Add on. Something for folks to keep in mind is that NAT does have the lowest cash flow operating cost due to no debt and an up-to-date standardizedfleet I would not assume the ROC diviend will continue but this is an accurate statement.
Some way or some how rates must increase. But how and exactly when is an open question. But the big tankers with great amounts of existing debt; primarily SFL customers, are at a big disadvantage.
What is important for SFL is that the routes their contracted ships are on, remain cash flow positive. I think odds favor it but no one should delude themself into believing it is not a gamble.
I would have to agree with you. America’s oil production is up over a million bbl a day in just a couple of years. It could be more today if there were land infrastructure to transport and process it. Gasoline demand is down a sustained 3% in California; at 13% if GNP, and something like 1.5% for America. Our natural gas liquids production is displacing oil in ethane and finished chemical production.
It helps that Teekay is trying to work out another fleet wide reduction in tanker speed. But there are still more ships coming on line.
Asia and Europe are dependent on exports to us. So it will take improved American employment rates to drive oil demand and tanker rates. Until we retire Obama in 2012 and lift the stones of regulation / taxation off our economies chest, that cannot happen.
I do have some TGP and SSW pf. Embarrassed to admit I have a few shares of NAT. Although I too am not buying more yet, it seems going with the strongest balance sheet and a return of capital distribution around 8% to 9% would be the logical way to go. However, SFL has a more diversified fleet and that has merit as well.
I agree with you. Better to watch for now. Whether FRO makes it is an open question to be resolved.
Ship Finance International Limited (NYSE:SFL) ("Ship Finance" or the "Company"), today announced that it has agreed to sell the 20-year old combination carrier Front Striver to an unrelated third party and has simultaneously agreed to terminate the corresponding charter party with a subsidiary of Frontline Ltd. ("Frontline").
Delivery to the new owner is expected to be in October 2011 and Ship Finance expects to receive net proceeds of approximately $18.7 million including a $8.1 million charter termination compensation payment from Frontline. As a result of the sale, the Company expects to record a book gain of approximately $2.3 million in the fourth quarter of 2011.
This is exactly what needs to happen. Good time to buy SFL. FRO? A little early, IMO.
After the cancelation fee FRO could still pay to SFL that is.
SFL booked a gain while FRO booked something like a $9 million loss. But that was better than the alternative for them of course.
pay.back...I have a CSX rail line near my home in Evansville, Indiana (my home base)...and I cannot believe the amount of coal that is moving on it all the time (plus a lot of other goods)...
The two new coal mines that the White Oak Coal company is putting in in Hamilton County Illinois near my farms are going to be serviced by the Evansville railroad, which will haul the coal to a river port near my home outside of MT.Vernon Indiana...and down the Ohio river to the Gulf of Mexico and on to China...
The Evansville railroad is also tied in to CSX...I thought you would find this interesting because it will be another increase in business for CSX....!
[I noticed last night that its an OBO rather than a VLCC or Suezmaz as I would have expected.]
The OBOs have got to go. They're all 1991/1992 built, making them among the oldest SFL owns. Old, slow, inefficient and competing with VLOCs - as far as I know, FRO never used them as crude carriers.
They contracted the sale of their oldest VLCCs last month (although the last of those won't close until 3Q2013). That really only leaves the OBOs and one S-max as pre-1995 hulls. 1991/1992 will be due for major inspections this year and next. I'm sure they'll do whatever deals look positive, but they ought to be anxious to dump the OBOs.
pay.back...I think that it is old news, here is a link posted by Oropan on October 11, 2011..!
Tradewinds this morning reads like blood in the streets. FRO takes a loss of $40M on two vessel sales (one of them being SFL's Front Strider OBO). HRZ gets delisted. B&H plans on delisting. Saga has sold the last of their tankers and will try to figure out what kind of non-shipping business to go into. American Marine Advisors expects shippers to go Chapter 11 and cut-out shareholders rather than reorganize in place.
I think this is just the beginning of the pain everyone's been anticipating for the past year or two. Recovery won't happen until either the economy _really_ starts to recover or shippers start scrapping in earnest. The global tanker fleet needs to lose more ships than SFL owns to come back to balance, and I think there's still too many owners hoping to pick up all the cast off tonnage at near-scrap values for that to begin yet.
SFL, largely because of its rigs, is likely to come out of the bad times, but almost certainly with much smaller shipping fleet. Hopefully not too much smaller, but that depends on companies like FRO and HRZ.
At least the spot rates continue to click up...BDI is now 2140...its low was 1043 back in Feb.