2014 looks to be a year of physical growth for crude tanker owner DHT Holdings.
At the end of last year, DHT placed an order at Hyundai Heavy Industries for two VLCCs at a contract price of $92.7 million each and in January, added a third to the order at the same contract price. The vessels are scheduled for delivery in April, July and September 2016. In addition, DHT has agreed to acquire two second-hand 2006 and 2007-built VLCCs for a total consideration of $99 million, both due for delivery next month.
In DHT Holdings’ earnings call this morning, the company executives note that all new acquisitions will be put on the spot market, increasing their spot market exposure from 42 percent, as pointed out by Jonathan Chappell from Evercore.
DHT notes that the current break-even rates on their VLCCs are in the $13,000 per day range and that two of their VLCCs, the 2002-built DHT Eagle and the 1999-built DHT Phoenix, are currently on charters of >$50,000 pd and $36k pd, respectively.
Rather than filling their coffers this year however, the company management and shareholders are currently looking to grow the company via single-ship and fleet acquisitions, as well as possible mergers. They note that their banks support such a strategy as well.
During 2015 and beyond, they note that their physical growth strategy will likely taper off.
Regarding the near term adding of tonnage to the overall crude tanker market, DHT comments that they have been in close contact with the yards and that there is the potential for a few additional orders for 2016 deliveries, however yard prices are up and there is limited availability from quality recognized yards. They note that this situation will put a bit of a cap on the tanker supply over the next few years, likely supporting a recovery of the crude tanker market.