Euronav NV announces FY 2012 results
Euronav NV announces FY 2012 results, said in the company's press release.
Euronav took delivery of the Suezmax Maria (2012 – 157,523 dwt) and of the Suezmax Capt. Michael (2012 – 157,648 dwt) on 9 and 31 January 2012 respectively. Both vessels are owned in joint venture (50%-50%) with JM Maritime and are traded on the spot market by Euronav directly.
On 6 February 2012 Euronav received an option fee in cash in respect of a purchase option for both the Antarctica (2009 – 316,188 dwt) and the Olympia (2008 – 315,981 dwt) for delivery at the latest in the first half of 2015. The option fee is non-refundable but deductible from the purchase price. If the option is exercised, the purchase price will be slightly under or above the current book value of those ships depending on when the option is exercised.
On 28 February 2012, Euronav took delivery of the VLCC Alsace (2012 – 320,350 dwt) which immediately commenced trading in the TI pool.
On 2 March 2012, the VLCC Luxembourg (1999 – 299,150 dwt) was fixed on time charter contract for a period of 11 months with an option to extend up to an additional 8 months.
On 19 March 2012, Euronav drew down part of the revolving credit facility and the full term loan of the USD 750 million forward start senior secured credit facility concluded in June 2011. The credit facility is comprised of (i) a USD 250 million non-amortising revolving credit facility and (ii) a USD 500 million term loan facility. On the same day the USD 1,600 million facility signed in April 2005 was fully repaid. The USD 750 million senior secured credit facility is secured by 21 of the wholly-owned vessels of the Company’s fleet, comprising of 1 ULCC, 6 VLCCs and 14 Suezmaxes.
In the course of the first quarter 2012, the Company bought back 68 notes of its USD 150 million fixed rate senior unsecured convertible notes, due 2015. The face value of each bond is USD 100,000 and the Company paid an average of USD 78,441 per bond.
The time charter party of the Suezmax Cap Charles (2006 – 158,881 dwt) was extended for 24 months as from 28 April 2012 in direct continuation of the existing contract.
The time charter party of the Suezmax Cap Theodora (2008 – 158,800 dwt) was extended for 36 months as from 16 June 2012 in direct continuation of the existing contract.
The Suezmax Cap Guillaume (2006 – 158,889 dwt) was chartered out for a period of 30 months with a forward start from the fourth quarter of 2012.
The Company fixed its Suezmax vessel Fraternity (2009 – 157,714 dwt) on time charter contract for a period of 12 to 36 months as of 22 August 2012.
The Cap Guillaume (2006 – 158,889 dwt) has started its time charter contract for a duration of 30 months as of 21 October 2012.
On 24 October 2012, the Company sold the VLCC Algarve (1999 – 298,969 dwt) for a price of USD 35,875,000. The vessel was delivered to its new owner on the same day. The capital gain of USD 7.3 million has been recorded whilst the net cash proceeds available to the Company after the mandatory repayment of its debt obligation was USD 17.3 million.
The time charter contract of the VLCC TI Guardian (1993 – 290,927 dwt) which was running until October 2013 and would have cost the Company in charter hire an estimated USD 13 million was terminated in November 2012. She was the oldest vessel of the fleet and was booked as a finance lease. As a result, the company booked a capital gain of USD 2.8 million in the fourth quarter.
The Suezmax Cap Georges (1998 – 146,652 dwt) which is an ice-class vessel was chartered out for the winter starting 1 December 2012.
OFFSHORE
The FSO Asia and the FSO Africa have been operating on the Al Shaheen field over three years and two years and four months respectively. The performance of both vessels was outstanding as they were ‘on hire’ during the entire period.
TI Africa Ltd, the owner of FSO Africa, has signed a new contract agreement with Maersk Oil Qatar (MOQ) for the provision of FSO services on the Al Shaheen field offshore Qatar. The contract has a fixed duration of five years beginning 1 October 2012 with an option granted to MOQ to extend the contract period for either one or two years. The new agreement extends to MOQ use of the full capacity and functionality against an increase of the daily hire earned in each contract year equal to the daily hire rate schedule of the existing service contract for FSO Asia, its sister vessel.
Events occurred after the end of the financial year ending 31 December 2012
On 1 February 2013, the Company has launched an exchange offer on all outstanding bonds with maturity 31 January 2015 in exchange for newly issued convertible bonds maturing 31 January 2018. Bonds for a total of USD 125 million were tendered in the exchange, which means that only USD 25 million of the bonds maturing in 2015 remain outstanding.
On 15 March 2013, Euronav sold the Suezmax Cap Isabella (2013 – 157,648 dwt) a newbuilding from Samsung Heavy Industries and chartered the ship back on bareboat for a fixed period of 2 years with 3 options in favour of the charterer to extend for a further year. In case of a sale by the owner during the currency of the bareboat charter the Company will also share in any surplus if the vessel value exceeds a certain threshold. As this transaction was signed before the announcement of the 2012 final figures and is the result of negotiations with various parties which started in the financial year 2012, the Company will record the capital loss of USD -32 million still in 2012. More importantly, however, this transaction enables Euronav to eliminate its only remaining capital expenditure whilst using very limited cash to take delivery of the vessel.
Prospects for 2013
On the supply side, given the current state of the tanker market and the difficulty most owners face securing financing it is most probably safe to assume very few newbuilding contracts will be placed in 2013. The market also expects fleets to consolidate due to market pressure. Finally and most importantly, the poor market returns for the last 2-3 years, should push owner of relatively old tonnage to scrap their vessels. These three trends should help rebalance the tanker market over time. For the most part of 2013 but barring any major shift in global economic growth or oil demand, tanker owners are going to continue feeling the pressure from the robust ordering activity of previous years and the loss of once projected demand growth as a result of the financial crisis and subsequent multi year recession.
The outlook for crude tankers is indeed bleak and rates are expected to remain low. However, temporary hikes such as from seasonality of demand are expected to have a positive effect on crude tanker demand, but with less intense and shorter-lived spikes than previously. Owners could nevertheless improve the situation by beginning to scrap even younger vessels at a faster pace than they are doing today. That would undoubtedly help the market move towards a speedier recovery. Although fleet growth was limited, the large excess supply from previous years combined with high voyage expenses and low freight keeps net rates in the doldrums.
The year 2012 saw a shift in the trading pattern of the crude oil and this trend will continue in the coming years provided the growth of China’s economy remains constant. For the tanker market this will mean a further increase in crude oil import by China, and therefore increased tonne-miles which is positive for the market. A weakening of the oil price would reduce voyage costs and stimulate demand for oil as well as the requirement for both storage and transportation.
On the offshore side, the previous two decades have witnessed a steady rise in the use of production floaters across the globe driven by the increased activity into deeper and more remote waters. Whilst the future of the floating platform market looks strong, significant challenges remain. Although deepwater and ecologically challenging environments are calling for ever-more advanced technologies, with FSO and FPSO demand predominantly driven by countries in Latin America and West Africa, where significant local content requirements exist, construction companies are being increasingly challenged to create employment opportunities for the local workforce. Indeed, over the short-to-medium term this may affect the capital cost and timescales for FSO and FPSO developments.
Despite these factors, the floating platform market remains one of the strongest offshore sectors going forward to the end of the decade. With an increasing amount of floating production investment being made in regions away from the traditional areas of Latin America and West Africa, the next five years look set to witness an interesting change in dynamics within this sector.
Dividend policy
It will be proposed to the annual general meeting of 8 May 2013 to not distribute a dividend over the financial year 2012.
