Tsakos Energy Navigation, a US-listed owner of more than 70 vessels on the water or under construction, revealed a bold, fresh newbuilding move on Thursday.
As part of its first-quarter results, the company said it has signed five LR1 newbuildings with a Far Eastern yard.
The scrubber-fitted panamax tankers will be delivered between the second quarter of 2027 and the third quarter of 2028, TEN said without giving further details.
“It is a side of the business in which very few people” ink orders, the company’s chief executive officer Nikolas Tsakos told analysts in a conference call, referring to LR1s as the “least-built” tanker segment.
The deal increases the number of newbuildings the company has under construction to a dozen vessels: three DP2 shuttle tankers, two scrubber-fitted suezmaxes, two scrubber-fitted MRs and the LR1s it has just unveiled.
The order is in line with a busy, double-pronged strategy where the Greek owner offloads older vessels at high prices and replaces them with modern newbuildings and secondhand tonnage.
A number of LR1s in TEN’s current fleet can be considered sale candidates as part of that strategy, Tsakos said, making particular mention of the 68,400-dwt Andes (built 2003) — a vessel built “before my children were born”.
As TradeWinds reported, TEN has raised about $400m since early 2023, from selling 12 tankers and one LNG ship with an average age of 17.5 years.
Over the same period, the company has added 21 newbuildings or very modern secondhand tankers, including six LNG dual-fuelled tankers already in operation.
Demand for such vessels among oil majors is running extra hot at the moment.
“Clients are grabbing these ships as soon as we ink them,” Tsakos said, adding this is the first time he has experienced such demand in his 30 years in the business.
TEN’s pace of dealmaking has accelerated this year, as a seller and as a buyer of tonnage.
“It has been a frantic period,” Tsakos said.
According to the TEN earnings statement, the first half of 2024 was “one of the busiest ever for the company, which engaged in activities relating to sales, acquisitions and new orders of 14 vessels, five of which in the first quarter”.
The company, which had its most profitable year in 2023 in three decades as a public company, continued raking in robust earnings.
TEN posted on Thursday a net income of $54m for the first quarter, down 69% year on year.
The decline is largely due to an $81.2m gain from vessel sales that the company notched up in early 2023 and did only partly repeat in the first quarter of the current year, with comparable gains of just $16.2m.
The company’s stock was down 0.6% to $28.77 per share in early New York trading on Thursday, down from a multi-year high of $31.48 per share earlier this month.
This gives TEN a market value of $831m, which compares poorly to the $2.8bn net value of its fleet as of the end of March.
“We’re still a long way from where we expect it [the share] to be,” Tsakos said in the conference call.
Members of the Tsakos family are the company’s single biggest shareholders.
According to the company’s latest available annual report, the clan owns about one-third of the company’s common shares and about 4% of its preferred ones.
