Factors attracting tanker companies
Despite a fall in the crude oil prices, tanker firms are looking to raise capital through the US markets. Crude prices recorded a dip of 46.8% in 2014.
The positive factors benefiting these companies are lower bunker fuel prices and oil demand among bargain hunters. Companies like Teekay Tankers (TNK), DHT Holdings (DHT), Frontline Ltd. (FRO), and Tsakos Energy Navigation Ltd. (TNP) also benefited from these positive factors. The factors also benefited the broader industry (SEA).
In the week of January 22, 2015, the average earnings for supertankers—a tanker with a deadweight capacity of over 75,000 tons—reached over $83,000. This is close to the record high levels of $120,000 per day. These levels were reached before the 2008 slump in trade.
Currently, companies are looking to raise capital. They’re looking to take advantage of the strengthening market.
In 4Q14, demand for crude tankers remained strong due to record global oil production and robust seasonal demand, analyst Ben Nolan of Stifel commented. VLCC (very large crude carrier) vessels reached their highest levels of 2014 at over $66,000 per day in mid-December. Suezmax and Aframax vessels’ charter rates averaged $41,000 and $32,000, respectively, per day in 4Q14. This is almost double the amount in 4Q13. This was partially due to strong Iraqi crude exports.
Companies seeking listing
Tankships is among the companies that set out plans for share issues. Tankships is a unit of DryShips (DRYS). DryShips is a shipping firm led by Greek magnate George Economou and Belgian crude oil tanker group Euronav. Euronav went ahead with its NYSE listing in an initial public offering, or IPO, worth ~$175 million on January 20, 2015. Tankships is looking for a $100 million NASDAQ listing under the ticker TNKS.
Norway’s leading investment bank, DNB Markets, is acting as the sole bookrunner for Tankships’ IPO.
In the next part of this series, we’ll discuss what Tankships said about its IPO and its general risks.