According to Fearnleys, the VLCC fleet totalled 501 vessels at the end of the fourth quarter with eleven deliveries during the quarter. There are six additional deliveries expected to take place in the first quarter of 2009. The total order book amounted to 227 vessels at the end of the fourth quarter, down from 238 vessels after the third quarter of 2008. The current orderbook represents approximately 45 percent of the VLCC fleet. Two VLCC's were deleted from the trading fleet and no VLCCs were ordered during the quarter. The single hull fleet amounted to 110 vessels at the end of the fourth quarter. Finally, a further six VLCC newbuilding contracts were cancelled during the quarter and additional amendments to the orderbook is expected.
The Suezmax fleet totalled 348 vessels at the end of the quarter, up from 346 vessels after the third quarter of 2008, a 0.5 percent fleet increase over the quarter. No Suezmax tankers were ordered and two deliveries took place in the quarter. The total orderbook amounted to 172 vessels at the end of the quarter, a decrease of two from the end of the third quarter. There are 73 deliveries expected in 2009 according to Fearnleys and the orderbook represents approximately 50 percent of the current Suezmax fleet. However, it must be stressed that significant delays to the 2009 delivery schedule is expected. Finally, the single hull fleet amounted to 37 vessels at the end of the fourth quarter.
Strategy and Outlook
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 Ltd.
The main focus is to find solutions to get access to the locked up future cash flows in the Company, however in the current financial markets it is a challenge to pursue any alternatives.
Based on the new charter structure described above for the VLCC British Pioneer in 2009, the Board anticipates improved results as a consequence of the market related exposure and is satisfied with the downside protection with the Base Daily Rate of $20,000 per day.
The Company's charter coverage for its six double hull VLCCs is 100 percent in 2009 and 96 percent 2010. For the three double hull Suezmax tankers, the charter coverage is 100 percent in 2009 and 75 percent in 2010. Our strategy has been to focus on long term charters to reputable companies and we are very satisfied in today's challenging credit and shipping markets that BP and Chevron are our main counterparties.
The Company has low cash breakeven rates and the vessels are financed through the US bond market with maturity from 2015 to 2021. The Company's focus at the moment is related to the refinancing of the short term bank facilities of $40.6 million that mature in June and August 2009. The latter was drawn in connection with the repurchase of our own Windsor term notes in 2008.
The combination of fixed bareboat and market rates for the six VLCCs in the years ahead and the fact that all the vessels are financed creates a solid platform for the Company going forward.
My comment: A company that is earning .21 cents per annum in a fairly stable enterprise should be worth more than .25 cents a share.