Overseas Shipholding Group, Inc. (NYSE: OSG), one of the world’s largest publicly traded tanker companies in the world carrying nearly 11 million DWT with a fleet of 112 ships, reported results for the second quarter of fiscal 2012 ended June 30, 2012.
Morten Arntzen, President and CEO commented: “Following on the slowdown of the world economy, all our international flag markets turned down during the second half of the second quarter, with rates in our MR segment being under particular pressure, resulting in a disappointing quarter. Rates remain challenging today. On a bright note, our U.S. Flag unit continued to perform ahead of plan and the prospects for this business improved following the announcement of the sale of Conoco’s Trainer refinery to Delta Air Lines and Sunoco’s transfer of its Philadelphia refinery to a joint venture with Carlyle.”
Cash was $227 million as of June 30, 2012, however…
Mr. Arntzen comments: “In July we drew down the full remaining availability under our revolving credit facility and now have cash reserves of over $550 million. We believe this was a prudent step given the ongoing difficult market conditions. We are in discussions with our main banks to put in place long-term financing that provides sufficient liquidity to manage through an extended downturn in our International Flag tanker markets. At the same time, we are pursuing other liquidity raising options available to the company.”
- During May 2012, the Overseas Yellowstone and the Overseas Josefa Camejo were transferred from the Aframax fleet trading in the Aframax International pool to the Aframax lightering fleet to replace the Overseas Rebecca and the Overseas Ania, which were redelivered to their owner after completion of their respective time charters.
- On June 1, 2012, OSG took delivery of two Aframaxes, the Yasa Golden Bosphorus and the Yasa Golden Marmara, under 15-month (minimum term) time charters for service in the Aframax International pool.
- During June 2012, OSG redelivered the Overseas Sophie, a time chartered Aframax, to its owner.
- In the year to date, OSG has redelivered 1.9 VLCCs, 2.9 Suezmaxes and 4.0 Aframaxes previously chartered-in at rates above those earned in the spot markets in 2011. Over the balance of 2012, the Company is scheduled to redeliver another 1.2 VLCCs, 0.9 Suezmaxes and 1.0 Aframax remaining on such higher-rate time charters. The expiry of these charters-in and/or the rechartering of replacement tonnage at current lower rates is expected to have a significant positive impact on the results of OSG’s chartered-in Crude fleet going forward.
- Of the Company’s six LR1s, three are trading in the Panamax International pool, two are on time charter and one is trading in the clean Panamax (LR1) market.
- OSG’s Jones Act product tanker fleet remains fully committed under time charters, with renewals in the year 2012 to date at rates in excess of expiring rates and each successive renewal rate higher than the last. Four of OSG’s products ATBs have secured short term time charters with expiries from late 4Q2012 to early 2Q2013.
- In June, Delta Air Lines closed on its acquisition of the Trainer refinery, which had been idled since September 2011. After previously announcing that they would idle the main processing units of its Philadelphia refinery in August 2012 if the facility could not be sold, Sunoco announced in July that it would form a joint venture with The Carlyle Group to own and operate the refinery.