The company had a net loss of $3.9 million (fourth quarter 2013 $23.3 million) for the three months ended 31st December 2014. EBITDA was $67.6 million (fourth quarter 2013 $20.9 million). For the full year ending 31 December 2014, the net results are a loss of $45.8 million compared to a loss of $89.7million in 2013.
Euronav operates its spot VLCC tonnage through the Tankers International Pool of which it is a founding member. Since 6th October 2014, the Pool has been operating in a joint venture with Frontline. This combination is the largest provider of spot VLCC tonnage in the world and is operating under the name VLCC Chartering Ltd.
In October the Suezmax Cap Isabella (2013 – 157,258 dwt), which the company had on bareboat charter, was delivered to its new owners. This sale generated a profit of $4.3 million for Euronav. Euronav also took delivery of the 15th and last vessel of the Maersk Acquisition announced on 5th January 2014: the Sandra (2011 – 323,527 dwt).
Towards the end of the year, the company took delivery of the following two VLCCs (both part of the acquisition of four modern Japanese-built VLCC vessels announced on 8th July 2014): the Hojo (2013 – 302,965 dwt) and the Hakone (2010 – 302,624 dwt). Deliveries of the remaining two vessels are expected to take place late February and towards the end of the first quarter of 2015.
In January the VLCC Antarctica (2009 – 315,981 dwt) was delivered to its new owners for conversion in an FPSO.
A robust and sustained recovery in freight rates in both VLCC and Suezmax sectors gained traction during the fourth quarter of 2014 – a feature which has continued and expanded into Q1 2015. The last three months of the year presented some challenges as owners’ confidence was slow to grow and bunker price gains did not materialise within Q4 as bunker inventory was burned off. However, Euronav delivered creditable returns on its VLCC fleet, where it lost a number of vettings due to the ownership change following the acquisitions, thus leading to a longer time required to book charters.
The fundamental drivers for the tanker market, supply and demand for seaborne transport are well positioned for the short and medium term. Demand for oil is healthy and growing. Euronav believes the fall in the oil price will stimulate demand further in the short and medium term. Vessel supply will remain restricted for at least the next two years. Not only is forecast fleet growth limited in the medium term but there is limited capacity as the financial crisis reduced capacity and productivity in many shipyards. Ton miles are structurally increasing. The Atlantic is effectively long oil – this oil supply is feeding demand from non OECD and especially in Asia and the Far East. Therefore traditional trade lanes will continue to be replaced by longer haul routes with the Far East as their ultimate destination.
So far, in the first quarter of 2015, the Euronav VLCC fleet operated in the Tankers International pool has earned on average $59,400 per day and 53% of the available days have been fixed. Euronav’s Suezmaxes trading on the spot market have earned on average $40,300 per day and 69% of the available spot days have been fixed.
The oil price contango will continue to drive floating storage and reduce vessel supply for transport throughout 2015. Lower bunker costs make speed less of a cost issue but Euronav says ship owners will not waste fuel so speeds in ballast will vary as to whether the ship is sailing to a cargo or not. No ship owner will want to speed up just to wait. Ships should continue in slow speed until they are fixed for a cargo and then adjust speed to arrive just in time. Ships are not speeding up to a degree which will make a tangible difference to capacity. The industry has learnt over the past five years how to manage variable voyage costs and speed is the key factor.