Independent Tankers Corporation Limited was incorporated on Bermuda on January 18, 2008 and the shares have traded in the Norwegian over-the-counter market since March 7, 2008. Independent Tanker's business is mainly concentrated around the ownership and operation of crude oil tankers on long term bareboat contracts, which include certain cancellation options to major oil companies. Independent Tankers owns or leases six VLCC's and four Suezmax tankers. All vessels are financed through bonds in the US market and some of the vessels are also subject to financial lease arrangements. Our main shareholder Frontline Ltd. ("Frontline") owns approximately 83% of the Company.
Second Quarter and Six Month Results 2008
The Board of Independent Tankers announces a net income of $3.5 million, equivalent to earnings per share of $0.05 for the second quarter of 2008. This compares with a net income of $4.0 million, equivalent to earnings per share of $0.05 for the second quarter of 2007 based on predecessor accounts.
The average daily bareboat rate earned in the second quarter by the Company's VLCCs and the Suezmax tanker Front Voyager were approximately $26,100 and $7,900 respectively compared with approximately $26,100 and $8,000, respectively in the preceding quarter.
For the six months ended June 30, 2008 the Company announces net income of $7.2 million, equivalent to earnings per share of $0.10 (2007 comparable six months $7.3 million, equivalent to earnings per share of $0.10). Net interest expense was $12.2 million (2007 comparable six months: $13.0 million). At June 30, 2008 all of the Company's bond debt of $390.5 million is fixed with interest rates ranging from 6.56% to 8.52%.
As all cash is restricted there was no movement in cash and cash equivalents in the quarter. In August 2008, the Company has an average cash breakeven rate for its VLCCs and Suezmax tanker of approximately $21,400 and $4,900 per vessel, respectively.
Charter development
In April 2008, Front Voyager, Inc., a subsidiary of Frontline, has extended the charter party with Calpetro Tankers (Bahamas III) Ltd. for the single hull Suezmax tanker, Front Voyager, for one year from April 1, 2008 at a bareboat rate of $4,242 per day on a cash basis. The charter party is being accounted for as a four year operating lease from April 1, 2006 and the estimated income is being amortized on a straightline basis giving a rate of $7,900 per day.
In June 2008, Chevron Transport Corporation chose not to declare the termination option for the VLCC Phoenix Voyager, and the vessel will continue to be on a bareboat rate of $28,500 per day until March 2011.
Other Matters
In July 2008, the Board of Independent Tankers approved a grant of 300,000 share options to the board member Ajay Khandelwal, with a subscription price of NOK 10.0 per share. The options vest one third each year over three years, and the option period is set to five years.
74,825,166 ordinary shares were outstanding as of June 30, 2008 and the weighted average number of shares outstanding for the quarter was also 74,825,166.
The Market
The tanker market has shown high volatility so far in the third quarter. Average day rates for VLCC have according to Clarkson been $108,000 so far in the third quarter compared to $30,000 in the third quarter 2007. The market has during the last weeks shown a temporary negative development.
Bunkers at Fujairah averaged approximately $578/mt in the second quarter with a low of approximately $495/mt and a high of approximately $680/mt. The average bunker price at Fujairah so far in the third quarter is $713/mt, according to Platts, while present quotes are $657/mt.
The International Energy Agency (IEA) reported in August 2008 an average OPEC oil production, including Iraq, of 32.2 million barrels per day during the second quarter of the year, a 0.2 million barrels per day decrease from the first quarter. The next OPEC meeting is scheduled to take place on September 9, 2008.
IEA further estimates that world oil demand averaged 86.1 million barrels per day in the second quarter, a 0.8 percent decrease from the first quarter of 2008. IEA predicts that the average demand for 2008 in total will be 86.9 million barrels per day, or a 0.9 percent growth from 2007, hence showing a continued demand growth.
According to Fearnleys, the VLCC fleet totalled 486 vessels at the end of the second quarter with five deliveries during the quarter. There are 24 additional deliveries expected in 2008. The total order book amounted to 208 vessels at the end of the second quarter, up from 185 vessels after the first quarter of 2008. The current orderbook represents about 43 percent of the VLCC fleet. Seven VLCCs were deleted from the trading fleet whilst 28 VLCCs were ordered during the quarter. The single hull fleet amounted to 117 vessels at the end of the second quarter.
Strategy
The Company's strategy will mainly be concentrated around long term charters to reputable companies and for the time being BP Shipping Limited, Chevron Transport Corporation and Frontline.
The Board feels that the stock price is not reflecting the value of the underlying assets in the Company, and is working on different alternatives including strategic options in order reduce this differential.
Outlook
The quarterly earnings for the remainder of the year are expected to be in line with the second quarter of 2008. From January 2009 the Board anticipates stronger results as a consequence of the VLCC British Pioneer coming off a fixed charter rate and starting to trade at a market rate with a minimum rate of $20,000 per day. On the basis of the Imarex TD3 forward rate (CAL 09) as per August 26, 2008 including an increase in forward flat rate of 38.1%, the estimated charter rate is approximately $68,000 per day, compared to present charter today of approximately $33,000 (including opex) per day. The difference on a yearly basis of $12.8 million is equivalent to incremental earnings per share of approximately $0.17. In addition, three further VLCC vessels will start trading at a market rate during 2010.
The Company is well financed and anticipates strong increase in cash flow in the years to come.
Second Quarter and Six Month Results 2008
The Board of Independent Tankers announces a net income of $3.5 million, equivalent to earnings per share of $0.05 for the second quarter of 2008. This compares with a net income of $4.0 million, equivalent to earnings per share of $0.05 for the second quarter of 2007 based on predecessor accounts.
The average daily bareboat rate earned in the second quarter by the Company's VLCCs and the Suezmax tanker Front Voyager were approximately $26,100 and $7,900 respectively compared with approximately $26,100 and $8,000, respectively in the preceding quarter.
For the six months ended June 30, 2008 the Company announces net income of $7.2 million, equivalent to earnings per share of $0.10 (2007 comparable six months $7.3 million, equivalent to earnings per share of $0.10). Net interest expense was $12.2 million (2007 comparable six months: $13.0 million). At June 30, 2008 all of the Company's bond debt of $390.5 million is fixed with interest rates ranging from 6.56% to 8.52%.
As all cash is restricted there was no movement in cash and cash equivalents in the quarter. In August 2008, the Company has an average cash breakeven rate for its VLCCs and Suezmax tanker of approximately $21,400 and $4,900 per vessel, respectively.
Charter development
In April 2008, Front Voyager, Inc., a subsidiary of Frontline, has extended the charter party with Calpetro Tankers (Bahamas III) Ltd. for the single hull Suezmax tanker, Front Voyager, for one year from April 1, 2008 at a bareboat rate of $4,242 per day on a cash basis. The charter party is being accounted for as a four year operating lease from April 1, 2006 and the estimated income is being amortized on a straightline basis giving a rate of $7,900 per day.
In June 2008, Chevron Transport Corporation chose not to declare the termination option for the VLCC Phoenix Voyager, and the vessel will continue to be on a bareboat rate of $28,500 per day until March 2011.
Other Matters
In July 2008, the Board of Independent Tankers approved a grant of 300,000 share options to the board member Ajay Khandelwal, with a subscription price of NOK 10.0 per share. The options vest one third each year over three years, and the option period is set to five years.
74,825,166 ordinary shares were outstanding as of June 30, 2008 and the weighted average number of shares outstanding for the quarter was also 74,825,166.
The Market
The tanker market has shown high volatility so far in the third quarter. Average day rates for VLCC have according to Clarkson been $108,000 so far in the third quarter compared to $30,000 in the third quarter 2007. The market has during the last weeks shown a temporary negative development.
Bunkers at Fujairah averaged approximately $578/mt in the second quarter with a low of approximately $495/mt and a high of approximately $680/mt. The average bunker price at Fujairah so far in the third quarter is $713/mt, according to Platts, while present quotes are $657/mt.
The International Energy Agency (IEA) reported in August 2008 an average OPEC oil production, including Iraq, of 32.2 million barrels per day during the second quarter of the year, a 0.2 million barrels per day decrease from the first quarter. The next OPEC meeting is scheduled to take place on September 9, 2008.
IEA further estimates that world oil demand averaged 86.1 million barrels per day in the second quarter, a 0.8 percent decrease from the first quarter of 2008. IEA predicts that the average demand for 2008 in total will be 86.9 million barrels per day, or a 0.9 percent growth from 2007, hence showing a continued demand growth.
According to Fearnleys, the VLCC fleet totalled 486 vessels at the end of the second quarter with five deliveries during the quarter. There are 24 additional deliveries expected in 2008. The total order book amounted to 208 vessels at the end of the second quarter, up from 185 vessels after the first quarter of 2008. The current orderbook represents about 43 percent of the VLCC fleet. Seven VLCCs were deleted from the trading fleet whilst 28 VLCCs were ordered during the quarter. The single hull fleet amounted to 117 vessels at the end of the second quarter.
Strategy
The Company's strategy will mainly be concentrated around long term charters to reputable companies and for the time being BP Shipping Limited, Chevron Transport Corporation and Frontline.
The Board feels that the stock price is not reflecting the value of the underlying assets in the Company, and is working on different alternatives including strategic options in order reduce this differential.
Outlook
The quarterly earnings for the remainder of the year are expected to be in line with the second quarter of 2008. From January 2009 the Board anticipates stronger results as a consequence of the VLCC British Pioneer coming off a fixed charter rate and starting to trade at a market rate with a minimum rate of $20,000 per day. On the basis of the Imarex TD3 forward rate (CAL 09) as per August 26, 2008 including an increase in forward flat rate of 38.1%, the estimated charter rate is approximately $68,000 per day, compared to present charter today of approximately $33,000 (including opex) per day. The difference on a yearly basis of $12.8 million is equivalent to incremental earnings per share of approximately $0.17. In addition, three further VLCC vessels will start trading at a market rate during 2010.
The Company is well financed and anticipates strong increase in cash flow in the years to come.