Norway's Hunter Group has fixed three of its VLCCs on period charters to "de-risk" earnings later in the year, despite booming spot markets.
The Arne Fredly-backed company has secured rates of $80,000 per day over six months for the 300,000-dwt Hunter Atla, Hunter Laga and Hunter Freya (all built 2019).
This will "significantly de-risk" second and third quarter cash flow, the company said.
The deals will commence immediately after completion of current spot voyages in March, April and May. The charterer has not been revealed.
The ships have been operating in the Tankers International spot pool for scrubber-fiited ships.
A fourth operational ship, Hunter Saga, will remain in the spot market through this pool.
Three more coming
The remaining three newbuildings will also join the pool. The Hunter Disen will enter in May or June, the Hunter Idun in June or July and Hunter the Frigg in July or August.
Cleaves Securities head of research Joakim Hannisdahl said: "These are extraordinary high rates in what is normally a low-season for oil tankers, and reflects the incredible market created by the ongoing OPEC+ price war.
"No one knows how long this price war will last, and locking in these stellar rates on part of the fleet seems like a prudent move in these uncertain times."
He added: "The vessels will be redelivered in what is usually the start of the seasonally strong winter market, where we forecast VLCC spot rates could average around $100,000 per day for the fourth quarter.
"Might not sound like much these days, but rest assured that investors should rejoice if such rates are sustained over time."
Fearnley Securities said: "In our view this is a sensible move from Hunter given the uncertainty on the longevity of the current market."
Each charter will generate about $10m in free cash flow to equity and "substantially" de-risk the tail-end of 2020, which potentially could face a significant slowdown should Saudi Arabia’s price war on Russia come to a halt and the current production be reversed to a cut from OPEC+, it added.
Rates falling from Middle East Gulf
Spot rates were reported at up to Worldscale (WS) 400 last week, around $410,000 per day, but rates from the Middle East Gulf to South Korea came down WS 10 on Tuesday and West Africa to China by WS 55.
"Given the combination of record high freight levels coupled with crude prices below $30 per barrel, it should come as no surprise seeing the rate trajectory turn negative from current levels as the freight element simply becomes too big," Fearnley Securities said.
"That said, there should be less sensitivity to high freight levels this time around (versus October 2019 rally) given the large discount on the Saudi official selling prices."
A clutch of VLCC fixtures failed over the past few days, with owners not willing to extend subjects.
"Though we see the current Saudi war primarily benefiting crude tankers in a short period of time (most crude left in inventories and not refined), product rates are also seeing a revival with MR Atlantic triangulation now pinned at $35,500 per day and LR2s at $50,000," the investment bank said.
Hunter Group posted net profit of $16.1m in the final quarter of last year , against $1.25m the year before.
