Tanker Firms Look to U.S. Listings

Oil prices falling

By MarEx 2015-01-22 12:17:11

Inspired by an upturn in shipping markets after one of the worst sector downturns on record, a batch of oil tanker companies are looking to raise capital through U.S. listings.

While crude prices have fallen more than 50 percent since June, tanker prospects have brightened, helped by a drop in bunker fuel prices and demand for oil among bargain hunters. Overcapacity, which has dogged owners for years, is also receding.

Average earnings for supertankers have reached over $83,000 a day this week, not far from a peak of more than $120,000 a day seen before the 2008 slump in trade. Companies are banking on investors having noted such trends.

Belgian crude oil tanker group Euronav and Tankships Investment Holdings Inc, a unit of DryShips, a shipping firm led by Greek magnate George Economou, have both set out plans for share issues.

Euronav said this week it was going ahead with a New York Stock Exchange listing in a public offering worth some $175 million. It postponed plans in October citing unfavorable market conditions.

Tankships said on Wednesday it was seeking up to $100 million in a Nasdaq listing.

"The sharp increase in tanker rates and voyage activity is likely to continue as OPEC members maintain their high production levels," Tankships said in its prospectus, noting the positive effects of the current "contango" in crude prices, a market structure where oil for immediate delivery is cheaper than oil in the future.

"Should crude oil prices remain under pressure, the existing contango along the crude oil curve could widen and thereby increase oil stockpiling and the potential use of tankers for floating storage," it said.

Oil traders have already booked up to 20 tankers to store an estimated 40 million barrels of crude in floating storage, aiming to sell later on for a profit when prices rebound.

Tankships said it planned to use part of the flotation proceeds to acquire three tankers, one beneficially owned by Economou and the other two by his former wives. The purchases will increase the company's crude tanker fleet to 13 vessels.

Yet the company conceded market conditions could quickly change, as they did in the first few months of 2014, when a number of shipping companies had tried to raise capital through U.S. listings only to see conditions deteriorate, forcing some to wait or scrap their listing plans.

"We believe we are well positioned to benefit from a recovery in the crude oil tanker market," Tankships said. "However, we cannot assure you that the tanker market will strengthen as we anticipate and charter rates may decline."

By Jonathan Saul (C) Reuters 2015.