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International Seaways inks LR1 newbuild deal with K Shipbuilding
International Seaways Inc reported an income of US$154M for Q2 2023. The figure is an improvement on the US$69M logged in Q2 2022
The tanker operator credited the increase in net income to a US$103M increase in time charter equivalent (TCE) revenues, an outcome of the effects of sanctions on Russian oil that disrupted trading patterns, leading to longer voyages and higher tanker utilisation coupled with higher oil demand of approximately 3M barrels per day.
Shipping revenues for Q2 2023 were US$292M, compared with US$188M for Q2 2022, while consolidated TCE revenue for Q2 was US$288M.
International Seaways president and chief executive Lois K Zabrocky said the company has taken advantage of the strong market conditions.
She said, “Our optimism is fuelled by attractive supply and demand fundamentals, underpinned by trends in the global energy trade, as Russian oil displacement has resulted in increases in tonne-mile demand and tanker utilisation. Economic activity has remained strong, and oil demand forecasts signal a pickup in the second half of the year. These factors, combined with an historically low orderbook and an ageing global fleet, drive our expectation for strong tanker earnings for the foreseeable future.”
Chief financial officer Jeff Pribor added the company has prepaid US$172M of debt this year.
Crude carriers
TCE revenues for crude tankers stood at US$149M for the second quarter, compared with US$60M for the equivalent period last year. This increase was primarily attributed to higher spot rates as the average spot earnings of the VLCC, Suezmax and Aframax sectors were approximately US$52,300, US$61,300 and US$53,500 per day, respectively.
Product carriers
Product carriers logged US$140M in revenue in Q2. TCE revenues were US$139M for the same period, up from US$126M last year, driven by higher LR1 spot rates with average earnings of approximately US$63,600 per day in Q2 2023 compared with approximately US$25,900 per day for Q2 2022.
However, MR tankers racked up lower revenue days, primarily reflecting the sale of three older MRs and slightly lower average spot earnings of approximately US$28,300 per day in Q2 2023, down from US$30,500 in the same period for 2022.
International Seaways is pressing ahead with its fleet optimisation programme, contracting two LR1 product carrier newbuilds for construction at South Korea’s K Shipbuilding (formerly STX Offshore & Shipbuilding). The contract is worth an aggregated US$115M and vessel delivery is set for late 2025. When delivered, the ships are expected to enter into International Seaways’, Panamax International Pool.
Contracted revenues have now risen to US$352M by entering into a new three-year time charter agreement for an Aframax ship. The company also took delivery of its third dual-fuel VLCC. All three vessels are employed on long-term time charters with an oil major and financed under sale and leaseback arrangements with a fixed interest rate of approximately 425 bps.
In all, shipping revenues for the first half of 2023 stood at US$579M.
Looking ahead to the rest of the year, Mr Pribor said, “We maintain considerable financial strength, evidenced by nearly US$500M in total liquidity and a net-loan-to-value ratio of 22% at quarter’s end. With a cash break even below US$16,000 per day, Seaways is well-positioned to generate incremental free cash flow and continue returning significant capital to shareholders.”
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