Euronav Responses to a Weaker Tanker Market
The Belgium-based crude oil tanker company Euronav has taken affirmative action in response to a weaker tanker background, said a press statement from the company.
The Company has a strong balance sheet with low leverage and access to over USD 800 million of liquidity following its entry into the debt capital markets during Q2.
High quality fixed income (the FSO vessels and 4 x 7 year Suezmax time charters) secured via strong relationships and with visibility to 2025 provides Euronav's stakeholders with additional security which will now be reflected in our upgraded return to shareholders policy.
Euronav takes its responsibility as steward of capital seriously and management believes that possessing a strong yet flexible capital structure will be critical in the next 18-24 months.
Euronav further believes that the sector is now entering a new phase of the cycle with stabilized prices for modern assets but uncertainty over, and pressure upon, freight rates. Euronav is well positioned to navigate the next stage of the tanker cycle - to be strategically opportunistic whilst remaining exposed to any potential upside from an improved freight rate environment.
So far during the third quarter of 2017, the Euronav VLCC fleet operated in the Tankers International Pool has earned about 20,000 USD and 61% of the available days have been fixed. Euronav's Suezmax fleet trading on the spot market has earned about 14,700 USD per day on average with 60% of the available days fixed.
"We believe that the recent deferral of the required implementation of installing new ballast water treatment systems on all large crude tankers from September 2017 until 2019 will have a negligible impact," said the company.
"Many operators had already de-harmonised their surveying cycle arrangements in anticipation of this legislation so that the original implementation date of 8 September 2017 would, in our view, not have been a specific catalyst for scrapping. However, a significant portion of both the VLCC and Suezmax global fleet is reaching maturity (20 years old or more) between the end of 2017 and end of 2020 during which time both the ballast water treatment directive and reduced sulphur emissions directive will have to be implemented."
In June Euronav sold the VLCC TI Topaz (2002 - 319,430 dwt) for USD 21 million recording a capital loss of USD 21 million. The TI Topaz joined the Euronav fleet in the first quarter of 2005 and has contributed positively over the years to the results of Euronav, especially during strong freight rate years such as 2005, 2006, 2008, 2010, 2015 and 2016.
