Tanker Watch: News from Three Major Ship Operators

Published Oct 19, 2006 12:01 AM by The Maritime Executive

• Teekay Shipping

On Wednesday morning, Teekay Shipping announced that it had acquired a 50.3% stake in Petrojarl ASA, consistent with its mandatory bid which they previously announced on September 18th. Teekay, effectively declaring victory in their battle for control of the Norwegian oil production services firm, said in a statement on Wednesday that they had received a total of six acceptances for the sale of more than 500,000 Petrojarl shares.

Teekay, a Canadian-based, U.S. listed tanker group engaged in a bidding war with Prosafe for Petrojarl in August. Last week, Prosafe declined to sell their 30% stake in the company and they again confirmed yesterday that they would remain a significant shareholder. Teekay, headquartered in Vancouver, launched a mandatory takeover bid for all remaining Petrojarl shares in mid-September. Teekay’s acquisition of Petrojarl expands the tanker firm’s position in the floating, production, storage and offloading (FPSO) sector.

Teekay Shipping assets carry about 10 percent of the world's maritime oil traffic. They have also expanded into the liquefied natural gas shipping sector through a subsidiary unit, Teekay LNG Partners unit.

• Stolt-Nielsen

Stolt-Nielsen, the product and parcel tanker giant who last week reported increased operating revenues in the third quarter, but also saw its net profit dip because of anti-trust issues, publicly confirmed that its chairman and chief executive are being investigated by the US Department of Justice. The disclosures, provided in a new SEC filing, say that “Jacob Stolt-Nielsen, the chairman of the board, and Niels Stolt-Nielsen, the chief executive officer, received letters on March 27, 2006, from the Philadelphia office of the United States Department of Justice’s Antitrust Division stating that each is regarded as a target of a federal grand jury investigation concerning antitrust and other violations in the parcel tanker industry”.

Stolt-Nielsen has continued to defend itself against the indictments as well as the DOJ’s reversal of its amnesty deal. The firm also maintains it has been “misstated in the press that the US Supreme Court had decided not to hear our case” and Stolt continues to work towards having its case heard by the high court.

Last week, Stolt disclosed that their third quarter earnings of 398 million, up from about $384 million a year ago were offset by payments of $17.8 million to some customers for the settlement of anti-trust issues and related ($10 million) legal expenses. Total profit dropped from $53 million to almost $37 million. Stolt-Nielsen continues to post good operational performance numbers, but anti-trust legal expenses are expected to continue to impact the firm’s bottom line.

• Overseas Shipholding

New York-based Overseas Shipholding Group (OSG) has announced that their previously announced purchase of US-flag ship operator Maritrans has passed antitrust scrutiny. The Federal Trade Commission has waived the standard waiting period with respect to their acquisition of Maritrans. The purchase, announced on September 25th, is still subject to other conditions, including but not limited to shareholder approval.

The cash transaction between OSG and Maritrans is valued at around $455 million and will immediately position Overseas Shipholding as a dominant Jones Act ship operator. Tampa, FL-based Maritrans operates 11 articulated tug and barges (ATB) units, five product carriers and has three large ATB tug barges under construction. Beginning last year, Maritrans had embarked on a program to convert its existing fleet of 16 vessels from single hull to double hull to meet international mandates.

The acquisition will give OSG control over about one-third of the refined product trade in the coastwise U.S. markets and overnight, OSG doubles its fleet of U.S. Jones Act-protected vessels to 36 ships. The NY-based OSG already owns or leases a fleet of 88 ships, making it among the largest publicly traded tanker firms, both in terms of number of vessels and deadweight tonnage. OSG also maintains a notable presence in the Jones Act market on the East and West coasts.