ITCL - Second quarter 2009 and six months results

 

Independent Tankers reports net income of $3.2 million, equivalent to earnings per share of $0.04 for the second quarter of 2009.

Independent Tankers reports net income of $7.1 million, equivalent to earnings per share of $0.09 for the six months ended June 30, 2009.

The Company has secured short term refinancing for the $40.6 million loan drawn in 2008 in connection with purchase of Windsor term notes.

BP extended the charter for the double hull VLCC British Purpose for one year after the fixed period ends in July 2010.

 

 

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.

 

 

The Board of Independent Tankers announces net income of $3.2 million, equivalent to earnings per share of $0.04 for the second quarter of 2009. This compares with a net income of $3.9 million, equivalent to earnings per share of $0.05 for the first quarter of 2009. The decrease in net income is primarily due to foreign exchange movements.

 

The average daily bareboat rates earned in the second quarter by the Company's VLCCs and the Suezmax tanker Front Voyager were approximately $25,400 and $7,900, respectively, compared with approximately $25,700 and $8,000, respectively, in the preceding quarter. The decrease is explained by fluctuations in days between the quarters.

 

Net interest expense was $5.3 million (first quarter 2009: $5.2 million). At June 30, 2009, all of the Company's bond debt of $335.2 million is at fixed interest rates ranging from 6.63% to 8.52%. The Company repaid short term bank facilities of $40.6 million in June, financed by a new $33.0 million short term bank loan and a $7.6 million short term loan from Frontline.

 

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 June 30, 2008 to conform to the current year presentation was $252.0 million.

 

For the six months ended June 30, 2009 the Company announces net income of $7.1 million, equivalent to earnings per share of $0.09 (2008 comparable six months $7.2 million, equivalent to earnings per share of $0.10). Net interest expense was $10.5 million (2008 comparable six months: $12.2 million).

 

In August 2009, the Company has an average cash breakeven rate for its VLCCs and Suezmax tanker of approximately $19,100 and $5,000 per vessel per day, respectively.

 

 

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 June 30, 2009.

 

On July 14, 2009, BP extended the charter for the double hull VLCC British Purpose for one year after the fixed period ends in July 2010. The vessel will continue on a bareboat rate of $24,895 per day until the fixed period ends in July 2010, followed by the same rate structure as for British Pioneer until July 2011.

 

 

74,825,166 ordinary shares were outstanding as of June, 30 2009 and the weighted average number of shares outstanding for the quarter was also 74,825,166.

 

 

The average market rate for VLCCs from MEG to Japan in the second quarter of 2009 was about WS 36 ($ 20,600 per day) compared to about WS 47 ($ 44,000 per day) in the first quarter of 2009.

 

Bunkers at Fujairah averaged approximately $345/mt in the second quarter of 2009 with a high of approximately $424/mt on June 30 and a low of approximately $252/mt on April 1. On August 27, 2009 the quoted bunker price in Fujairah was $442/mt. 

 

The International Energy Agency ("IEA") reported in August 2009 an average OPEC oil production, including Iraq, of 28.5 million barrels per day during the second quarter of the year, a small increase of 30,000 barrels per day from the first quarter of 2009. The next OPEC meeting is scheduled to take place on September 9, 2009.

 

IEA further estimates that world oil demand averaged 83.7 million barrels per day in the second quarter of 2009, 0.8 million barrels less compared to the first quarter of 2009. IEA predicts that the average demand for 2009 in total will be 83.9 million barrels per day, a 2.7 percent decline from 2008.

 

The VLCC fleet totalled 511 vessels at the end of the second quarter with 16 deliveries during the quarter. Throughout 2009 it is expected that a total of 73 VLCC deliveries will take place. The total order book amounted to 200 vessels at the end of the second quarter, down from 217 vessels after the first quarter of 2009, including one cancellation. The current orderbook represents about 39 percent of the VLCC fleet. During the quarter, no new orders were made and there were 10 deletions from the trading fleet of which one was demolished and the rest were conversions to non-tanker regular trade. The total single hull fleet counted 91 vessels at the end of the second quarter.

 

The Suezmax fleet totalled 374 vessels at the end of the quarter, up from 361 vessels after the first quarter of 2009. Fifteen Suezmax tankers were delivered during the quarter, whilst there were two deletions from the trading fleet and no new orders took place. The total orderbook amounted to 147 vessels at the end of the quarter, a decrease of 15 vessels from the end of the first quarter of 2009. There are 74 deliveries expected in 2009 according to Fearnleys and the orderbook represents approximately 39 percent of the current Suezmax fleet. The Single hull fleet totalled 35 vessels at the end of the second quarter.

 

 

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 second half 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 second half of 2009 and 81 percent in 2010. We are slowly building up our cash positions in comfortable pace hence the Company's long term charters. 

 

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.

 

The long term focus is on restructuring the bond debt and UK leasing arrangements within the Company.

 

 

 

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.

 

 

 

August 27, 2009

The Board of Directors

Independent Tankers Corporation Limited

Hamilton, Bermuda

 

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