approximately WS 52.5 or
$13,700 per day compared to approximately WS 59 or $20,000 per day in
the second quarter of 2009.
Bunkers at Fujairah averaged approximately $426/mt in the third
quarter compared to $345/mt in the second quarter of 2009, with a
high of $459/mt at the end of August and a low of $378/mt in the
middle of July. On November 25, 2009 the quoted bunkers price in
Fujairah was $460/mt.
The International Energy Agency ("IEA") reported in November 2009 an
average OPEC oil production, including Iraq, of 28.8 million barrels
per day during the third quarter of the year - an increase of 320.000
barrels per day compared to the second quarter of 2009. At the last
OPEC conference on September 10 it was agreed to keep the current
production levels unchanged. The next OPEC meeting is scheduled to
take place on December 22, 2009.
IEA further estimates that world oil demand averaged 85.1 million
barrels per day in the third quarter of 2009, an increase of
approximately 0.9 million barrels per day compared to the second
quarter of the year. IEA predicts that the average demand for 2009 in
total will be 84.8 million barrels per day, a 1.7 percent decline
from 2008. Additionally, the IEA estimates that the demand will
increase by 1.7 percent in 2010 to 86.2 million barrels per day.
The VLCC fleet totalled 524 vessels at the end of the third quarter
with nine deliveries during the quarter. Throughout 2009 it is
estimated that 61 deliveries will take place including 48 made so
far. The orderbook counted 188 vessels at the end of the third
quarter, down from 197 vessels after the second quarter of 2009. A
new order for 12 VLCCs was reported during the quarter, however this
is not yet confirmed. The current orderbook represents approximately
35 percent of the VLCC fleet. During the quarter, there were two
deletions from the trading fleet with five being sold for demolition
and six for conversion purposes. According to Fearnleys, the single
hull fleet now stands at 89 vessels.
The Suezmax fleet totalled 381 vessels at the end of the quarter,
with 11 deliveries taking place during the quarter. Throughout 2009
it is estimated that 57 deliveries will take place including 38 made
so far. The orderbook counted 127 vessels at the end of the quarter,
down from 138 vessels at the end of the second quarter and now
represents 32 percent of the total fleet. During the quarter, there
were two deletions from the trading fleet. According to Fearnleys,
the single hull fleet stands at 33 vessels at the end of the quarter.
Strategy and Outlook
The Company's strategy is mainly concentrated around long term
charters to reputable companies and for the time being BP, Chevron
and Frontline. The Company's charter coverage for its six double hull
VLCCs is 100 percent for the rest of 2009, 99 percent in 2010 and 24
percent in 2011, if the charterers are not extended. For the one
single hull and three double hull Suezmax tankers, the charter
coverage is 100 percent for the rest of 2009 and 81 percent in 2010.
We are slowly building up our cash position at a comfortable pace
from the Company's long term charters. The long term focus is on
restructuring the bond debt and UK leasing arrangements within the
Company.
The Company has low cash breakeven rates and the vessels are financed
through the US bond market with maturity from 2015 to 2021. The
combination of fixed bareboat charters and floating market rates for
the six VLCCs in the years ahead and the fact that all the vessels
are financed creates a solid platform for the Company going forward.
Forward Looking Statements
This press release contains forward looking statements. These
statements are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including the Company's
management's examination of historical operating trends. Although the
Company believes that these assumptions were reasonable when made,
because assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to
predict and are beyond its control, the Company cannot give assurance
that it will achieve or accomplish these expectations, beliefs or
intentions.
Important factors that, in the Company's view, could cause actual
results to differ materially from those discussed in this press
release include the strength of world economies and currencies,
general market conditions including fluctuations in charter hire
rates and vessel values, changes in demand in the tanker market as a
result of changes in OPEC's petroleum production levels and world
wide oil consumption and storage, changes in the Company's operating
expenses including bunker prices, drydocking and insurance costs,
changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending or future
litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political
events, and other important factors described from time to time in
the reports filed by the Company with the Norwegian over-the-counter
market in Oslo.
The full report is available in the link enclosed.
The Board of Directors
Independent Tankers Corporation Limited
Hamilton, Bermuda
November 26, 2009
Questions should be directed to:
Bengt Neteland: Vice President Finance, Frontline Management AS
+47 23 11 40 37 or +47 924 99 386
WEBSITE: WWW.ITCL.BM
hugin.info/138953/R/1357531/330270.pdf
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