Oil tankers latest sinking business as U.S. imports less crude

 

 

.

The changing oil flows mean much of the U.S. oil tanker movement is restricted to shipments within domestic ports that are handled by smaller vessels.

Tim Rue/BloombergThe changing oil flows mean much of the U.S. oil tanker movement is restricted to shipments within domestic ports that are handled by smaller vessels.
  • The surge in United States domestic crude oil production has begun to send serious ripples through the global oil supply chain, with oil-tanker firm, Windsor Petroleum Transport Corp., filing for bankruptcy protection Monday, citing dramatic shifts in global oil trade flows as the cause

 

The Bermuda-based company, with more than US$100-million in debt, blamed “reduced growth in demand for seaborne transportation, particularly in North America,” as a key reason for its misfortunes in its petition filed in U.S. Bankruptcy Court in Wilmington, Del.

U.S. oil imports have shrunk to 7.5 million barrels per day this year, compared to 9.8 million bpd in 2008, as Canadian and domestic production from the Bakken and Eagle Ford basins displace about two million bpd of OPEC oil. Louisiana Offshore Oil Port LLC, the country’s biggest oil port, has seen barrels entering the port reach 685,000 bpd in 2013, roughly half of its peak imports in 2005.

Most analysts believe the U.S. is poised to surpass Saudi Arabia and Russia as the world’s biggest producer of oil.

Windsor, which operates four very large crude carriers (VLCC) and was caught off-guard as domestic blends displaced imports from international markets. Reacting to changing trade flows, OPEC producers have been refining oil domestically and shipping it to Asia, further reducing need for tankers, as oil products are usually shipped on other vessels.

The changing trade flows “led to a decrease in international tanker usage, as the voyage to the U.S. from the Middle East is one of the longest possible voyages for seaborne crude oil,” the company said in its filing.

VLCCs also rely on long-term contracts with major oil players, and BP PLC’s decision to cancel exclusive charters for some of Windsor’s tankers and not renew contracts set to expire in 2015, also hurt the company’s bottom line.

“There is a mismatch between the economics of the oil industry and the economics of the shipping industry,” said Ian Holloway, dean of Law at the University of Calgary and a naval historian. “Ships are big, expensive things, and take a long time to be built and travel. Lately, oil and gas has been dynamic and changing. We will see lots more of this, and even if we don’t see bankruptcies, there is an awful lot of unhappy shipowners right now.”

Frontline Ltd., the parent company of Windsor, is also facing problems.
One of the biggest oil tanker companies based out of Bermuda, and controlled by Norwegian billionaire John Fredriksen, Frontline posted a net loss of US$12.1-million in the first quarter, and warned the company will need to restructure if cash flows from operations do not satisfy liquidity requirements. New York-based Overseas Shipholding Group Inc. also filed for bankruptcy in late 2012, blaming adverse market conditions.

The changing oil flows mean much of the U.S. oil tanker movement is restricted to shipments within domestic ports that are handled by smaller vessels. In addition, the so-called Jones Act stipulates only U.S.-flagged carriers can ship within the domestic ports, hurting the prospects of foreign-registered ships.

There is a mismatch between the economics of the oil industry and the economics of the shipping industry

In the midst of the downturn, VLCCs that were ordered prior to the U.S. production boom continue to enter the market, further depressing spot rates. VLCCs earned an average of US$10,907 a day last year, the lowest in 16 years, and rates remain “subdued” this year, according to the International Energy Agency.

“The lesson from Windsor is that especially in markets evolving rapidly, your business model and your business structure is absolutely critical,” said Darryl Anderson, managing director at Wave Point Consulting, based in Victoria. “In this case, companies that were chartering Windsor only needed them on the margins. The company was not structured for long-term stability in cash flow, in a market with tight freight rates.”

Large oil-tanker outlook could improve in North America if new shipping routes are opened, analysts say. The United States is contemplating scrapping an export ban on crude oil exports, which could boost tanker demand, although VLCCs may be the last to benefit as the Panama Canal is not equipped to handle such large carriers yet.

TransCanada Corp.’s proposal to build the Energy East pipeline project that ends at a shipping terminal in Saint John, N.B. could also boost the shipping industry, Mr. Holloway said.

 

17 July 2014

Baltic Dry Index (BDI)    -17   738 
Rates

È

BCI

(Cape index)

BPI

(Panamax index)

BSI

(Supramax index)
INDEX

1248

-41

603

-18

660

-6

SPOT TC AVG (USD)

9422

-359

4825

-144

6906

-61

YESTERDAY (USD)

9781

4969

6967

YEAR AGO (USD)

13710

9265 9381

Even in Canada, booming U.S. oil and gas is elbowing out Alberta’s crude

The dramatic rise of U.S. crude oil and natural gas production is disrupting even long-established trade flows inside Canada, as Alberta producers are increasingly finding themselves competing for — and losing — market share to American petroleum suppliers, even in their home province.
The Bermuda-based company, with more than US$100-million in debt, blamed “reduced growth in demand for seaborne transportation, particularly in North America,” as a key reason for its misfortunes in its petition filed in U.S. Bankruptcy Court in Wilmington, Del.

U.S. oil imports have shrunk to 7.5 million barrels per day this year, compared to 9.8 million bpd in 2008, as Canadian and domestic production from the Bakken and Eagle Ford basins displace about two million bpd of OPEC oil. Louisiana Offshore Oil Port LLC, the country’s biggest oil port, has seen barrels entering the port reach 685,000 bpd in 2013, roughly half of its peak imports in 2005.

Most analysts believe the U.S. is poised to surpass Saudi Arabia and Russia as the world’s biggest producer of oil.

Windsor, which operates four very large crude carriers (VLCC) and was caught off-guard as domestic blends displaced imports from international markets. Reacting to changing trade flows, OPEC producers have been refining oil domestically and shipping it to Asia, further reducing need for tankers, as oil products are usually shipped on other vessels.

The changing trade flows “led to a decrease in international tanker usage, as the voyage to the U.S. from the Middle East is one of the longest possible voyages for seaborne crude oil,” the company said in its filing.

VLCCs also rely on long-term contracts with major oil players, and BP PLC’s decision to cancel exclusive charters for some of Windsor’s tankers and not renew contracts set to expire in 2015, also hurt the company’s bottom line.

“There is a mismatch between the economics of the oil industry and the economics of the shipping industry,” said Ian Holloway, dean of Law at the University of Calgary and a naval historian. “Ships are big, expensive things, and take a long time to be built and travel. Lately, oil and gas has been dynamic and changing. We will see lots more of this, and even if we don’t see bankruptcies, there is an awful lot of unhappy shipowners right now.”

Frontline Ltd., the parent company of Windsor, is also facing problems.
One of the biggest oil tanker companies based out of Bermuda, and controlled by Norwegian billionaire John Fredriksen, Frontline posted a net loss of US$12.1-million in the first quarter, and warned the company will need to restructure if cash flows from operations do not satisfy liquidity requirements. New York-based Overseas Shipholding Group Inc. also filed for bankruptcy in late 2012, blaming adverse market conditions.

The changing oil flows mean much of the U.S. oil tanker movement is restricted to shipments within domestic ports that are handled by smaller vessels. In addition, the so-called Jones Act stipulates only U.S.-flagged carriers can ship within the domestic ports, hurting the prospects of foreign-registered ships.

There is a mismatch between the economics of the oil industry and the economics of the shipping industry

In the midst of the downturn, VLCCs that were ordered prior to the U.S. production boom continue to enter the market, further depressing spot rates. VLCCs earned an average of US$10,907 a day last year, the lowest in 16 years, and rates remain “subdued” this year, according to the International Energy Agency.

“The lesson from Windsor is that especially in markets evolving rapidly, your business model and your business structure is absolutely critical,” said Darryl Anderson, managing director at Wave Point Consulting, based in Victoria. “In this case, companies that were chartering Windsor only needed them on the margins. The company was not structured for long-term stability in cash flow, in a market with tight freight rates.”

Large oil-tanker outlook could improve in North America if new shipping routes are opened, analysts say. The United States is contemplating scrapping an export ban on crude oil exports, which could boost tanker demand, although VLCCs may be the last to benefit as the Panama Canal is not equipped to handle such large carriers yet.

TransCanada Corp.’s proposal to build the Energy East pipeline project that ends at a shipping terminal in Saint John, N.B. could also boost the shipping industry, Mr. Holloway said.

Baltic Trade Index Decline – Sinks Shipping Sector Hopes

After a brief rally past 2000 the index has been on a steady decline to the 800 level.

Stock prices are still in the ” waiting for proof of life” stage .
11 July 2014

Baltic Dry Index (BDI)    -22   814 
Rates

BCI (Cape index) BPI (Panamax index) BSI (Supramax index)
INDEX 1465 -58 679 -23 679 -2
SPOT TC AVG (USD) 11149 -556 5432 -181 7099 -19
YESTERDAY (USD) 11705 5613 7118
YEAR AGO (USD) 14182 8725 9376

Spot  TC Average = The Average Value of the Main Shipping Routes applicable for each of the 3 types of Ships
BDI=The Weighted Composite Index of BCI/BPI/BSI

VLCCF has moved down sharply in the past week;

KNIGHTSBRIDGE TANKERS LTD(VLCCF:NASDAQ, US)

12.72USDDecrease0.12(-0.93%)Volume: 
Below Average
As of 11 Jul 2014 at 10:31 AM EDT.

QUOTE DETAILS

Open 12.81 P/E Ratio (TTM) 26.2x
Last Bid/Size 12.72 / 2 EPS (TTM) 0.49
Last Ask/Size 12.75 / 2 Next Earnings 13 Aug 2014
Previous Close 12.84 Beta 0.90
Volume 37,971 Quarterly Dividend 0.2000
Average Volume 562,298 Dividend Yield 6.29%
Day High 12.90 Ex-Dividend Date 20 May 2014
Day Low 12.64 Shares Outstanding 30.5M
52 Week High 16.32 # of Floating Shares 11.83527M
52 Week Low 7.00 Short Interest as % of Float 14.94%
DRIP Eligible No

Dryships, often taken as a bellweather of the sector recovery  has retreated from $3.50 level

DRYSHIPS INC(DRYS:NASDAQ, US)

3.00USDDecrease0.007(-0.23%)Volume: 
Above Average
As of 11 Jul 2014 at 10:32 AM EDT.

QUOTE DETAILS

Open 3.01 P/E Ratio (TTM)
Last Bid/Size 3.00 / 93 EPS (TTM) -0.36
Last Ask/Size 3.01 / 133 Next Earnings
Previous Close 3.01 Beta 2.44
Volume 1,277,430 Last Dividend
Average Volume 4,102,948 Dividend Yield 0.00%
Day High 3.05 Ex-Dividend Date
Day Low 2.98 Shares Outstanding 454.9M
52 Week High 5.00 # of Floating Shares 440.086M
52 Week Low 1.80 Short Interest as % of Float 2.18%
DRIP Eligible No
chart
Diana Shipping is generally regarded as better managed and financially stable but it too has retreated

DIANA SHIPPING INC(DSX:NYSE, US)

10.16USDDecrease0.0398(-0.39%)Volume: 
Below Average
As of 11 Jul 2014 at 10:33 AM EDT.


QUOTE DETAILS

Open 10.23 P/E Ratio (TTM)
Last Bid/Size 10.16 / 1 EPS (TTM) -0.27
Last Ask/Size 10.18 / 3 Next Earnings 30 Jul 2014
Previous Close 10.20 Beta 1.38
Volume 39,854 Last Dividend
Average Volume 474,665 Dividend Yield 0.00%
Day High 10.23 Ex-Dividend Date
Day Low 10.15 Shares Outstanding 83.4M
52 Week High 13.93 # of Floating Shares 68.11239M
52 Week Low 9.65 Short Interest as % of Float 2.29%
DRIP Eligible No

Shipping Sector – Still Struggling to The Light At The End Of The Dock

Navios Maritime Acquisition Corp.

NNA : NYSE : US$3.58
HOLD 
Target: US$3.75
Energy — Maritime
SHIFTING GEARS
Investment recommendation
Initiating coverage with a HOLD rating and $3.75 price target

Investment highlights

 Strong brand and long-term relationships creates market
opportunity: As part of the Navios group of companies, management
maintains significant relationships throughout the industry,
particularly with banks, that allow it to see distressed deals earlier
than many of its competitors. Furthermore, the company has
proven access to multiple forms of capital and has demonstrated an
ability to think creatively and move quickly to seize opportunities.
 Focus on growing attractive VLCC segment: Recently, NNA has
focused its capital on growing in the VLCC segment, particularly
secondhand vessels. We believe this is an attractive strategy, as we
think that 5-10 year old secondhand VLCCs are currently one of the
most undervalued segments of the tanker market.

 Capital structure and employment strategy supports dividend: NNA
maintains a relatively long-term capital structure through a mixture
of term loans and senior notes, which, combined with high period
charter coverage, help support a healthy dividend of 5.6% per year.
Upside exposure to the market is primarily through profit sharing
arrangements. We believe this is a more conservative approach to
the segment.

Valuation
Our forward, normalized NAV (2016E) is $3.43 per share, not including $0.60 of dividends expected over that time frame. As such, we believe the stock is fairly valued at current levels and initiate coverage with a HOLD rating and $3.75 price target.
We use a 1.1 multiple to value the stock due to an above average, sustainable dividend, and relatively low cost structure

09 July 2014

Shipping Index Remains Under Pressure
Baltic Dry Index (BDI)    -18   863 
Rates

È

BCI

(Cape index)

BPI

(Panamax index)

BSI

(Supramax index)
INDEX

1648

-107

710

+6

684

-3

SPOT TC AVG (USD)

12524

-627

5677

+42

7150

-35

YESTERDAY (USD)

13151

5635

7185

YEAR AGO (USD)

13963

8139 9449

 

Crashing Iron Ore May Lift Dryships

from Motley Fool

DryShips (NASDAQ: DRYS ) has been beating on this drum for months: Iron ore prices have been in a tailspin and the domino effect looks bullish for the dry shipping industry. On June 13, Morgan Stanley came out with a report that echoed exactly what George Economou, CEO of DryShips, has been saying all along.

Look out below!
In the report, Morgan Stanley dropped its estimate for iron ore prices to average $105 a ton this year compared to previous forecasts of $118 back in May and $135 last year. For 2015, even worse, as two analysts expect a further decline to an average of $90 per ton. That sounds like more than a temporary blip.

DryShips executives have been emphatic in various interviews, conference calls, and press releases saying that miners have been ramping up their production and it is going to crash iron ore prices. DryShips likewise believes the pressure on iron ore prices will continue for years to come.

Ordering up some ore
The DryShips theory is that cheap and plentiful iron ore orders would begin to accelerate in pace and then be shipped on the high seas to be delivered around the world, especially to China, which would desperately need the cheap iron ore. Much of China’s own domestic mines would be forced to close due to such cheap market prices. This in turn would spark more iron ore shipping demand, higher shipping rates, and greater shipping profits.

The two Morgan Stanley analysts wrote, “As seaborne supply enters a period of vast expansion, cheaper tons will displace higher cost tons in China and elsewhere.” That’s what DryShips’ Economou has been predicting. He’s been a bit off on timing, but maybe he’ll be redeemed shortly.

Of course, the year is half over, so $105 per ton “average” means $95 for the second half of the year, according to Morgan Stanley. The firm reiterated what DryShips has been saying — many Chinese mines simply have operating costs higher than these estimated low prices. It’s simply not worth spending $100 to extract $95 (or less) worth of product. It is cheaper to simply import ore.

So why are rates still depressed?
Expect to see shipping demand and rates pick up gradually over the next several weeks or months. Andrew Shaw, an analyst with Credit Suisse, pointed out that it will take some time for these high-cost Chinese mines to close unless the iron ore prices suddenly undershoot estimates and force faster closures.

DryShips executives have mentioned that most Capesize ships, the ships that carry iron ore, are already locked up in contracts. The remaining available ships for hire on the spot rate are in limited global supply. Once this supply is absorbed, which shouldn’t take long by DryShips’ reasoning, then the pendulum will swing upward in the other direction. For now, the pool of Capesize ships is in a state of “marginal oversupply.” Even a small change where demand outweighs the rest of supply, could mean that rates may run multitudes from current levels as we have seen sometimes in years past including late 2013.

Foolish takeaway
The rapidly changing dynamics of the dry shipping market are exciting to watch. Changes can come seemingly out of left field. Investors should check out the daily rates and read the news on global iron ore supplies while watching this play out. If things work out as DryShips hopes, it could be a rags-to-riches story for the company, and a boon for industry in general.

Shipping Sector : The Recovery That Never Arrived

ultramax_dry_bulk_top.jpgAs we approach midyear 2014, shipping’s economics remain stuck in the doldrums will little or no recovery in sight. The surplus capacity of ships to the cargoes requiring transportation has been aggravated by the delivery of a massive orderbook of new ships that followed the boom markets of the middle of the last decade.

This surplus is not limited to a few markets but, with the possible exception of gas, both LNG and LPG, it has affected the rest and in particular the wet and dry bulk, and the container markets. The effect has been severe as few ships in these markets generate a profit after operating expenses, debt interest and amortization.

Numerous public companies have gone bankrupt as also have many private ones. The German KG funds have been almost completely wiped out and created huge losses for the German shipping banks. The average age of the world fleet is at an historic low, meaning it will be around for at least another decade. Unfortunately when companies go bankrupt or when their ships get arrested and sold, they do not go away but continue to trade with lower capital costs, thereby prolonging the depressed freight markets.

Furthermore a majority of the fleets in most sectors trade in the spot markets without any period charter cover, in the false expectation that markets will recover or secondhand values will increase.

This however ignores the facts that shipyard capacity remains high and in countries like Korea and China has now become a strategic industry supported with domestic banks funding the construction period and government funds backing Export Credit. All without any secure operating income from charters.

Unfortunately this rush to order new ships has been fueled by an influx of new money, both equity and bonds from Private Equity and Hedge Funds that are gambling on ship values and not the long-term revenue streams from operations.

The vast majority of the ships on order today have no contractual employment and no evidential income other than indications of future ship values referenced back to the boom years of 10 years ago.

Some have likened this influx of new money to the “Blind Capital” of the mid-1800s. “Credulous capital, ignoring risks, flooding into unwise investments”.

There is no sign of any investment interest from Mutual Funds or Institutional Investors such as Pension Funds or Life Insurance companies which are usually averse to short term gambles. The speculative day traders have fun playing the rumors and the price volatility of the publicly traded companies.

Even more surprising is the activity of some of the Private Equity funds buying distressed bank debt at marginal discounts. If a shipowner cannot serve his existing bank debt, how is he going to service the new owners of the debt who have much higher expectations of return on their investments than simple bank margins?

It has been said that some of these funds are looking for default so they can convert the loans to equity, take over the ships and sell them for a profit. The track record of these deals so far is not good and the current focus on newbuildings only extends the excess fleet capacity and prolongs the lower freight rates which are the key economic of the shipping industry.

The list of publicly traded shipping companies on the New York stock exchanges is the worst performing of any sector. Original equity has been emasculated by secondary offerings and huge secured debts that in many cases today exceed the current market value of the ships that are the security. In the past 12 months we have seen the emergence of new forms of “Junk Bonds”, with double digit interest rates, which rapidly escalate on default and look more like the Cash Advance lending that proliferates among the poor. This junk is surprisingly not shown as debt in the borrower’s balance sheets and is ironically named as “Perpetual”.
So while new money is finding the shipping industry what is the outlook for the services it provides?

The freight markets for most ship types remain severely depressed because of the excess capacity that was generated from the new-building orders that followed the brief boom of 10 years ago, and then faced the financial crises and the global recession that still envelops the world today.

Yet it is reported that some $40bn of newbuilding orders were placed in the first 4 months of 2014.

This current reckless activity in ordering hundreds of new ships will only extend further the bad markets and push any balancing between supply and demand into the next decade, at the earliest. The claims of fuel economies of the new ships will not force earlier scrapping as the older ships will have less capital invested in them and can be maintained to operate until they are at least 20 years old.

There is no evidence of any increased demand for shipping, except in the gas sectors, and the newfound resources of oil and gas in the USA will have a negative effect on crude oil shipments. This may well be compounded by the new pipelines between Russia and China, the reduction in consumption of gasoline in China and the expansion of “Fracking” in Europe. The USA will reduce its imports of crude oil by at least 50% in the next 10 years and convert its trucking fleets to natural gas by 2025.

It unfortunately will take several years before the current influx of new money faces the reality that it is operating income that makes a business and not the fluctuating values of the operating assets.
Source: First International Corporation

Ship owners invest $18.4 billion during April for newbuildings and second hand vessels

shipbuilding_frontview_shipyard_top.jpgShip owners around the world have kept on piling up newbuilding orders as demand for modern tonnage has remained unabated during the month of April. According to data compiled by shipbroker Golden Destiny, a total of $16 billion was invested in newbuilding orders during April, with an additional $2.4 billion headed for second hand tonnage. Newbuilding orders were up by 7% on the month and up by 53% on the year. A total of 318 vessels were contracted, while 181 new orders were reported at an undisclosed price. In terms of second hand vessel pruchases, Golden Destiny reported a decline of 54% on a monthly basis and a fall of 30%, compared to the same month of last year. A total of 93 vessels were traded.

According to the shipbroker’s analysis, “April ended with unexpected downward pressure in the performance of dry freight market as oversupply of vessels seems to head downwards the freight market recovery. World economy in a recovery mode with fears of slowdown from the weaker performance of Chinese economy that also shadows the freight performance of dry bulkers. Chinese economic growth slowed down to 7.4% during the first quarter of the year, but its iron ore appetite stays solid and is expected to bring future firmness in Baltic Dry Index that now tries to stay afloat above the psychological barrier of 1,000 points. A downward pressure is also witnessed in the performance of crude freight rates, while the container market tries to benefit from the gradual recovery of developed Eurozone to resolve the key issue of “oversupply”. The significant upturn of dry and wet freight market, during the first quarter of the year, resulted also in a continued upward momentum of shipping investments that now has started to slow, but asset prices have not yet followed the downward incline of freight market. Investors seem that wait to see the performance of freight market and development of asset prices in the coming days in order to renew their investment strategy”, said Golden Destiny.

It added that “2014” signals to be one more challenging year with threats and investment opportunities as asset prices remain significantly at lower levels compared with their 10 years average prices. Vessels oversupply is very likely to be rebalanced with demand growth this year for the first time since the first downturn in 2009, but it is too early to confirm this trend as newbuilding appetite keeps high and refuels the existence of imbalance between vessels’ supply growth and demand”.

The shipbroker also noted that “overall, S&P activity in the secondhand market for April 2014 ended on lower levels than last month and even last year. Scrapping activity is also showing slower volume and newbuilding appetite persists on the high side. Despite the downward incline of secondhand purchasing appetite in April, shipping players keep much higher levels of activity from last year. During January-April 2014, the average number of weekly reported S&P transactions is 35 vessels, up by 40% year-on-year compared with 25 vessel purchases in the first four months of 2013 and up by 67% from 2012 levels (21 vessel purchases).
Compared with the investments in the secondhand market, in terms of number of vessels, the ordering appetite for the construction of new vessels is 97% higher than the number of vessels purchased by shipping players worldwide. During the first four months of 2014, the average number of weekly reported new orders was 69, up by 86% year-on-year (37 new orders on average reported per week in January-April 2013) and up by 165% from 2012 levels. (26
new orders on average reported per week in January-April 2012)”, said Golden Destiny.

DEMOLITION MARKET
“In the demolition market, the scrapping appetite of shipping players shows almost similar levels of last year with a soft downward incline from 2013 and 2012 levels. Record scrapping appetite in the container segment supports strong ship recycling business for the shipyard in India that offered very alluring levels of disposal rising to excess $500/ldt.
During January-April 2014, the average number of weekly reported demolitions represents 16% year-on-year decline with 16 vessels reported on average per week in 2014 compared with 19 vessels disposals per week in 2013 and 20 vessel disposals in 2012″, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

 

U.S. Ruling Loosens Four-Decade Ban On Oil Exports- Tanker Stocks May Benefit

Shipments of Unrefined American Oil Could Begin As Early As AugustJune 24, 2014 5:14 p.m. ET Wall Street Journal
The Obama administration has quietly cleared the way for the first exports of unrefined American oil in four decades, allowing energy companies to chip away at the long-standing ban on selling U.S. crude overseas.

Federal officials have told two energy companies that they can legally export a kind of ultra-light oil that has become plentiful as drillers tap shale formations across the U.S. With relatively minimal processing, oil shipments could begin as early as August, according to one industry executive involved in the matter.

Using a process known as a private ruling, the U.S. Commerce Dept.’s Bureau of Industry and Security is allowing Pioneer Natural Resources Co. of Irving, Texas, and Enterprise Products Partners LP of Houston to export ultra-light oil known as condensate to foreign buyers who could turn it into gasoline, jet fuel and diesel.

Both companies confirmed they had received the rulings.

Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself. The Administration’s new approach, which hasn’t been publicly announced, redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.

The Commerce Department said the companies have improved the processing of the crude in a way that qualifies it for export, even though the oil wouldn’t count as being traditionally refined. Exactly how the agency defines condensate and remains unclear.

The first shipments are likely to be small, but could ultimately encompass a lot of the 3 million barrels a day of oil that energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export

Tankers to benefit from more energy exports, Jefferies says • 11:59 AM

  • While refiner stocks are tumbling on fear that margins will be hurt as the U.S. begins to allow U.S. condensate exports, the sensational headline speculating on the end of the oil export ban “is a long way from giving two companies export permissions to full U.S. crude exports.”
  • However, Jefferies analysts say the news is a near-term positive for tanker companies that ship oil, such as Frontline (FRO -4.6%) and Nordic American Tanker (NAT +1.3%).
  • Even while condensate export volumes are likely to be limited, any increase in export volumes should have a net positive impact on the crude oil tanker market, the firm says, with any heavy condensate volumes exported out of the U.S. to be carried out on either Aframax crude oil tankers and/or Panamax crude oil tankers.

TEEKAY TANKERS LTD(TNK:NYSE, US)

4.20USDDecrease0.03(-0.71%)Volume: 
Average
As of 25 Jun 2014 at 10:59 AM EDT.

QUOTE DETAILS

Open 4.18 P/E Ratio (TTM) 17.6x
Last Bid/Size 4.19 / 24 EPS (TTM) 0.24
Last Ask/Size 4.20 / 1 Next Earnings 4 Aug 2014
Previous Close 4.23 Beta 2.10
Volume 184,389 Quarterly Dividend 0.0300
Average Volume 782,689 Dividend Yield 2.86%
Day High 4.29 Ex-Dividend Date 15 Apr 2014
Day Low 4.18 Shares Outstanding 83.7M
52 Week High 5.08 # of Floating Shares 62.75428M
52 Week Low 2.49 Short Interest as % of Float 13.74%
chart

KNIGHTSBRIDGE TANKERS LTD(VLCCF:NASDAQ, US)

BuySell
14.69USDIncrease0.12(0.82%)Volume: 
Average
As of 25 Jun 2014 at 11:00 AM EDT.

 

QUOTE DETAILS

Open 14.53 P/E Ratio (TTM) 29.8x
Last Bid/Size 14.68 / 4 EPS (TTM) 0.49
Last Ask/Size 14.69 / 8 Next Earnings 13 Aug 2014
Previous Close 14.57 Beta 0.95
Volume 120,159 Quarterly Dividend 0.2000
Average Volume 431,246 Dividend Yield 5.45%
Day High 14.87 Ex-Dividend Date 20 May 2014
Day Low 14.50 Shares Outstanding 30.5M
52 Week High 16.32 # of Floating Shares 11.83527M
52 Week Low 6.50 Short Interest as % of Float 14.67%

Shipping Sector : Zack’s Updates / Ratings DRYS and TNK

23 June 2014Baltic Dry Index (BDI)    -18   886 
Rates

BCI

(Cape index)

BPI

(Panamax index)

BSI

(Supramax index)
INDEX

1896

-54

452

-9

701

-3

SPOT TC AVG (USD)

14569

-564

3628

-74

7330

-26

YESTERDAY (USD)

15133

3702

7356

YEAR AGO (USD)

12158

7451 9722
DryShips, Inc. (DRYS) was a big mover last session, as the company saw its shares rise over 7% on the day. The move came on solid volume too with far more shares changing hands than in a normal session. This continues the recent uptrend of the company, as the stock has gained nearly 11% in the past one-month time frame.
This ocean transportation and offshore drilling services company has seen no estimate revision in the last 7 days. The Zacks Consensus Estimate hasn’t been in trend either. Yesterday’s rally is encouraging though, so make sure to keep a close watch on this firm in the near future.
DryShips currently has a Zacks Rank #3 (Hold) while its Earnings ESP is negative.
Some other Medical Drug stocks worth considering are Euroseas, Ltd. (ESEA), Global Ship Lease, Inc. (GSL) and Kirby Corp.(KEX). All the three stocks hold a Zacks Rank #2 (Buy).
Teekay Tankers Ltd. (TNK) was a big mover last session, as the company saw its shares rise nearly 11% on the day. The move came on solid volume too with far more shares changing hands than in a normal session. This breaks the recent trend of the company, as the stock is now trading above the volatile price range of $3.46 to $3.88 over the past one-month time frame.None of the estimates for this shipping stock were revised over the past 30 days. The Zacks Consensus Estimate also remained unchanged during the same time frame.  The recent price action is encouraging though, so make sure to keep a close watch on this firm in the near future.Teekay Tankers carries a Zacks Rank #3 (Hold), while its Earnings ESP is 0.00%.

TEEKAY TANKERS LTD(TNK:NYSE, US)

4.39USDIncrease0.1402(3.30%)Volume: 
Above Average
As of 23 Jun 2014 at 11:08 AM EDT.

 

QUOTE DETAILS
Open 4.27 P/E Ratio (TTM) 17.7x
Last Bid/Size 4.39 / 26 EPS (TTM) 0.24
Last Ask/Size 4.40 / 2 Next Earnings 4 Aug 2014
Previous Close 4.25 Beta 2.11
Volume 578,556 Quarterly Dividend 0.0300
Average Volume 590,429 Dividend Yield 2.73%
Day High 4.45 Ex-Dividend Date 15 Apr 2014
Day Low 4.17 Shares Outstanding 83.7M
52 Week High 5.08 # of Floating Shares 62.75428M
52 Week Low 2.49 Short Interest as % of Float 13.74%
chart

However, some better-ranked stocks in the same sector include China COSCO Holdings Company Limited (CICOY), Euroseas, Ltd.(ESEA) and Global Ship Lease, Inc. (GSL). All these stocks hold a Zacks Rank #2 (Buy).

Overview: Teekay Tankers Ltd.

TEEKAY TANKERS LTD(TNK:NYSE, US)

4.13USDIncrease0.299(7.81%)Volume: 
Above Average
As of 20 Jun 2014 at 12:01 PM EDT.

 

TNK shares are  owned by Jack A. Bass Managed Accounts

QUOTE DETAILS

Open 3.82 P/E Ratio (TTM) 15.9x
Last Bid/Size 4.11 / 9 EPS (TTM) 0.24
Last Ask/Size 4.13 / 5 Next Earnings 4 Aug 2014
Previous Close 3.83 Beta 2.10
Volume 944,325 Quarterly Dividend 0.0300
Average Volume 384,109 Dividend Yield 2.91%
Day High 4.14 Ex-Dividend Date 15 Apr 2014
Day Low 3.82 Shares Outstanding 83.7M
52 Week High 5.08 # of Floating Shares 62.75428M
52 Week Low 2.49 Short Interest as % of Float 13.74%

 

Teekay Tankers

With a market cap of $308.4 million, Teekay Tankers Ltd.(TNK) pays a regular quarterly dividend of $0.03 per share. Meanwhile, its parent company, Teekay Corporation (TK), has a market cap of $4.2 billion.

 

 

In December 2007, Teekay Tankers Ltd. was formed by Teekay Corporation in order to expand its conventional oil tanker business. As its majority shareholder, TK manages all the TNK assets and operations, including its marine systems and standards. Plus, Teekay Tankers owns a minority interest in Tanker Investments Ltd.

Currently, TNK owns a fleet of 27 double-hull vessels, including 11 Aframax tankers, ten Suezmax tankers, three Long Range 2 (LR2) product tankers, three Medium-Range (MR) product tankers, and one time-chartered Aframax tanker. All these vessels are managed by Teekay Tankers Management Services Ltd., an affiliate of TK, using a mix of short- and medium-term fixed-rate time-charter contracts and spot tanker market trading. TNK also owns a Very Large Crude Carrier (VLCC) through a 50% owned joint venture.

Trading at a beta of 2.1, TNK recorded an increase of 34.2% compared to a rise of 17.4% by S&P 500. Meanwhile, peers like Frontline Ltd (FRO), Nordic American Tanker Ltd. (NAT), and DHT Holdings Inc. (DHT) have recorded 26.2%, 4.7%, and 58.5% increases, respectively, in the past year. Teekay Corp. (TK), which is a part of the top fund holdings of the Guggenheim Shipping ETF (SEA), recorded an increase of 51.4% in the past year. Teekay Offshore Partners LP (TOO) and Teekay LNG Partners LP (TGP) are also a part of the top fund holdings of SEA.

Let’s discuss in detail TNK’s fixed dividend payout policy, balanced fleet chartering mix, and transformation to a full-service conventional tanker platform. Find out more in the next part of this series.

eekay Tankers’ dividend policy

TNK has a secure dividend payment policy, mainly contributed by factors like fixed-rate, time-charter contracts, which provide stable cash flows, creditworthy counterparties, and a favourable debt profile, with no covenant concerns or large principal payments until 2015.

 

Div YieldEnlarge Graph

 

With a significant interest alignment of Teekay Tankers and Teekay Corporation, TNK acts like the growth vehicle for TK’s tanker franchise. As per Teekay Tankers’ current fixed dividend policy, the company paid its first quarter 2014 dividend of three cents per share, its 26th consecutive quarterly dividend. Its dividend is currently fixed at an annual level of 12 cents per share, payable quarterly.

Comparatively, peers like Frontline Ltd (FRO), Nordic American Tanker Ltd. (NAT), and DHT Holdings Inc. (DHT) record dividend yields of 0%, 10.2%, and 1.16%, respectively. Teekay Corp. (TK), part of the Guggenheim Shipping ETF (SEA), records a dividend yield of 2.1%.

TK is further motivated to grow Teekay Tankers’ dividends through a performance fee that entitles Teekay Corp. to 20% of TNK’s cash flow in excess of $3.20 per share—provided that the shareholders have first received a minimum per-share dividend of $2.65 in the preceding years.

Tax treatment on U.S. distributions

For federal income tax purposes, the distributions that TNK pays to its U.S. shareholders would be treated as dividends to the extent the distributions come from earnings and profits (E&P) and non-dividend distribution or a return of capital to the extent the distributions exceed E&P. On the contrary, distributions to a non-U.S. shareholder won’t be subject to U.S. federal income tax or withholding tax if the non-U.S. shareholder isn’t engaged in a U.S. trade or business.

First quarter performance

In the first quarter of 2014, Teekay Tankers earnings and cash flow significantly improved, as it benefitted from operating leverage in a recovering tanker market. Notably, during the cyclically low tanker market of the past several years, TNK has maintained fixed-rate coverage between 40% and 50%, which safeguards its earnings from the market downside.

For the quarter, cash available for distribution was 36 cents per share, as compared to 10 cents per share in the first quarter of 2013.

Teekay Partners Ltd. benefits from its parent company’s reputation for quality service and higher utilization that comes from trading within pools. This helps TNK maximize its cash flows from the spot market–traded vessels and allows it to pay higher dividends to shareholders.

Teekay Tankers has transformed to a large global marine midstream services provider from a small regional player.

Browse this series on Market Realist:

Shipping Sector Moving On Monday

The proverbial problem of  how difficult it is to turn a big ship in an ocean of troubles seems to be resolved this morning.

As noted last week Jack A. Bass Managed accounts added to TNK

 

80USDIncrease0.10(2.70%)Volume: 
Below Average
As of 09 Jun 2014 at 11:41 AM EDT.


QUOTE DETAILS

Open 3.67 P/E Ratio (TTM) 15.4x
Last Bid/Size 3.80 / 3 EPS (TTM) 0.24
Last Ask/Size 3.81 / 5 Next Earnings 4 Aug 2014
Previous Close 3.70 Beta 2.10
Volume 107,869 Quarterly Dividend 0.0300
Average Volume 472,282 Dividend Yield 3.16%
Day High 3.80 Ex-Dividend Date 15 Apr 2014
Day Low 3.65 Shares Outstanding 83.7M
52 Week High 5.08 # of Floating Shares 62.75428M
52 Week Low 2.49 Short Interest as % of Float 12.80%

 

LATEST COMPANY NEWS

Teekay Tankers Announces New CEO

28 May 2014 – ACQUIREMEDIA
HAMILTON, BERMUDA—- 05/28/14– Teekay Tankers Ltd. today announced the appointment of Mr. Kevin J. Mackay as Chief Executive Officer of Teekay Tankers, effective June 20, 2014.. Mackay will join Teekay Tankers from Phillips 66 Corporation, where he is currently head of the global marine business unit for this industry-leading downstream company.

COMPANY DESCRIPTION

Teekay Tankers Ltd. is an international provider of marine transportation to global oil industries. The Company’s business is to own crude oil and product tankers. The Company is wholly owned subsidiary of Teekay Corporation. The Company’s operations are managed by Teekay Tankers Management Services Ltd., a subsidiary of Teekay Corporation, which provides to it commercial, technical, administrative and strategic services. As of February 1, 2013,

KNIGHTSBRIDGE TANKERS LTD(VLCCF:NASDAQ, US)

15.99USDIncrease0.25(1.59%)Volume: 
Average
As of 09 Jun 2014 at 11:44 AM EDT.

QUOTE DETAILS

Open 15.74 P/E Ratio (TTM) 32.2x
Last Bid/Size 15.98 / 10 EPS (TTM) 0.49
Last Ask/Size 15.99 / 1 Next Earnings 13 Aug 2014
Previous Close 15.74 Beta 0.95
Volume 253,252 Quarterly Dividend 0.2000
Average Volume 701,779 Dividend Yield 5.00%
Day High 15.99 Ex-Dividend Date 20 May 2014
Day Low 15.60 Shares Outstanding 30.5M
52 Week High 16.25 # of Floating Shares 11.83527M
52 Week Low 6.10 Short Interest as % of Float 12.22%
chart

DRYSHIPS INC(DRYS:NASDAQ, US)

3.21USDIncrease0.0524(1.66%)Volume: 
Above Average
As of 09 Jun 2014 at 11:45 AM EDT.

 

QUOTE DETAILS

Open 3.19 P/E Ratio (TTM)
Last Bid/Size 3.21 / 310 EPS (TTM) -0.36
Last Ask/Size 3.22 / 182 Next Earnings
Previous Close 3.16 Beta 2.42
Volume 2,772,099 Last Dividend
Average Volume 5,552,405 Dividend Yield 0.00%
Day High 3.23 Ex-Dividend Date
Day Low 3.15 Shares Outstanding 454.9M
52 Week High 5.00 # of Floating Shares 440.086M
52 Week Low 1.65 Short Interest as % of Float 2.58%
chart

DIANA SHIPPING INC(DSX:NYSE, US)

BuySell
11.52USDIncrease0.06(0.52%)Volume: 
Above Average
As of 09 Jun 2014 at 11:45 AM EDT.

 

QUOTE DETAILS
Open 11.45 P/E Ratio (TTM)
Last Bid/Size 11.51 / 2 EPS (TTM) -0.27
Last Ask/Size 11.52 / 3 Next Earnings 30 Jul 2014
Previous Close 11.46 Beta 1.36
Volume 323,619 Last Dividend
Average Volume 299,304 Dividend Yield 0.00%
Day High 11.57 Ex-Dividend Date
Day Low 11.44 Shares Outstanding 83.4M
52 Week High 13.93 # of Floating Shares 68.11239M
52 Week Low 9.38 Short Interest as % of Float 2.29%

Cautiously Looking To Shipping Sector

Very , very  cautious. Just because it is hard hit – does not mean it has hit bottom.

Having said that : Jack A. Bass Managed Accounts bought a few shares in Teekay at $ 3.58 this morning.

TEEKAY TANKERS LTD(TNK:NYSE, US)

3.60USDIncrease0.10(2.86%)Volume: 
Below Average
As of 05 Jun 2014 at 12:22 PM EDT.

QUOTE DETAILS

Open 3.49 P/E Ratio (TTM) 14.5x
Last Bid/Size 3.59 / 31 EPS (TTM) 0.24
Last Ask/Size 3.60 / 1 Next Earnings 4 Aug 2014
Previous Close 3.50 Beta 2.10
Volume 194,420 Quarterly Dividend 0.0300
Average Volume 511,414 Dividend Yield 3.33%
Day High 3.60 Ex-Dividend Date 15 Apr 2014
Day Low 3.43 Shares Outstanding 83.7M
52 Week High 5.08 # of Floating Shares 62.75428M
52 Week Low 2.49 Short Interest as % of Float 12.80%
chart
Nordic American Tankers (NYSE: NAT  ) announced this week that it agreed to acquire two Suezmax vessels for $36.6 million apiece. The ships, which were built in 2005, will expand Nordic American Tankers’ fleet to 22 Suezmaz ships. It’s a move that should also fuel future dividend increases at a company that already yields more than 11%.Sticking with what works Nordic American Tankers noted that these ships are essentially sister ships to the rest of its fleet, as the company’s business model is built around only owning Suezmax ships. The company notes this is of significant importance, as it provides both operational and cost synergies that enable the company to earn more money, which it, in turn, sends back to investors in the form of a very hefty dividend.This is a bit of a different approach than competitors like Frontline (NYSE: FRO  )  which has a bit more of a diversified fleet consisting of 17 Suezmax vessels and 29 Very Large Crude Carriers, or VLCCs — and Teekay Tankers (NYSE: TNK  ) , which is also diversified, as it owns a fleet of Aframax tankers, Suezmax tankers, product tankers, and one VLCC. For Nordic American Tankers, its focus on simplicity is what it’s using to fuel its extra-large dividend to investors.
The overall improvements in the tanker market was also apparent last quarter at Teekay Tankers, as it had a solid first quarter. Teekay Tankers reversed its year-ago loss, and declared its fixed-quarterly dividend of $0.03 per share. That fixed divided, while much lower, is a nice anchor in for investors, though its payout has also fluctuated wildly during the past few years. Frontline, on the other hand, hasn’t yet experienced the turn in the market, as the company turned in another net loss on the quarter, which is why it didn’t declare a dividend for the quarter.

 

Follow

Get every new post delivered to your Inbox.

Join 1,944 other followers