scorpio tankers

Image: Scorpio Tankers

Scorpio Tankers Inc. (NYSE: STNG) on Tuesday said it has agreed to construct six additional eco-friendly, LR2 product tankers for a total cost of $300 million, bringing its closely watched eco buying spree to 33 vessels.

In a statement, Scorpio said it had executed agreements with Hyundai Samho Heavy Industries Co. of South Korea to construct a total of four 114,000 dwt LR2 product tankers for approximately $50 million each. Including the two LR2 newbuildings previously announced, today’s order brings Scorpio’s LR2 newbuilding total at HSHI to 6 vessels, all of which are scheduled to be delivered within 2014.

In addition to these four vessels, Scorpio also said it has reached an agreement with Daewoo Shipbuilding and Marine Engineering Co. to construct another two 114,000 dwt LR2 product tankers, also for $50 million each. These vessels are scheduled to be delivered within 2014.

Scorpio’s Newbuild Tally

Today’s announcement brings the company’s newbuild total to 33 product tankers, which include 19 MR, eight LR2 and six Handymax ice class-1A vessels, at Hyundai Mipo Dockyard Co. Ltd., SPP Shipbuilding Co. Ltd., HSHI, and DSME. One of the newbuildings is expected to be delivered to Scorpio by April 2013 and the remaining 32 by the end of 2014. The Company also has fixed-price options to construct additional newbuilding product tankers at these yards.

Earlier in March, Scorpio held its largest equity offering to date.  The issue was expected to raise more than $230 million, giving a strong indication that the company would continue its buying spree. The offering was expected to closed March 18, 2013.

Delivery of STI Emerald

In addition to the newbuild contracts, Scorpio also announced that on March 25, 2013, the company took delivery of the seventh MR product tanker under its newbuilding program, named STI Emerald, and the vessel began a time charter for up to 120 days at $19,500 per day plus an adjustment based on fuel consumption. The vessel was partially financed by the Company’s 2011 Credit Facility.

Time Charter-In Agreements

Scorpio also said that it has agreed to time charter-in three product tankers. These included:

  • Two LR2 product tankers (a 115,756 dwt, 2011 built, and a 115,592 dwt, 2010 built) each for one year at approximately $16,000 per day with expected deliveries by the middle of April 2013.
  • A Handymax product tanker, ice-class 1B, (37,217 dwt, 2004 built) for one year at approximately $12,700 per day. The Company also has an option to extend the charter for an additional year at $14,000 per day. This vessel is expected to be delivered by the middle of April 2013.

Fleet Recap

Scorpio Tankers Inc. currently owns 14 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, seven MR tankers, and one post-Panamax tanker) with an average age of 4.4 years, time charters-in 21 product tankers (five LR2, three LR1, seven MR and six Handymax tankers), and has contracted for 33 newbuilding product tankers (19 MR, eight LR2 and six Handymax ice class-1A vessels), one of which is expected to be delivered to the Company by April 2013 and the remaining 32 by the end of 2014.

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