Image: Scorpio Tankers
Scorpio Tankers Inc. (NYSE: STNG) announced today that it has finalized their agreement with SPP Shipbuilding Co., Ltd. of South Korea (SPP) for the construction of four MR product tankers for approximately $32.5 million each, two of which are the exercise of options from a previous contract.
This news follows up from their letter of intent which was signed in early December.
In a phone conversations with Jonathan Chappell, Managing Director of Evercore Partners’ Equity Research Group, he commented, “This deal is in line with their strategy of product tanker fleet expansion. Scorpio has two MR tankers scheduled to be delivered in 2013, and as of today’s announcement, 14 in 2014.”
Evercore Partners notes that STNG’s share price is up 46% since the end of October (versus a 6% increase in the S&P 500), helped by the positive momentum of product tanker rates and STNG’s ongoing fleet expansion through additional newbuilds and charterin tonnage. The firm holds and Overweight rating on STNG and targets share price to $9.50 (from $8.50).
In conjunction with these contracts, the extensions were received on several previously agreed options and Scorpio received four new fixed price options for similar vessels which would be delivered in 2015.
The company also has fixed-price options to construct a total of 14 additional newbuilding product tankers at these yards.
Sign up for our newsletter