Scorpio Ends Eco Buying Spree With a Bang

Image: Scorpio Tankers

With a total 54 newbuilds on order, NYSE-listed Scorpio Tankers says its appetite for fuel-efficient product tankers has finally been satisfied.

Scorpio made the announcement Thursday along with a final order for 16 new vessels consisting of eight LR2, four MR, and four Handymax ice class-1A product tankers with five Korean shipyards. In addition, Scorpio also announced that syndication of their previously announced $267 million credit facility has been heavily over-subscribed resulting in an increase of the overall commitments received from new and existing financial institutions to $525 million.

“These 16 orders for fuel efficient vessels, and, as significantly, the over-subscription of our 2013 credit facility, have solidified our unique position in front of an improving cycle in product tankers,” said Emanuele Lauro, who is CEO and chairman of the board at Scorpio. “We are pleased that our shareholders and lenders alike are showing their support of our strategy.”

Newbuild Spree

Lauro added that due to weakened capacity at shipyards, Scorpio’s buying spree is now concluded.

“Furthermore, we are observing attenuated capacity at quality shipyards, meaning that prices have moved up 8-12% and expected deliveries for new orders are moving beyond 2015,” Lauro said. “Under these circumstances, we have no plans for further newbuilding contracts.”

Including today’s announced order, Scorpio has a total of 54 newbuilding product tanker agreements, which include 26 MR, 16 LR2 and 12 Handymax ice class-1A vessels, at Hyundai Mipo Dockyard (HMD), SPP Shipbuilding (SPP), Hyundai Samho Heavy Industries (HSI), Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries (SHI), all of South Korea.

Four of the newbuildings are expected to be delivered to Scorpio by September 2013, 38 within 2014, and the remaining 12 in the first half of 2015.

Today’s Order

Scorpio announced today its final order for eight LR2, four MR, and four Handymax ice class-1A product tankers.

The eight, 114,000 dwt, LR2 product tankers were ordered from SHI (4), HSI (2), and DSME (2) for approximately $52.0 million each. These vessels are scheduled to be delivered in the first and second quarters of 2015.

The four 52,000 dwt MR product tankers are to be constructed at SPP for approximately $32.5 million each. These vessels are scheduled to be delivered in the first and second quarters of 2015.

Finally the four Handymax ice class-1A (37,000 dwt) product tankers are to be built at HMD for approximately $31.6 million each. These vessels are scheduled to be delivered in the third quarter of 2014.

Scorpio currently owns 15 tankers, including one LR2 tanker, four LR1 tankers, one Handymax tanker, eight MR tankers, and one post-Panamax tanker, with an average age of 4.4 years. Scorpio also has time charters-in 25 product tankers, including seven LR2, three LR1, eight MR and seven Handymax tankers.