Sovcomflot (SCF Group), a world leader in energy shipping and offshore services to the oil and gas industries specializing in harsh environment work, today reported its results for the third quarter (Q3) and nine months (9M) ending 30 September 2018.
During the reporting period, the tanker freight markets remained in a depressed state as vessel supply continued to outstrip vessel demand. Signs of a better balance have emerged more recently following longer term oil price recovery and worldwide fleet removals over 2H 2017 and 1H 2018. These factors, in part, led to the start of a recovery in freight levels in the conventional tanker fleet towards the end of Q3 2018 and in the large crude vessel segments in particular. The improvement has continued into Q4 2018 and has resulted in a healthy increase in earnings across the Group’s crude carrying vessels, an improvement that is forecast to hold steady in the near term and into Q1 2019.
Financial highlights for the third quarter to 30 September 2018
|
USD Millions |
Q3 2018 |
Q3 2017 |
% |
|
Gross revenue (Freight and hire) |
396.4 |
350.5 |
+13.1 |
|
Time-charter equivalent (TCE) revenue |
262.6 |
255.2 |
+2.9 |
|
EBITDA* |
146.9 |
125.4 |
+17.1 |
|
Net profit (loss) |
0.3 |
(22.0) |
- |
* EBITDA calculated on adjusted basis as operating profit before depreciation and amortisation adjusted by gain / (loss) on sale of subsidiaries, gain/(loss) on sale of equity-accounted investments, other operating revenues / (expenses) and interest income.
Financial highlights for the nine months to 30 September 2018
|
USD Millions |
9M 2018 |
9M 2017 |
% |
|
Gross revenue (Freight and hire) |
1,106.5 |
1,060.7 |
+4.3 |
|
Time-charter equivalent (TCE) revenue |
774.0 |
786.0 |
-1.5 |
|
EBITDA |
414.6 |
408.3 |
+1.5 |
|
Net profit (loss) Including non-cash vessel value impairment provision |
(57.5) (45.9) |
(6.8) |
- |
** The net loss recorded for the nine month period was USD 57.5 million (9M 2017: USD 6.8 million net loss). This includes a non-cash vessel value impairment provision of USD 45.9 million, in the first nine months of 2018, relating to some older crude oil and oil product tankers (reflecting a reassessment of their longer-term value in use, given the historic freight market lows reached earlier in 2018).
Operational highlights Q3/9M 2018
In February, a new high-tech multifunctional icebreaking platform supply vessel, Yevgeny Primakov, entered service under a 20-year time-charter agreement with Sakhalin Energy Investment Company Ltd.
In June, Sovcomflot and PAO Novatek signed a strategic partnership agreement to develop together logistical support for Yamal LNG, Arctic LNG-2 and other projects of NOVATEK.
In July Gagarin Prospect, the world’s first Aframax tanker to use cleaner burning LNG as her primary fuel, entered the fleet under a long-term time-charter with Shell. This vessel is pioneering the use of Marine LNG for large capacity tankers, especially those not tied to fixed routes or set timetables.
In August, the Group’s LNGC Pskov loaded the first cargo of LNG produced at the Yamal LNG’s Train 2 in Northern Russia.
Subsequent to the period, in October, Lomonosov Prospect, the Group’s second Green Funnel Aframax tanker completed its maiden voyage along the Northern Sea Route (NSR) carrying clean petroleum products. During the voyage, the crew successfully tested the operation of the ship’s engines and fuel system controls using LNG, as well as the operation of navigation equipment and machinery in ice conditions at sub-zero temperatures.
Commenting on the Group’s results Sergey Frank, President & CEO of PAO Sovcomflot, said:
“The Group returned to positive numbers in Q3 2018 with continued growth in SCF’s industrial, fixed income businesses. The Offshore and Gas divisional performances remain at the core of the Group’s profitability and earnings performance, contributing now around 60% of Group’s net revenues. The green shoots of recovery in the conventional tanker market and in the larger crude sector in particular, are encouraging for Q4 2018 and may bring a welcome earnings boost on top of that provided by the Gas and Offshore divisions. Of particular note, we achieved a key milestone in our drive to innovate within the tanker industry with the delivery and the first LNG fuelling of Gagarin Prospect in partnership with Shell and the project is an excellent example of SCF partnering its client to harness technological innovation to provide cleaner, safer and more efficient maritime transportation services.”
Nikolay Kolesnikov, Sovcomflot Senior Executive Officer & Chief Financial Officer, said:
“During the nine month period, the Group completed financing and refinancing transactions amounting to USD 424.0 million in total including a USD 106.0 million long-term facility with Sberbank, to finance an Arctic shuttle tanker and a USD 252.0 million long-term facility with international banks to finance six Green Funnel Aframax tankers. SCF’s long-term offshore and gas businesses increased their TCE revenues by 17.7 per cent and 14.5 per cent respectively in the nine month period, compared with the first nine months of 2017. The company continues to enjoy an exceptionally strong pipeline of future contracted revenues amounting to a total of USD 7.7 billion.”
Fleet summary
As at 30 September 2018, the Group’s fleet (including vessels owned, chartered-in, and in joint ownership with third parties) comprised 147 vessels with a combined deadweight of approximately 12.7 million tonnes.
SCF Press Service
PAO Sovcomflot (SCF Group) is one of the world's leading shipping companies, specialising in the transportation of crude oil, petroleum products, and liquefied gas, as well as the servicing of offshore oil and gas exploration and production. The company’s own and chartered fleet includes 147 vessels with a total deadweight of 12.7 million tonnes, of which 80 vessels have an ice class. 8 vessels are under construction.
Sovcomflot is involved in servicing large oil and gas projects in Russia and around the world: Sakhalin-1; Sakhalin-2; Varandey; Prirazlomnoye; Novy Port; Yamal LNG, and Tangguh (Indonesia). The company is headquartered in Saint Petersburg, with offices in Moscow, Novorossiysk, Murmansk, Vladivostok, Yuzhno-Sakhalinsk, London, Limassol, and Dubai.