When Oslo-quoted Aker turns in the results later this week many believe management will weigh in on whether Philly Tankers intends to order another pair of product tankers.
Erik Nikolai Stavseth, an analyst at Arctic Securities, is confident there may be an update but isn’t sure whether the fledgling Jones Act owner plans to pull the trigger.
“The yard has not received any new orders since last quarter, but we see potential for news relating to the last two options that Philly Tankers holds,” he told clients in an alert published Tuesday morning.
Stavseth believes the rate tied to a recent fixture involving a 50,000-dwt product tanker under construction at General Dynamics NASSCO illustrates that there is still money to be made in the Jones Act market.
“As such, we would not rule out the two options, but at the same time highlight that our market balance is finely balanced and we see the risk of lost volumes on USWC (which we see as the most probable loss) driving down utilization going forward,” he added.
“In the near-term the rapid build of US stockpiles has widened the Brent/LLS spread to a level where we see increased incentive to move crude from USGC to USEC, the only problem being low refinery utilization on US East Coast due to cold weather.”
Philly Tankers is backed by Aker (AKPS), American Shipping Company (AMSC), Apollo Global Management and a handful of other low-profile private equity firms.
When AMSC reported fourth-quarter earnings earlier this month it said the Jones Act product tanker market is still strong but admitted that the recent crash in crude prices has “introduced uncertainty” about the future of shale oil production.
The Oslo-listed operator acknowledged this could impact its core market but argued that domestic crude production will continue to increase through 2015.
“With limited availability for new delivery slots at the two US shipyards currently able to build product tankers, it is expected that the Jones Act tanker market will remain firm going forward,” it added.
While AMSC maintains a stake in Philly Tankers its management team did not offer any new details about the affiliate's near-term plans.