Norway is out-speculating the Greeks on VLCC newbuildings, says Craig Jallal
I was excited to see in the latest Hunter Group press release that two of the scrubber-equipped VLCCs are classed as resale candidates, potentially producing the investment company around US$25M for the pair. These VLCC newbuildings were described in a recent issue of Tanker Shipping & Trade, and I likened the enterprise to that of a previous Norwegian venture, Bulk Transport.
To put the sale in perspective, the VLCCs were ordered some 12 months ago for US$83.5M each and have now been reportedly sold before delivery for US$98M each, a potential US$12.5M positive result. This equates to roughly US$35,000 per day ’earnings’ without carrying a single drop of crude oil, versus current 2019 average VLCC earnings of US$19,000 per day, according to Clarkson Research Services statistics.
The significance for the tanker industry is that other investors will consider speculating to realise similar gains. Given that IMO 2020 – one of the key factors in the Hunter Group VLCC equation – is virtually upon us means that investors have probably missed the boat, but there may be lesser gains to be had. This could lead to a slew of VLCC newbuilding orders, and we all know how that story will end.
The Hunter Group has issued further news on the resale of scrubber-equipped VLCCs.
Hunter Tankers AS, a wholly owned subsidiary of Hunter Group ASA, has entered into a US$180M sale-and-leaseback transaction with Ship Finance International Limited, for an initial three VLCCs at highly attractive terms.
Hunter Tankers will receive net proceeds of US$60M per vessel for the sales of Hunter Atla, Hunter Saga, and Hunter Laga, and will subsequently bareboat charter the vessels back for five years. Hunter Tankers will have purchase options for all three vessels, ensuring maximum flexibility in regards to potential future vessel sales.
Hunter Group chief executive Erik Frydendal commented “This transaction reflects our ongoing efforts to continuously optimise our financing and drive out unnecessary costs wherever possible, while maintaining a high level of flexibility, in order to create value for our shareholders.”