Ardmore Adds Second-Hand Product Tanker, Stays in the Red

Tanker owner and operator Ardmore Shipping Corporation has agreed to acquire a 2008 Japanese-built product tanker.

The acquisition of the 47,500 dwt ship is subject to completion of financing under a lease arrangement, and if successful, the vessel is expected to deliver to Ardmore in December 2017 or January 2018, the company said announcing results for the three and nine months ending September 30.

According to the company’s CEO Anthony Gurnee, while this is just a single-ship acquisition, together with attractive lease financing, “the transaction will provide a meaningful boost to earnings and cashflow.”

Separately, Ardmore said that it had completed a USD 15 million revolving credit facility in October, further enhancing its financial flexibility.

The company reported a net loss of USD 4.6 million in the third quarter of 2017, a slightly lower when compared to a net loss of USD 4.8 million booked in the same period last year. For the nine-month period, Ardmore posted a net loss of USD 8.7 million, reversing from a net income of USD 7.4 million recorded a year earlier.

“Short-term oil market dynamics continue to dominate the product tanker market; while this has been a significant negative for some time, we believe this is shifting to the positive with the impact of Hurricane Harvey abating and global oil inventories heading toward normal levels after an extended period of destocking. As a consequence, we believe the product tanker market is poised for a seasonal rebound this winter.

Beyond these near-term factors, underlying fundamentals are positive: global oil demand growth is strong and export-oriented refinery capacity is increasing to meet this demand. On the back of this, MR tonne mile demand growth is set to continue at about 5%, while supply growth is estimated to be 1.8% for 2017 and only 1.1% for 2018, which should rapidly tighten the MR supply-demand balance. In addition, shipyards and shipowners continue to be capital constrained and, as a consequence, we don’t anticipate any major ordering activity until a recovery is well underway,” Gurnee said.

The average TCE rate for the company’s fleet was USD 12,376 per day for the Q3, 2017, a decrease of USD 1,513 per day when compared to last year.

Ardmore has 27 vessels currently in operation, comprising 21 Eco MR tankers ranging from 45,000 to 49,999 dwt and six Eco-Design IMO 2 product/chemical tankers ranging from 25,000 to 37,800 dwt.