New York-listed International Seaways has seen rates improve quarter over quarter in four of five key operating segments, promising more investor returns for the first three months of 2024.
According to a first-quarter rates guidance provided on Thursday’s investor call, only suezmaxes have tailed off from fourth-quarter spot rates, sliding to $45,500 per day from $47,318, with 79% of days booked.
Leading the gainers is the LR1 sector, where bookings have improved 36% to $62,600 with 70% booked, rising from last quarter’s $46,199.
Also looking better are MRs at $36,400 per day from 31,493 with 69% booked, aframaxes at $51,800 from $43,952 with 63% fixed, and VLCCs at $45,800 from $42,991 with 84% committed.
In the fourth quarter, Seaways said it had entered into two new time charter agreements on a pair of 2009-built MRs for two years, bringing to eight the number of clean and crude tankers it had placed on charters of between two and three years during 2023.
This extended contracted revenue to $354m from 1 January through expiring time-charter, although commercial director Derek Solon said the owner was discriminating about contract tenure.
“We continue to look for multi-year time charters — for one year and shorter, we’d rather stay in the spot market,” Solon told analysts.
Seaways will soon be able to play that market with six new MRs, as it confirmed TradeWinds’ 16 February report that it is buying the stable for $232m from a seller it did not identify, including 15% of the price in shares. TradeWinds has reported the seller as Minnesota-based private equity firm Wayzata Investment Partners.
Looking at MRs over the long term, chief executive Lois Zabrocky called them “by far the best-performing sector throughout the tanker market — you can see why we’re bringing these ships in.”
The Wayzata ships are coming on a staggered delivery schedule with all to be in by the end of the second quarter, Seaways said. The balance of the purchase price is being paid by available liquidity. The purchases will lower the average age of Seaways’ MR fleet to 13 years from 14 years.
Debt reduction
At the same time, Seaways has been a seller of older MR tonnage. With the disposal of two 2008-built units in the fourth quarter, it brings to 18 the number of MRs Seaways has sold in the past 30 months, Zabrocky said.
Most of these were acquired in its 2021 acquisition of Diamond S Shipping in a $416m all-stock deal.
Seaways said the three 2008-built MRs sold within 2023 would yield net proceeds of $39m after debt repayment, equating to an 80% return on investment since their acquisition.
Over the past year, Seaways has reduced its fleet-wide operating breakeven by $3,000 a day to $14,500 through aggressive debt reduction.
It also achieved a record-low loan to valuation of 17%, and has reduced net debt well below the fleet’s scrap value.
Seaways shares were up about 1% to $52.75 after the strong earnings report on Thursday.
