Sue Goodridge

Since the BDTI (Baltic Dirty Tanker Index) has fallen by 50% from the beginning of the year, crude tanker stock prices have also fallen.

Pacific Drilling’s (PACD) operating expense-to-revenue ratio stood at 37.5% at the end of 3Q16, similar to the previous quarter’s 37.3% and 3Q15’s 37.7%.

Just like crude tanker rates, most crude tanker stocks also fell in 3Q17.

In October, NAP amended its existing management agreement with Navios Tankers Management. It extended the fleet’s fixed-fee period for commercial and technical management services.

August was the first time in 22 months that China has recorded a YoY increase in imports. Crude oil imports for China are now at a record high.

Wall Street analysts estimate revenues of $270 million in 3Q15 for Pacific Drilling (PACD)—close to the $274 million revenue earned in 2Q15.

Of the five analysts surveyed, 20% recommended a “buy” for Seadrill Partners, 60% recommended a “hold,” and 20% offered a “sell” recommendation.

In Week 28, analysts made no target price revisions or recommendation changes for crude tanker companies.

For 2Q17, analysts estimate that Tsakos Energy Navigation (TNP) will see revenues of $109.8 million, compared with the $138 million we saw in 1Q17.

Refinery margins have fallen throughout most of the world. US Gulf refinery margins for WTI crude lost more than $2 compared to last month’s level.

On February 2, 2017, Morgan Stanley upgraded Seadrill Partners (SDLP) and raised its target price to $8 from $7.

Transocean (RIG) plans to release its 1Q17 results on May 3, 2017, after the market closes.

Pacific Drilling’s (PACD) cash flow from operations was $40.0 million in 4Q16 compared to $59.0 million in 4Q15.

GasLog’s revenue in fiscal 4Q15 was very similar to fiscal 3Q15 revenue. In 4Q15, the company posted revenue of $107.5 million compared to $105.7 million in the previous quarter.

Many offshore drillers have scrapped their older rigs to reduce costs. Although scrapping rigs reduces costs, it also negatively impacts the earnings potential of the company.

VLCC time charter rates were almost constant in week ten of 2016. Otherwise, there hasn’t been a significant move in time charter rates in last few weeks.

Noble Corporation’s (NE) contract drilling revenue was $354.0 million in 1Q17 compared to $591.0 million in the same period last year.

Offshore drilling (XLE) (IYE) is a capital-intensive industry requiring a large amount of money to keep rigs active and well-maintained.

Seadrill will release its 1Q17 results on May 24. In 4Q16, Seadrill’s revenue was $667 million—nearly 10% lower than revenue of $743 million in 3Q16.

DHT Holdings (DHT) was the best-performing stock among peers on a YTD basis.

GasLog Partners plans to release its 2Q17 results before the market opens on July 27. The release will be followed by a conference call on the same day.

In many ways, China is the most important country for the crude oil tanker industry. In this series, we’ll take a close look at China’s March 2017 import-export data and manufacturing sector performance.

In November 2017, China’s manufacturing PMI (purchasing managers’ index) was 51.8. The PMI rose from 51.6 in October.

US products supplied for the week ended March 17, 2017, totaled 19,225 Mbpd (thousand barrels per day), 1% less than in the previous week.

Analysts expect Transocean’s (RIG) 3Q17 EBITDA to fall to $313 million—a 10% fall from $349 million reported in 2Q17 and a 31% fall year-over-year.

After Tsakos Energy Navigation released its 2Q17 results, Maxim Group reduced its target price to $6 from $7 and maintained a “buy” rating on the stock.

The crude tanker index rose in week 36. However, crude tanker stocks had a mixed performance. Average VLCC rates rose from multiyear lows.

Tsakos Energy Navigation’s 1Q16 net revenues fell by 11.6% to $99 million from $112 million in the previous quarter.

On July 20, 2017, average bunker fuel prices were $339.5 per ton—compared to $323 per ton a week ago on July 13, 2017.

Transocean’s top line In 3Q17, Transocean’s (RIG) drilling revenue was $699 million, just 0.8% lower than its revenue of $705 million in the previous quarter, and 21% lower than the $886 million seen in 3Q16. Revenue sources Transocean earns its revenue mainly through floaters. The company sold its jack-up fleet to Borr Drilling in March 2017. […]

In 2Q16, Ocean Rig’s (ORIG) revenue decreased by $56 million to $452 million, as compared to $508 million in 1Q16.

In week 49, the BDTI fell from 820 to 814. In the middle of the week, the index rose to 824 but fell towards the end of the week.

Diamond Offshore (DO) closed at $14.47 on October 12. Over the last month, DO’s stock has had a good run with a 16.3% return.

The consensus 12-month target price for Navios Maritime Partners is $4.83, which implies a potential upside of 40.82% from its market price on July 12.

Nordic American Tankers’ revenue in 3Q16 fell to $71 million—compared to $88 million in 2Q16. Its revenue was 29% lower than its revenue in 3Q15.

Consensus recommendations On January 13, 2017, Credit Suisse downgraded Navios Maritime Midstream Partners (NAP) to “neutral” from “outperform” and decreased the target price to $12 from $13. Only five analysts give recommendations on Navios Maritime Partners. According to Reuters, the consensus rating for the stock is 2.6, which means a “hold.” One analyst has given a […]

In week 19, average VLCC (very large crude carrier) rates dropped from the previous week and are again below $10,000.

The third quarter wasn’t very good for tanker rates. In August 2016, the middle of the third quarter, tanker rates dropped to some of their lowest levels.

For the offshore drilling industry, we believe that the EV-to-EBITDA multiple reflects the perceived riskiness of investing in offshore drilling companies, as well as investors’ expectations for the industry’s outlook.

Euronav thinks that the rise in the orderbook is partly due to the Tier 3 legislation on nitrogen oxide emissions. The legislation is applicable from January 2016.

The time charter rates for one year on VLCCs (very large crude carriers) fell to $43,000 per day on November 25—compared to $45,500 per day the previous week.

Ocean Rig (ORIG) recorded general and administrative expenses of $26.9 million in 2Q16, as compared to $19 million in 1Q16.

The offshore drilling industry made headlines last week, especially Seadrill (SDRL), which reached a 52-week high of $0.73.

According to Weber’s report, VLCC rates for the route from the Arabian Gulf to China fell from $10,809 per day on August 18 to $8,747 per day on August 25.

Tsakos operates a total fleet of 50 tankers and has 15 tankers under construction. Of these 15, seven newbuilds are expected to join the fleet in 2016.

In this series, we’ll look at Wall Street analysts’ recommendations and ratings for offshore drilling companies.

Wall Street analysts expect revenue of just over $21.5 million for Navios Maritime Midstream Partners (NAP) in 2Q17, compared to $21.1 million in 1Q17 and $22.7 million in 2Q16.

In May, no drilling permits were issued in the shallow waters of the Gulf of Mexico. In the first five months of 2018, only two were issued.

Analysts expect a fall in Ensco’s (ESV) EBITDA for 3Q16. Analysts’ estimate for Ensco’s EBITDA in 3Q16 is $221 million—a 58% fall from $532 million in 2Q16.

Bunker fuel prices, the biggest cost to run a ship, are correlated with crude oil prices. For the week ended May 20, the average bunker fuel price was $275–$282 per ton.

Analysts are estimating that Teekay LNG Partners’ 4Q16 revenue will be $110.0 million, which is 10.0% higher than $100.0 million in 3Q16.

The Market has given a consensus rating of “sell” to Transocean (RIG). Of the 37 analysts covering the stock, only 5% have given it a “buy” recommendation.

On March 31, 2017, Atwood Oceanics (ATW) had a backlog of $400 million, which was ~60% lower than the $1 billion it reported on March 31, 2016.

Noble (NE) has a consensus “hold” recommendation based on ratings from 39 analysts covering the stock, according to Bloomberg.

In February 2018, China’s manufacturing PMI (purchasing managers’ index) was 50.3.

Frontline had 61 vessels in its fleet on September 30. The 61 vessels include 22 VLCCs, 18 Suezmax tankers, 20 LR2/Aframax tankers, and one MR vessel.

In 1Q16, Rowan Companies (RDC) had cash flow from operations of $160 million, which was substantially lower than the previous quarter’s $338 million.

China’s crude oil imports hit an all-time high in March. April’s crude oil imports eased—total crude oil imports came in at 34.39 million tons.

Of the 28 analysts covering Ensco, three analysts gave “strong buy” recommendations, while eight analysts gave “buy” recommendations.

On October 20, 2017, Citigroup raised the target price for Navios Maritime Midstream Partners (NAP) to $8 from $7.

Seadrill (SDRL) still has 14 rigs under construction including four drillships, two semisubmersibles, and eight jack-ups.

Of these 36 analysts, one analyst gave Transocean (RIG) a “strong buy,” six analysts gave a “buy” recommendation, and 15 analysts recommended a “hold.”

China’s crude oil imports in March hit a new record. Its total crude oil imports came in at 39.0 million tons, compared to 31.8 million tons in February.

Seadrill’s 2Q16 results are expected to be released on August 25, 2016. The company’s stock has fallen 19% since the start of the year.

In week 12 of 2018, which ended on March 23, the BDTI rose from 635 to 656. In week 11, the index dropped by 18 points.

Noble Corporation plans to release its 2Q17 results on August 3, 2017, after the markets close. It will have a conference call on August 4, 2017.

Crude oil production has gradually fallen since the beginning of 2016, especially on the non-OPEC (Organization of the Petroleum Exporting Countries) side.

The main factor for a bright outlook for the tanker industry is the world oil supply, which is at the highest level ever at 97 million barrels per day. The low price for oil is supporting higher demand.

Diamond Offshore Drilling’s (DO) stock showed a 5% rise as of November 5, 2015, after the company released its 3Q15 earnings on November 2.

In Transocean’s (RIG) 4Q17 conference call, the company provided insights about the offshore drilling industry’s outlook.

For the next five years, Noble needs to pay around $200 million–$300 million in debt every year. Then, the repayment for each year rises to around $400 million or more.

Teekay LNG Partners (TGP) has a total fleet of 87 vessels, out of which 27 vessels are newbuilds under construction. The active fleet of 60 vessels consists of 29 LNG carriers, 21 LPG carriers, and eight conventional tankers.

On September 30, 2016, Euronav (EURN) had long-term debt of ~$1.0 billion. This increased from $952 million at the start of the year.

Ensco’s (ESV) estimated $457 million in revenues in 3Q17 would be a 16.6% fall year-over-year, similar to 2Q17 revenue of $457 million.

GasLog Partners (GLOP) plans to release its 1Q18 results before the market opens on April 27.

GasLog Partners’s (GLOP) fiscal 2016 revenues totaled $228 million—higher than its revenues of $200 million recorded in 2015.

In June 2017, Morgan Stanley upgraded GasLog (GLOG) to “overweight” from “equal weight.”

Wells Fargo raised the target price for Transocean (RIG) to $11 from $9.5. Simmons and Cowen and Company raised Transocean’s target price to $11.

In the week ending December 15, 2017, offshore drilling stocks had mixed returns. Seadrill was the best performer, while Ensco was the worst performer.

Week 51 was a mixed bag for crude oil tanker investors. DHT Holdings (DHT) was the top performer, and Nordic American Tankers (NAT) and Frontline (FRO) were the worst.

Seadrill (SDRL) plans to release its 2Q17 results on August 24. In 1Q17, Seadrill’s revenues totaled $569 million, nearly 14.6% lower than its 4Q16 revenues of $667 million.

In week 28, which ended on July 14, 2017, the BDTI fell from 649 to 644—the fourth consecutive week that the BDTI has fallen.

GasLog (GLOG) has eight newbuilds in the pipeline. Of these, four will be delivered in 2016, and four will be added to the company’s fleet in 2017 and 2018.

Tsako posted revenue of $109 million in 3Q16—9% lower than last quarter’s revenue of $120 million and 23% lower than $141 million recorded in 3Q15.

Offshore drilling stocks had mixed returns in Week 30, which ended July 27. The best performer was Seadrill (SDRL).

Most offshore drilling stocks traded in the green in the week ended July 13. The best performer during the week was Noble.

In week 44, many of the crude tanker stocks traded in the red. Only Frontline and Navios Maritime Midstream Partners traded in the green.

Last week Ensco (ESV) announced its decision to acquire Atwood Oceanics (ATW) in an all-equity transaction.

Navios Maritime Midstream Partners’ (NAP) 1Q17 revenue fell to $21.1 million, as compared to $24.15 million in 1Q16.

Currently, 13 analysts have given recommendations for Euronav (EURN). The consensus rating on the stock is 2.2, which means a “buy.”

The BDTI stood at 739 on June 7, 2016. For the week ending June 3 (Week 22), the BDTI rose to 759 from 735 at the beginning of the week.

After Pacific Drilling released its 3Q16 earnings, no Wall Street analysts either upgraded or downgraded its stock, unlike Diamond Offshore and Rowan Companies.

Rowan Companies’ (RDC) direct operating costs, excluding rebillable items, were $140 million in 1Q18, below its guidance of $150 million–$160 million.

China’s (MCHI) auto sales for the first two months of 2017 were 8.8% higher than sales for the same period in 2016.

Of the 32 analysts covering Ensco (ESV), 44% recommend a “buy” or equivalent for the stock.

Of the 34 analysts covering Diamond Offshore, two analysts gave it a “buy” recommendation, 18 analysts gave it a “hold,” and 14 analysts gave it a “sell.”

In the first quarter, Teekay Tankers’ EBITDA fell to $80.9 million, from $83.9 million in the previous quarter.

In its 1Q17 conference call, Rowan Companies (RDC) shared its outlook on the offshore drilling market.

Newbuild VLCC (very large crude carrier) prices rose in May 2017, and this is the first time we’ve seen a rise in prices this year.

In 4Q17, Transocean’s (RIG) costs increased. With a fall in revenue, Transocean’s drilling-to-revenue ratio rose to 66% in 4Q17 from 46% in 3Q17.