Nordic American Tankers is launching a share buyback program, amid a divergence in rates and share price.
The Herbjorn Hansson-led, New York-listed suezmax specialist announced Wednesday that it was launching a repurchase plan for the next two years on the back of an "extraordinarily strong tanker market".
"The financial position of NAT is solid. NAT has an increasing cash flow. In view of the above main factors, the NAT Board has decided to establish a share buy-back program," Hansson said in a statement.
The programme will last two years and will see Nordic American Tankers repurchase shares "when [it] sees fit".
The initiative is for up to 4.5m shares, NAT said. The company has about 147m shares outstanding.
In its announcement, the company reiterated Hansson's Tuesday letter in which he said Nordic American Tankers ships had been fixed on rates ranging from $65,000 per day to $100,000 per day.
The run in rates was ignited by the Saudi Arabia-Russia oil price war that started last week after 14-member Opec and 11 non-members — collectively known as Opec+ — were unable to come to an agreement on a supply cut.
The flood of oil to the market has cratered the price of oil, but lifted the number of cargos available for shipment — there were 52 cargoes fixed from the Middle East Gulf for shipment from 11 March to 20 March and 72 from 21 March to 31 March, both higher than the six-week average, according to Tankers International data.
Hansson's confidence echos statements made this week by International Seaways chief executive Lois Zabrocky and Frontline head Robert Hvide Macleod.
Both said that as long as Saudi Arabia wants to wage the price war, rates will remain high.
Despite the run, shares remain much lower than where they were at the New Year.
Nordic American Tankers shares were trading at $4.84 on 2 January, but were at $2.60 ahead of the open Wednesday.
Similarly, Frontline shares started 2020 at $12.94, before falling to $6.40 in premarket trading, falling $1.05, or 14.14%, overnight.
International Seaways fell from $29.82 to $20.16 over the last 12 weeks.
Other tanker owners have also fallen off, with DHT falling from $8.40 to $5.80 over the same period and Diamond S Shipping sliding from $16.86 to $10.20 overnight Wednesday.
