American Shipping Co (AMSC) has secured new employment for two Jones Act MR tankers due to come off charter at the end of 2022.
The Oslo-listed company said Keystone Shipping Co has agreed to take the pair on bareboat charters from December.
The charters, which have minimum terms of three years that can be extended at the charterer’s options, will add almost $60m to AMSC’s charter backlog, excluding any proceeds from the profit share component of the charters.
The charters are said to be secured by back-to-back time charters of the same duration between Keystone and a major US-based oil and refinery group.
Fearnley Securities said the vessels have won rates 15% above their previous levels with Overseas Shipholding Group (OSG).
The tankers “have turned out to be options with risk on the upside rather than challenges as the Jones Act tanker market has continued to firm up”, the investment bank said.
The contract value implies day rates of $27,000 per day against $23,500 previously.
“Thus, AMSC did not only secure employment for the vessels, but also managed to obtain significantly improved terms,” analysts Oystein Vaagen, Erik Gabriel Hovi and Ulrik Mannhart said.
“Not only in terms of improved rates, but also structurally as the new contracts are back-to-back with an oil major (AMSC’s bareboat charter matching Keystone’s time charter),” they added.
Fearnleys remains confident that AMSC will fix the last vessel well ahead of contract expiry in December this year.
The names of the vessels involved were not disclosed, but a fleet list on AMSC’s website shows the charters of the 46,900-dwt Overseas Los Angeles (built 2007), Overseas New York and Overseas Texas City (both built 2008) are due to expire in December.
AMSC chief executive Pal Lothe Magnussen said Jones Act tanker capacity will “remain constrained for the foreseeable future, and these charters are indicative of strong demand for our vessels”.
Keystone president Donald Kurz added: “Taking the two AMSC vessels on back-to-back bareboat charters will fall well within our strategy to operate ships in the domestic tanker trade.
“We are very happy to have concluded this bareboat transaction, which allows us to service a key oil and refinery group in the US Gulf.”
Last December, OSG announced it would not be extending bareboat contracts for three AMSC vessels.
Chief executive Samuel Norton said the move would allow OSG to focus on niche trades as the US moves away from carbon-based fuels.
AMSC did a little diversification of its own last month when it branched out into a new sector by spending $157m to buy the 177.9-loa offshore construction vessel Normand Maximus (built 2016) from Norway’s Solstad Offshore and then leased it back for an initial five years.
Magnussen said the deal is projected to produce an annual return on equity greater than 20% and a strong running dividend yield.
