Tsakos Energy Navigation Limited (TEN) announced today the signing of a newbuild plus five-year charter agreement with an undisclosed European oil major for two 74,000 ton dwt LR1 product tankers.
The Athens-based company says the two ships will be chartered at an accretive base rate with 50/50 profit sharing above the base rate between TEN and the oil major. The charters are expected to generate minimum gross revenues of $62 million for the two vessels during the five year period. The option to declare two additional LR1 vessels expires at the end of October 2014.
Financing for the newbuilds will come from a combination of existing cash and bank debt. Deliveries are expected during 2H 2016. The shipyard was not disclosed.
Additionally, TEN signed a charter agreement for two of their modern Suezmax tankers with a different European oil major for 24 and 12 months respectively with options for another 12 months for each vessel at an accretive base rate with profit sharing. TEN expects minimum gross revenues of approximately $35 million for the full period.
“We are pleased to follow up on our recent announcement with another strategic alliance with one of the largest major oil companies in the world. We continue growing and modernizing our fleet with non speculative orders. At the same time our existing fleet is utilized to maximize the company’s
profitability and shareholder value. We believe that the nature of these transactions is a testament of TEN’s reputation as a company of choice for major oil companies. We expect the value created by these and other similar projects to be soon reflected in our valuation,” Mr. Nikolas P. Tsakos, President and CEO of TEN commented.
In early August, TEN reported their six-month results which by and large were very positive on the back of a resurgence in crude tanker rates, a situation that TEN is able to capitalize due to the fact nearly 70 percent of their crude tanker fleet operates on spot or flexible crude contracts. The company also announced nine Aframax newbuildings tied to long term charters with Statoil.