TEN Reports Lower Profit, Gears Up for Newbuild Deliveries

Greek tanker owner and operator Tsakos Energy Navigation Limited (TEN) posted a net income of USD 25.4 million in the first quarter of 2016, down from last year’s USD 37.2 million amid less operating days due to scheduled drydockings.

Namely, three suezmaxes were sent to drydocking in order to install necessary regulatory upgradings, losing 121 operating days in Q1, which equals to USD 3.5 million in forfeited net revenues. These lost days were mainly responsible for the lower fleet utilization in the quarter to a level of 95.3%.

In addition, the LNG carrier Neo Energy completed its long term time charter in mid-February 2016, resulting in a further USD 3.9 million net revenue cut. The vessel is currently employed on a spot contract.

In a relatively strong market, the company’s fleet earned healthy rates during the quarter achieving an average daily TCE rate of USD 23,378, TEN said.

“The year started on a positive note both for the tanker markets and the company. 2016 is a pivotal year for TEN’s growth. Over the course of the next eighteen months, our bottom line will be boosted by the deliveries 15 state-of-the-art newbuilding vessels, 12 of which on long period charters with the potential of adding about USD 100 million in TEN’s EBITDA going forward,” said Nikolas P. Tsakos, President and CEO of TEN.

Earlier this month the company took delivery of the new VLCC Ulysses from Hyundai Heavy Industries in South Korea, which entered an attractive spot contract however management is pursuing employment opportunities in the time charter market.

The remaining deliveries are to start coming in mid-June. By the end of 2016, four aframaxes and two LR1 product carriers will have been delivered, all with accretive time-charters attached. In addition, later this year, the VLCC Hercules and the LNG carrier Maria Energy will be delivered and management is in active negotiations for securing employment for both.

“We have arranged financing at competitive terms for each of our newbuildings subject only to final and customary approvals relating to a loan for the LNG carrier and one VLCC under construction. In total, the newbuilding program amounts to an investment of almost USD 1.07 billion of which approximately USD 800 million will be financed by committed bank loans, USD 190 million of which has already been drawn down by March 31, 2016,” the company said.



According to TEN, the second quarter of 2016 continues to exhibit signs of a good market with tanker charter rates, across the board, providing healthy returns.

The company said that it will continue to shift its employment policy towards predominantly longer term charters and lock into the attractive levels currently on offer, while maintaining presence in the spot market to take advantage of possible rate spikes.

On the specialized vessels’ front, TEN intends to preserve its LNG presence and is investigating opportunities for long term charters or conversion possibilities for its 2007-built 150,000cbm Neo Energy to a floating storage and regasification unit (FSRU). In addition, the company said that it was starting to build up its own expertise in LNG carrier technical management.

In conclusion, TEN noted that it remains open to opportunities to divest some of its older vessels in order to lower the current age profile of the fleet.


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