New York-listed DHT Holdings has reported the loss of a lucrative time charter but confirmed strong spot earnings this quarter.
The 12-month charter for the 317,826-dwt DHT Scandinavia (built 2006) had been terminated, the tanker owner said in a statement.
“DHT Scandinavia has been significantly delayed discharging cargo on her current voyage and has thereby failed to deliver in time,” DHT said. “Consequently, the time charter is cancelled.”
No exact rate information was disclosed. However, DHT previously announced in April that the vessel and five other VLCCs were fixed out for at least 12 months at an average rate of $67,300 per day.
Separately, the owner said it chartered the 319,713-dwt DHT Stallion (built 2018) to an unnamed oil major for $41,800 per day.
DHT now has 10 of its 27 VLCCs on period charters, including six with fixed rates and four with profit sharing deals. Their average rate is at least $50,673 per day, according to the owner.
Strong spot earnings
As for its spot vessels, DHT has fixed 97% of the second-quarter days at $90,100 per day on average.
It has also covered 18% of the third-quarter spot days at an average daily rate of $61,800.
Fearnley Securities said the second quarter market has left the company still at "super-profit" levels.
But the investment bank expects third quarter numbers to be "materially lower" given the current rate environment.
Fearnley expects DHT to report Ebitda of $159m in the second quarter, around 10% below consensus estimates.
For the third quarter, its analysts are forecasting rates of between $25,000 and $35,000 per day.
Fearnley said DHT remains ahead of its peers based on second quarter bookings.
"We expect the industry to report about $80,000 per day versus DHT’s $90,000," it added.
Debt prepayments
With strong cash flows and a low breakeven level, DHT has elected to prepay all of its regular loan installments next year.
This includes $25.8m under a Nordea loan facility and $33.4m under an ABN AMRO facility.
“Given the time-charter coverage only $3,000 per day is needed from the spot fleet to cover the entire cost base in the second half of 2020. That is impressive,” said Fearnley.
“We remain Hold weighted, finding significant value protection but few catalysts into what is expected to be a weak summer.”
Also maintaining a hold rating was Evercore ISI analyst Jonathan Chappell, who took down his third-quarter earnings estimate to $0.30 per share from $0.62, and also the second-quarter projection to $0.82 from $0.90. Evercore also reduced its price target to $6.50 from $7.
"DHT is well positioned to withstand likely market volatility and rate pain from global oil inventory destocking over the coming quarters, but with earnings and dividends likely to peak in the present quarter and a large [earnings per share] decline in the cards for the [fourth quarter and 2021], we maintain our In Line rating," Chappell wrote.
