Big Win for Aker Philadelphia, Crowley Signs $250 Million Contract for Pair of Jones Act Tankers

Aker pennsylvania product tanker jones act
Image: Crowley

Aker Philadelpha Shipyard (Oslo: AKPS) breathed a huge sign of relief today as it signed a contract with Jacksonville-based Crowley Maritime Corporation for the sale of two new Jones Act tankers, the Pennsylvania and the Florida, that they had been building on spec since 2011.  The tankers, scheduled for delivery in September 2012 and March 2013, mark Crowley’s re-entry into the Jones Act tanker market since its last tanker was retired in 2011.

These vessels are designated as Aker Philadelphia Shipyard Inc (APSI) Hulls 017 and 018 and are the 13th and 14th in the Veteran-Class built at Aker.

“We are pleased to partner with a first-class owner and operator like Crowley. Both APSI and Crowley share deep commitments to run safe and efficient operations, and I am confident that this transaction will bring significant value to both parties for years to come,” said Kristian Rokke, AKPS President and CEO. “This is a major milestone for the shipyard and we are greatly appreciative of the support we have received from many, including the Commonwealth of Pennsylvania, City of Philadelphia, and Aker ASA.”

The tankers will be capable of carrying nearly 330,000 barrels of a wide variety of petroleum products and chemicals. Once delivered, the vessels will operate in the U.S. coastwise trade.

“We are bringing the best available technology to our customers,” remarked Crowley’s Chairman, President and CEO Tom Crowley.  “This is yet another example of our on-going investments in new equipment and technology to meet the current and future needs of our customers.”

This proven design provides Crowley customers with ABS-classed vessels that have been thoroughly tested and refined for performance and reliability. With a length of 183.2 m, a breadth of 32.2 m, and a depth of 18.8 m, the tankers come in at 45,800 deadweight tons with a draft of 12.2 m. Powered by the first Tier II large-bore engines, MAN-B&W 6S50MCs, the speed of the Pennsylvania and the Florida is expected to average 14.5+ knots. In addition to being double hulled with segregated ballast systems, safety features also include water and CO2 firefighting systems, as well as a foam water spray system.

aker philadelphia shipyard
Image: Aker Philadelphia Shipyard

The financial side

AKPS, through its subsidiaries, will receive compensation for each vessel in the form of a fixed purchase price of USD 90 million at delivery and a variable component based on the vessel’s actual performance in the market. Based on current market conditions, AKPS anticipates receiving a nominal amount in excess of USD 35 million per vessel through the variable component. This amount has the potential to be significantly higher if market conditions continue to improve. The variable component is payable on an annual basis over the life of the vessel and will adjust upwards or downwards based on actual charter rates and other factors. There is no cap on the amount of the annual payment.

AKPS anticipates that the transaction will result in cumulative gains in excess of USD 25 million, recognized as each vessel is delivered, with the potential for future additional income based on the variable component.

DNB Markets, Inc. acted as exclusive financial advisor to Crowley.

Shipbuilding Operations Continue

In addition to the product tankers, APSI is currently constructing the first of two contracted 115,000 dwt crude oil carriers for SeaRiver Maritime, Inc., Exxon Mobil Corporation’s U.S. marine affiliate. Both of these crude oil tankers are scheduled for delivery in 2014.