GMR Q2 Profit Drops 55%

General Maritime 2nd-Quarter Profit Drops 55 Percent
By Todd Zeranski
July 31 (Bloomberg)

General Maritime Corp., the second- largest U.S. oil-tanker owner, said second-quarter profit fell 55 percent as the company's fleet declined in number and spent fewer days at sea.

Net income dropped to 37 cents a share, or $11.8 million, from $26.1 million, or 81 cents, a year earlier, New York-based based General Maritime said today in a statement. Revenue fell 18 percent to $62.7 from $76 million.

The size of the company's fleet declined by 5.5 percent, to 19 vessels. The total number of voyage days fell 4.6 percent, to 1,648. The number of days contracted on the spot market dropped 70 percent to 436.

General Maritime's fleet earned, on average, $33,739 per day, up 14 percent from $29,506 a day in the year-earlier period. The average spot market rate for its Suezmax tankers, where rates vary by voyage, was little changed at $32,957 a day.

The average spot rate for its Aframax tankers was $10,731, down 45 percent from $19,390.

General Maritime's earnings excluding a loss of 6 cents a share related to derivatives was 43 cents. On that basis, the company was expected to earn 40 cents, the average estimate of 10 analysts surveyed by Bloomberg. In last year's quarter, General Maritime's earnings were boosted by an $11.2 million gain from the sale of vessels.

JPMorgan Estimate

Jonathan Chappell, a JPMorgan Chase & Co. analyst, earlier this month lowered his per-share earnings estimate by 10 cents, to 38 cents a share.

``We believe the benefits of GMR's nearly 70 percent time- charter coverage in 2007 are already reflected in the stock's valuation,'' Chappell, who has a ``neutral'' rating on the shares, wrote in a report.

Shipping rates were 25 percent lower than last year's second quarter, according to the Baltic Dirty Tanker Index, a measure of rates for various-sized vessels on routes around the world. Suezmax tankers can transport as much as 1 million barrels of oil. Aframax tankers can hold 600,000 barrels.

Shares of General Maritime rose 37 cents, or 1.4 percent, to $26 in composite trading on the New York Stock Exchange.

General Maritime (GMR) releases Q2 results

NEW YORK, July 31 /PRNewswire-FirstCall/ -- General Maritime
Corporation (NYSE: GMR) today reported its financial results for the three
and six months ended June 30, 2007.

Financial Review: 2007 Second Quarter

The Company had net income of $11.8 million, or $0.38 basic and $0.37
diluted earnings per share, for the three months ended June 30, 2007
compared to net income of $26.1 million, or $0.83 basic and $0.81 diluted
earnings per share, for the three months ended June 30, 2006. The decrease
in net income was principally attributable to the absence of a gain on sale
of vessels of $11.2 million as realized in the prior year period as well as
the result of lower voyage revenues attributable to a 6.0% decrease in
fleet size from the prior year period.

Peter C. Georgiopoulos, Chairman, Chief Executive Officer and
President, commented, "During the second quarter and first six months of
2007, General Maritime met strategic objectives related to further
increasing its time charter coverage, continuing to distribute sizeable
quarterly dividends and entering into value creating transactions.
Specifically, we increased our time charter coverage to 68%, representing
$450 million in contracted revenue through 2011. We also declared a
cumulative $1.00 per share dividend for the first six months of 2007 and
have now declared regular quarterly dividends of $9.28 per share since
initiating our dividend policy in January 2005. Complementing this
significant success, we also paid a $15 per share special dividend during
the first six months of 2007, continuing our long tradition of entering
into transactions that unlock significant value for our shareholders."

Included in net income of $11.8 million are a $1.5 million unrealized
non- cash loss associated with the change in fair value of our freight
derivative as well as a $0.3 million loss associated with monthly cash
settlements of our freight derivative, both of which are included in Other
expense.

Net voyage revenue, which is gross voyage revenues minus voyage
expenses unique to a specific voyage (including port, canal and fuel
costs), increased 9.1% to $55.6 million for the three months ended June 30,
2007 compared to $51.0 million for the three months ended June 30, 2006.
EBITDA for the three months ended June 30, 2007 was $31.4 million compared
to $36.0 million for the three months ended June 30, 2006 (please see below
for a reconciliation of EBITDA to net income). Net cash provided by
operating activities was $37.7 million for the three months ended June 30,
2007 compared to $38.3 million for the prior year period.

The average daily time charter equivalent, or TCE, rates obtained by
the Company's fleet increased by 14.3% to $33,739 per day for the three
months ended June 30, 2007 from $29,506 for the prior year period. The
Company's average daily rates for vessels on spot charters increased by
0.3% to $32,957 for the three months ended June 30, 2007 compared to
$32,867 for the prior year period.

Total vessel operating expenses, which are direct vessel operating
expenses and general and administrative expenses, decreased 3.3% to $22.2
million for the three months ended June 30, 2007 from $23.0 million for the
three months ended June 30, 2006. During the same periods, the average size
of General Maritime's fleet decreased 5.5% to 19.0 vessels from 20.1
vessels in the prior year period. Daily direct vessel operating expenses
rose 2.2% to $6,237 during the quarter ended June 30, 2007 from $6,101
during the prior year period.

Financial Review: First Half 2007

Net income was $28.4 million or $0.92 basic and $0.90 diluted earnings
per share, for the six months ended June 30, 2007 compared to $110.4
million, or $3.44 basic and $3.36 diluted earnings per share, for the six
months ended June 30, 2006. Net voyage revenues decreased 17.6% to $112.9
million for the six months ended June 30, 2007 compared to $137.0 million
for the six months ended June 30, 2006. EBITDA was $60.5 million for the
six months ended June 30, 2007 compared to $131.0 million for the six
months ended June 30, 2006. Net cash provided by operating activities was
$61.1 million for the six months ended June 30, 2007 compared to $119.8
million for the prior year period. TCE rates obtained by the Company's
fleet increased 1.3% to $34,403 per day for the six months ended June 30,
2007 from $33,976 for the prior year period. Total vessel operating
expenses decreased 4.0% to $47.7 million for the six months ended June 30,
2007 from $49.7 million for the prior year period, and daily direct vessel
operating expenses rose 9.4% to $6,596 for the six month period ending June
30, 2007 from $6,029 from the prior year period.


General Maritime Corporation's Fleet

As of July 31, 2007, General Maritime Corporation's fleet on the water
was comprised of 19 wholly owned tankers, consisting of 10 Aframax and 9
Suezmax tankers, with a total carrying capacity of approximately 2.4
million deadweight tons, or dwt. The average age of the Company's fleet as
of June 30, 2007 by dwt, was 9.0 years compared to 8.5 years as of June 30,
2006. The average age of the Company's Aframax tankers was 11.8 years and
the average age of the Company's Suezmax tankers was 6.9 years.

Currently, 5 of General Maritime Corporation's Aframax tankers and 1 of
its Suezmax tankers are operating on the spot market. 68% of the Company's
fleet, consisting of 5 Aframax tankers and 8 Suezmax tanker are under time
charter contracts.

During the second quarter we agreed to enter into two three year time
charter contracts at a gross rate of $39,000 with Eiger shipping, a
subsidiary of Lukoil, for the remaining two Suezmax newbuilding vessels
which are expected to be delivered in August of 2007 and February of 2008.
The table below outlines which vessels are on time charter at what rate and
when the contracts are expected to expire.

Imarex/SHX Closing Prices 07.31.07

Imarex
TD3: WS62 (-4) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt
TC2: WS208 (-7) - MR2 - Rotterdam to New York (USAC)

SHX: 338.92 ( +3.67/-1.09% ) - PHLX Marine Shipping Index

TankerRates.com (08.01 - 00:30 CET)
MEG-East - - - - - - - VLCC - - - - 260k - - - - - - 54 (-1)
WAF-USAC - - - - - - Suezmax - -130k - - - - - - 100 (+2)
NSEA-UKC - - - - - - - Aframax - - 80k - - - - - - 100 (-6)
Singapore-Japan - - - MR - - - - - 30k - - - - - - 234 (0)

Imarex/SHX Closing Prices 07.31.07
Imarex, PHLX, SHX, WS, Worldscale

Suez Canal Allows VLCCs

November 28th, 2006

Egypt to Spend $5 Billion on Suez, Allow Supertankers (Update1)
By Abeer Allam
(Bloomberg)

Egypt plans to spend at least $5 billion over five years to expand the Suez Canal, speeding up Middle East oil shipments to Europe and the U.S. and increasing revenue from the world's longest man-made waterway.

The canal will be deepened by 10 feet and widened by 17 percent to an average of 365 meters (1,198 feet), Admiral Ahmed Fadel, chairman of the Suez Canal Authority, said in an interview in Ismailia. The Egyptian government will spend at least $1 billion a year from 2010 through 2015 on the project.

``We want to get the biggest possible share of future world trade,'' said Fadel in an interview yesterday. ``We want to create more bypasses to handle future huge tankers.''

The expansion will let vessels use the canal without emptying half their cargoes into the adjacent Sumed pipeline first, stoking demand for very large crude carriers, or VLCCs, operated by Frontline Ltd. and Euronav NV. The largest vessels that can use the link without stopping are suezmaxes. About 7 percent of the world's seaborne trade transits through the canal. The waterway earned Egypt $3.6 billion in the past year.

``It will create stronger demand for VLCCs,'' James Davis, an analyst for Lloyd's Marine Intelligence Unit, said by phone from London. Demand for suezmaxes and so-called aframaxes, which haul 650,000-barrel cargoes, may fall, he said.

Previous Expansion

The canal, through which 18,000 ships passed in 2005, has spent about $800 million on expansion projects since 1980 to accommodate growing traffic. Global trade will grow 8.9 percent this year and 7.6 percent in 2007, according to the International Monetary Fund.

As many as 220 VLCCs, each able to transport 2 million- barrel consignments, transited the canal in the past 12 months, according to Lloyd's MIU. A further 264 elected to take the longer journey around South Africa.

Some oil companies discharge their entire 2 million-barrel cargoes into the pipeline that runs by the 166-kilometer (103- mile) waterway from the Red Sea terminal of Ain Sukhna to storage tanks at Sidi Kerir on Egypt's Mediterranean coast. They then return to the Persian Gulf for new cargoes and the oil they discharge is collected by smaller vessels in the Mediterranean.

Quicker transits through the canal may encourage some oil- tanker operators to take cargoes directly to where they are needed, curtailing demand for smaller vessels operating in the Mediterranean Sea, according to Lloyd's MIU.

Suez Crisis

The waterway, built by Ferdinand de Lesseps in 1869, was nationalized in 1956 by President Gamal Abdel Nasser after the U.S. and the U.K. withdrew financial support for the Aswan High Dam project. The move prompted an Anglo-French-Israeli invasion of Egypt in what is known as the ``Suez Crisis'' or ``the Tripartite Aggression'' in Egypt. International pressure forced the troops to withdraw and Egypt retained control of the canal.

The waterway is one of Egypt's largest foreign-currency earners, together with tourism, oil and gas exports and remittances from Egyptian workers abroad.

Suez Canal revenue rose 8 percent in the fiscal year that ended June 30 because of growing trade between Europe and Asia, the surge in oil prices and the 3 percent increase in Suez Canal transit fees. In the first 10 months of this year, revenue rose 10 percent to $3.2 billion from a year earlier.

The expansion will enable tankers carrying 350,000 metric tons of cargo, equivalent to more than 2 million barrels, to pass through the canal. Ships carrying a maximum of 200,000 tons are currently able to use the waterway.

Sumed Capacity

The Sumed oil pipeline has a capacity of 2.5 million barrels of oil a day. Egypt and Persian Gulf monarchies, including Saudi Arabia, Kuwait and Qatar, own the pipeline, which mainly carries Saudi oil. The pipeline opened in 1977.

``We agreed with Sumed officials in 1997 that we should be complementing each other and we should offer transit service as a package,'' Fadel said. ``We would do anything to keep Suez Canal's route the most economically competitive and that is why we are conducting current expansions.''

The project also will speed up shipments of oil from Europe to Asia, according to Lloyd's MIU. A BP Plc-led pipeline will pump up to 1 million barrels of Azeri crude oil to the Turkish port of Ceyhan. Fuel oil that's used to power ships is also transported from Russian exporters in the Baltic Sea to Singapore and China.

The Suez Canal has gone through several expansion stages. Following nationalization, it was deepened 4 feet to handle ships with a 38-foot draft. It then closed for eight years after Israel occupied the Sinai Peninsula, east of Suez.

Five-Year Plan

When the canal was opened for international trade in June 1975, the authority began a five-year plan to build three bypasses near Port Said, Timsah Lake and Deversoir along the canal coastline to allow transit of ships in both directions. The bypasses' combined length reached 69 kilometers.

From 1980 through July 2001 the canal was deepened in two stages to allow passage of ships with a 62-foot draft, and 200,000 tons capacity. By the end of 2007, it will be able to handle 66 foot-draft ships, with 220,000 tons capacity.

``With every stage we make sure the return will be higher than the spending and we keep adjusting our plans to cater for a changing world,'' Fadel said.

Morgan Stanley May Run Larger Tankers

February 22, 2006

Morgan Stanley May Run Larger Tankers for Oil Trades
By Alaric Nightingale

Morgan Stanley, the world's second- largest securities firm, plans to expand its oil tanker business as global demand for crude rises, according to two people briefed on the discussions.

The company is considering operating suezmaxes, 1 million- barrel vessels that would be the largest Morgan Stanley controls, said the people, who declined to be identified because the plan is still being debated. The ships often haul crude from West Africa and the Black Sea to the U.S. and Europe.

Morgan Stanley, which has traded crude oil since 1984, wants to bolster its shipping unit to compete with companies such as Glencore International AG and Vitol Group. The New York-based company purchased a tanker operator last year for $200 million. Taking control of larger ships would help ensure the bank has sufficient quantities of crude to support its trades.

``Morgan Stanley is everywhere, but the physical presence is the one big thing missing in their book,'' Anthony Nunan, deputy general manager for international petroleum business at Mitsubishi Corp. in Tokyo, said by telephone. ``The physical business is getting bigger but more competitive.''

Carlos Melville, a Morgan Stanley spokesman in London, declined to comment on the plans.

By having tankers, a trader can try to influence the underlying oil price by buying or selling crude, boosting profit, according to Nunan. The price at which most derivative contracts are settled is determined by the price of the underlying oil.

Flexible Storage

Morgan Stanley is the world's biggest trader of oil derivatives, according to rankings compiled by Risk magazine.

It had more money at risk trading commodities than equities last year, according to an annual filing. So called value-at-risk, or the estimated amount its positions could lose in a day, was $30 million for commodities on average in the year to Nov. 30 and $28 million for equities, the filing showed.

No other banks operate oil tankers, said Nikos Varvaropoulos, a tanker broker for Optima Shipbrokers in Athens.

``It gives them the flexibility to target markets where there's a short-term demand that might have a higher price,'' said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. ``It gives them floating storage so they can deliver to anyone, anywhere in the world.''

The Paris-based International Energy Agency estimates demand for oil will rise 1.8 percent to 86 million barrels a day in 2007.

Heidmar Ships

The ships would be run by the Heidmar Group, a Connecticut- based shipping company Morgan Stanley bought in September. As the operator of the vessels, Morgan Stanley doesn't own the assets so it doesn't carry the risk of their value depreciating.

The Heidmar acquisition gave Morgan Stanley access to a fleet of 87 smaller tankers, with the biggest capacities approaching 843,000 barrels. The purchase price was disclosed in a regulatory filing Oct. 6.

Morgan Stanley does not disclose how much it uses the Heidmar fleet, Mark Lake, a spokesman for the bank in New York, said.

The bank rarely ships physical crude oil, according to Jean- Francois Vincke, a freight trader for Riverlake Shipping SA in Geneva. When the bank wants to ship refined oils the vessel booking is discussed privately with Heidmar, making it impossible to judge how much Morgan Stanley uses its current fleet, said Truls Dahl, a tanker broker for Fearnleys AS in Oslo.

Suez Canal

Suezmaxes carry the name because they're the biggest tankers that can navigate Egypt's Suez Canal when fully loaded. They cost about $80 million, according to Fearnleys, a shipping broker.

``They don't want to be caught with a cargo in the market place and have freight rates destabilizing their trading activities,'' said Sverre Bjorn Svenning, a director at Fearnleys.

A larger class of tanker, called Very Large Crude Carriers, or VLCCs, can transport more than 2 million barrels of oil.

A bigger fleet of ships gives an owner more bargaining power over hiring prices. Heidmar doesn't have to disclose how much the carriers cost to hire, or who is buying the cargo. Heidmar also ships oil products such as gasoline, naphtha and jet fuel.

Morgan Stanley said today its investment management division agreed to buy 80 percent of Montreal Gateway Terminals from European tour operator TUI AG.

Imarex/SHX Closing Prices 07.27.07

Imarex
TD3: WS66 ( +1.5 ) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt
TC2: WS220 (+6) - MR2 - Rotterdam to New York (USAC)

SHX: 329.63 (-3.16/-0.95%) - PHLX Marine Shipping Index
previous week close: 351.11 (-21.48/-6.12%)

TankerRates.com (07.27 - 00:30 CET)
MEG-East - - - - - - - VLCC - - - - 260k - - - - - - 55 (-1)
WAF-USAC - - - - - - Suezmax - -130k - - - - - - 98 (+5)
NSEA-UKC - - - - - - - Aframax - - 80k - - - - - - 110 (-4)
Singapore-Japan - - - MR - - - - - 30k - - - - - - 237 (0)

Imarex/SHX Closing Prices 07.27.07
Imarex, PHLX, SHX, WS, Worldscale

IEA July 2007 Report On Tanker Rates

Freight Rates

VLCC rates from the Middle East Gulf drifted below seasonal averages in June, falling most notably on westbound trades. Global volumes of oil at sea are now unseasonably low. The upside potential for rates in the summer, prompted by a decline in Asian refinery maintenance, is diluted by ongoing limits on OPEC exports. Interest in crudes from the Atlantic Basin and Mediterranean pushed rates from these regions slightly higher in June. Ample tonnage eroded clean tanker rates in the Atlantic Basin in June, despite high US gasoline imports.

Tanker trackers report that volumes of oil in transit remain well below seasonal norms, apparently confirming low vessel employment for this time of year. Growing VLCC availability was boosted further in the second half of June by the discharge from several of these two-million barrel vessels which had been storing crude temporarily in the US Gulf. VLCC rates from the Middle East Gulf to US Gulf fell from $20/tonne[$2.73/barrel] at the start of June to around $15/tonne[$2.05/b] in early July.

OPEC cargo reductions continue to undermine any potential for a seasonal rebound in vessel demand as Asian refineries return from maintenance. In line with recent months, Saudi Arabia announced that it will supply 9-10% less crude to refineries in the Far East than contracted volumes in August. VLCC rates from the Middle East Gulf to Japan, now booking for loading in August, are currently around $9/tonne[$1.23/b], down by over $3/tonne from early June. However, eastbound rates have shown signs of rebounding in early July.

Suezmax rates from West Africa to the US Atlantic rose by over $1/tonne, to reach $11.50/tonne[$1.57/b] in the second half of June. Corresponding VLCC rates rose by a similar amount in early July. While these increases coincided with a temporary halt in hostilities from a major rebel group in Nigeria and delays at Nigerian ports, higher Mediterranean chartering was probably more supportive. Black Sea to Med million-barrel rates jumped by $4/tonne in the middle week of June, peaking at almost $12/tonne[$1.64]. There were also reports of improved economics for spot exports of African or FSU grades to the US. Increased interest in Aframax vessels in the Caribbean lent support to late-June rates for the sector and reduced broader vessel availability. Brisk chartering elsewhere contributed to firmness in Aframax rates in the North Sea in June, despite maintenance at production facilities.

Clean product tanker rates fell in June, especially in Western markets. Clean rates for 30,000-tonne trades from Northern Europe to the US Atlantic Coast dropped below $20/tonne[$2.73] at the end of June having started the month near $26/tonne[$3.55]. US gasoline imports remain but increased supply of product tankers in the Atlantic and Mediterranean have had an offsetting effect on spot charter rates. By contrast, limited tanker availability may have bolstered Singapore to Japan clean rates in late June following a quiet month of chartering activity, when refineries increasingly returned to operations.

IEA Oil Market Report July 2007

Chart of PHLX:SHX Shipping Index

Philadelphia Stock Exchange Marine Sipping Index (SHX) July 2007

Suezmax at Sullom Voe

Tanker clearly visible in Google Earth

Imarex/SHX Closing Prices 07.26.07

Imarex
TD3: WS64.5 (no change) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt
TC2: WS214 (+5) - MR2 - Rotterdam to New York (USAC)

SHX: 332.79 (-12.67/-3.67%) - PHLX Marine Shipping Index

TankerRates.com (07.27 - 00:30 CET)
MEG-East - - - - - - - VLCC - - - - 260k - - - - - - 55 (-1)
WAF-USAC - - - - - - Suezmax - -130k - - - - - - 98 (+5)
NSEA-UKC - - - - - - - Aframax - - 80k - - - - - - 110 (-4)
Singapore-Japan - - - MR - - - - - 30k - - - - - - 237 (0)

Imarex/SHX Closing Prices 07.26.07
Imarex, PHLX, SHX, WS, Worldscale

Asian Aframax Rate Gain May Be Limited

Asian Aframax Rate Gain May Be Limited by Rising Ship Supply
By Katherine Espina
July 26 (Bloomberg)

The rate for shipping oil on tankers that can carry 80,000 metric tons on Asian routes posted the smallest increase in six days and any gain may be limited by the increased availability of ships for hire.

The rate for the Kuwait-to-Singapore route climbed 0.14 percent to Worldscale 132.50 yesterday, according to data from the London-based Baltic Exchange. That puts the cost of shipping a barrel of oil at $1.78, Bloomberg data showed.

``The rates may soften with a lot of vessels out there,'' said Takeshi Ando, a shipbroker at Matsui & Co.'s tanker team said by phone today from Tokyo. ``I don't see a lot of activity from the Koreans.''

Sixteen ships, with a total capacity of 1.61 million tons, will sail to Singapore this month, four of them this week, according to AISLive data on Bloomberg.

Aframax vessels, which can typically carry 600,000 barrels of crude oil, are predominantly deployed on short-haul routes or intra-regional trade.

The cost of moving 80,000 tons of oil to Japan from Indonesia was at Worldscale 140 yesterday, unchanged since July 19, according to data from London-based shipbroker Galbraith's Ltd. That puts the cost of shipping a barrel of oil on the route at $1.64.

The rates of shipping gasoline, diesel and other oil products rose yesterday. The rate of shipping 30,000 tons of oil products to Japan from Singapore gained 0.3 percent to Worldscale 242.50, according to the Baltic Exchange. The cost of moving 55,000 tons of products to Japan from the Middle East climbed 0.6 percent to Worldscale 194.50.

Shipping 75,000 tons of oil product costs 0.7 percent more at Worldscale 142.29 yesterday, based on Baltic Exchange data.

Worldscale points are a percentage of a nominal, or flat, rate for a route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

Jefferies Rates Overseas (OSG) "Buy"

Overseas Shipholding "buy," target price raised

Wednesday, July 25, 2007 9:40:18 AM ET
Jefferies & Co

NEW YORK, July 25 (newratings.com) - Analysts at Jefferies & Co reiterate their "buy" rating on Overseas Shipholding Group (OSG.NYS). The target price has been raised from $84 to $124.

Overseas (OSG) reports 2Q results

Overseas Shipping Quarterly Profit Rises on Rates
By Todd Zeranski
July 25 (Bloomberg)

Overseas Shipholding Group, the largest U.S.-based oil-tanker owner, said second-quarter profit rose 31 percent on higher spot rates for its so-called Very Large Crude Carriers and smaller Aframax and dry-bulk vessels.

Net income rose to $78.9 million, or $2.28 a share, from $60.2 million, or $1.52, a year ago, New York-based Overseas Shipholding said in a statement. Revenue climbed 30 percent to $299.9 million. The company was expected to earn $1.43 per share, the average estimate of five analysts surveyed by Bloomberg.

Very Large Crude Carriers, or VLCCs, can carry 2 million barrels of oil. These ships operate mainly out of the Persian Gulf on routes to Asia and the U.S.

Overseas Shipping said its 21 VLCCs were chartered in the spot market at an average rate of $53,474 per day, 15 percent higher than the year-ago period. The company's break-even point for VLCCs is $28,700.

For its 15 Aframax tankers, which can transport about 600,000 barrels of oil, Overseas Shipholding said it was paid an average of $32,187 a day in the spot market, where rates vary by voyage, 21 percent higher than a year earlier.

Maritrans Purchase

Overall, Overseas Shipping totaled 8,704 revenue days for the quarter, a 16 percent increase over the year-ago period. The increase was aided by the purchase of four Handysize vessels that carry dry-bulk commodities, as well as the acquisition of a fleet of oil-transfer boats and the former Maritrans Inc. fleet.

Chief Executive Officer Morten Arntzen, 52, expanded the company's fleet of domestic tankers with the $455 million purchase of Maritrans in September.

The company said it repurchased 5.5 million shares at $66.13 per share during the quarter.

The earnings report was released after the close of regular trading on U.S. stock markets. Shares of Overseas Shipholding today rose $2.46, or 2.9 percent, to $86.14 in New York Stock Exchange composite trading.

Banc of America Dowgrades Overseas (OSG)

Oil Tanker Stocks Fall on Analyst Downgrade and Expected Rate Slump
Wednesday July 25, 12:08 pm
NEW YORK (AP)

Stocks of companies that own and operate crude oil tankers mostly fell Wednesday, after a Banc of America Securities analyst downgraded Overseas Shipholding Group Inc. and said the third quarter may be challenging for the sector.

Analyst Daniel L. Barcelo downgraded Overseas Shipholding to "Neutral" from "Buy" as the stock approached his fair value estimate. He maintained the stock as his top pick in the sector, but said he no longer sees any near-term catalysts to drive up the stock.

Across the sector, Barcelo said the tanker companies should post "solid" second-quarter earnings, although they may struggle in the near-term as tanker charter rates slip.

"Looking ahead, the third quarter may prove difficult as rates have collapsed between 25 to 50 percent since peaking in early May due to relatively high inventory levels, limited OPEC production and refinery turnarounds," the analyst said. "Thus we expect third-quarter rates will drop about 25 percent from second-quarter levels, on average, for all three major types of crude vessels."

The analyst expects tanker rates to even out throughout the rest of the year, and then to turn around in 2008 and 2009.

In midday trading, shares of Overseas Shipholding fell 32 cents to $84.

Frontline Ltd. fell 63 cents to $47.71, while Teekay Corp. rose 7 cents to $55.89.

Ship Finance International Ltd. fell 58 cents, or 1.9 percent, to $29.25. The stock has traded between $18.41 and $31.78 in the last 12 months.

General Maritime Corp. fell 3 cents to $27.45, and Aries Maritime Transport Ltd. rose 4 cents to $9.97.

Knightsbridge Tankers Ltd. rose 40 cents to $29.32.

Arlington (ATB) announces 2Q results

July 24
PRNewswire-FirstCall

Arlington Tankers Ltd. ATB today announced financial results for the second quarter and the six months ended June 30, 2007. For the quarter ended June 30, 2007, the Company's total revenues were $17.8 million, consisting of $16.5 million in basic vessel charter hire and $1.3 million in additional charter hire that the Company received under its profit sharing arrangements.

On the basis of the second quarter results, Arlington's Board of Directors has declared a cash dividend of $0.59 per share. The dividend is payable on August 6, 2007 to shareholders of record at the close of business on August 3, 2007.

Second Quarter Results

The additional charter hire earned during the second quarter of 2007 was derived from profit sharing arrangements under the time charters of the Company's V-MAX, Panamax and Product vessels. Of the $1.3 million in additional charter hire, $545,000 was attributed to contractually guaranteed profit sharing for the two V-MAX vessels. The additional $751,000 was attributed to additional charter hire from the Company's two Panamax tankers and the Company's two Product tankers that are eligible to earn additional charter hire. For these four vessels, the average time charter equivalent rates under the Company's profit sharing agreements over the preceding twelve months were in excess of contractual minimum levels.

The Company's operating expenses during the second quarter of 2007, including depreciation costs of $3.8 million and administrative expenses of $614,000, were $9.4 million. The Company's interest expense, net of interest income for the second quarter of 2007, was $3.2 million. This expense represents interest under the Company's $229.5 million, secured credit facility with The Royal Bank of Scotland plc.

The Company's net income for the second quarter of 2007 was increased by an unrealized gain of approximately $3.4 million, representing the change in the fair value of the Company's interest rate swap arrangement related to its secured credit facility with The Royal Bank of Scotland plc. As a result, the Company's net income for the second quarter of 2007 was $8.5 million, or $0.55 per share. Excluding the effect of this unrealized gain, the Company's net income for the second quarter of 2007 was $5.1 million, or $0.33 per share.

Imarex/SHX Closing Prices 07.24.07

Imarex
TD3: WS64.5 (0) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt
TC2: WS217 (-21) - MR2 - Rotterdam to New York (USAC)

SHX: 343.58 (-13.61/-3.81%) - PHLX Marine Shipping Index

TankerRates.com
MEG-East - - - - - - - VLCC - - - -260k - - - - -- 56 (0)
WAF-USAC - - - - - - Suezmax - -130k - - - - -- 80 (-2)
NSEA-UKC - - - - - - -Aframax - - 80k - - - - - - 141 (-4)
Singapore-Japan - - - MR - - - - - 30k - - - - - - 235 (-5)

Imarex/SHX Closing Prices 07.24.07
Imarex, PHLX, SHX, WS, Worldscale

Europe May Ship More Fuel Oil to Asia

Europe May Ship More Fuel Oil to Asia on Japanese Power Demand
By Bill Murray and Nidaa Bakhsh
July 23 (Bloomberg)

Europe-to-Asia shipments of fuel oil, used to generate electricity and power ships, may increase after demand from generators in Japan and China boosted prices in the region to a record.

The premium of Asian to European prices rose to a five- month high of $39.55 a metric ton on July 20, making so-called arbitrage cargoes more profitable. The spread was at $32.05 at 1:07 p.m. in London, compared with this year's average of $21.25, according to data compiled by Bloomberg. Asian fuel oil rose to a record $410.50 a ton on July 20.

Tokyo Electric Power Co. shut the world's largest nuclear plant on July 16 after it was hit by an earthquake. That will prompt Japanese refiners to increase output from plants that burn fuel oil. China's economy grew at the fastest pace in 12 years in the second quarter, boosting power demand.

``I wouldn't be surprised if there were five VLCCs'' hired for arbitrage shipments, said Christian Laurenborg, a fuel oil buyer for A.P. Moeller-Maersk A/S, the world's biggest shipping line. Surging fuel demand from Chinese companies is ``what makes life difficult for guys like me.''

Five very large crude carriers, or VLCCs, tankers able to carry about 2 million barrels of oil, are sailing toward Rotterdam, Europe's biggest port and supply center for fuel oil, according to AISLive data on Bloomberg. Traders normally use VLCCs for arbitrage shipments because they are the cheapest means of hauling the material over long distances.

Exxon, Shell

Exxon Mobil Corp. and Royal Dutch Shell Plc have each hired tankers to carry 80,000 tons of fuel oil from Saudi Arabia to the Far East, shipbrokers said. Asia's shortage of fuel oil is around 720,000 barrels a day, broker PVM said.

The strong demand is ``mostly due to higher expected fuel oil demand after the closure of the world's largest nuclear reactor in Japan following an earthquake,'' according to a daily energy market report published by PVM Oil Associates GmbH in Vienna.

The cost of hiring VLCCS has fallen to the lowest in almost four years after the Organization of Petroleum Exporting Countries cut production. That's helped to make fuel oil shipments from Europe profitable.

Fuel oil traded little-changed at about $370 a ton at Rotterdam today, Maersk's Laurenborg said.

Imarex/SHX Closing Prices 07.20.07

TD3: WS58 (+0.5) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt
TC2: WS235 (-5) - MR2 - Rotterdam to New York (USAC)

SHX: 351.11 (-7.01/-1.96%) - PHLX Marine Shipping Index

Imarex/SHX Closing Prices 07.20.07
Imarex, PHLX, SHX, WS

Imarex/SHX Closing Prices 07.19.07

TD3: WS57.5 (-2.5) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt

TC2: WS238 (-1) - MR2 - Rotterdam to New York (USAC)

SHX: 358.12 (+12.05/+3.48%) - PHLX Marine Shipping Index update

Imarex/SHX Closing Prices 07.19.07
Imarex, PHLX, SHX, WS

MEG Rates May Stay Near 3-Month Low

Persian Gulf Tanker Rates May Stay Near Three-Month Low on Glut
By Alaric Nightingale
July 18 (Bloomberg)

The cost of shipping crude from the Middle East to Asia, the world's busiest oil- tanker route, may stay near a three-month low as an oversupply of ships competing for cargoes negates a probable increase in demand.

Saudi Arabia, Kuwait and the United Arab Emirates all told oil companies this week when they must have tankers in place to collect crude from the region's ports next month, said Mathieu Philippe, a shipbroker for Paris-based Barry Rogliano Salles. Any resulting jump in demand may not be enough boost rates for the next several days because of a glut of tankers, he said.

``There's going to be more activity today and by the end of the week,'' Philippe said by telephone from Dubai, adding that Iran probably will also declare August's loading program by July 22 at the latest. ``But there will have to be 10 to 15 bookings a day before it brings the market up.''

The benchmark ship-rental rate for tankers slipped 1.1 percent yesterday, paying owners the equivalent of about $28,000 a day. At that rate, Frontline Ltd., the world's biggest supertanker operator, loses money.

The London-based Baltic Exchange, whose price assessment for shipments between the Middle East and Japan is used to settle shipping contracts between owners and oil companies, fell to 58.67 Worldscale points yesterday from 59.36 on July 16. Yesterday's rate was the lowest since April 25.

At 58.67 Worldscale points, owners of modern, very large crude carriers, or VLCCs, can earn about $27,957 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline said on May 30 that it needs more than $29,500 a day to be profitable on each of its VLCCs.

Bookings of supertankers sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP.

Imarex/SHX Closing Prices 07.17.07

TD3: WS60 (-3) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt

TC2: WS237 (-6) - MR2 - Rotterdam to New York (USAC)

SHX: 344.62 (+8.66/+2.58%) - PHLX Marine Shipping Index

Persian Gulf Rates May Extend Drop

Persian Gulf Tanker Rates May Extend Drop, Fueling Owner Losses
By Grant Smith
July 17 (Bloomberg)

The cost of transporting Middle East crude oil to Asia, down 15 percent in the past month, may extend declines, forcing shipowners to keep leasing out supertankers at a loss.

There are enough ships available in the Persian Gulf in the first two weeks of August to handle about three-quarters of potential cargoes, Paris-based shipbrokers Barry Rogliano Salles said in an e-mailed report yesterday. There are 96 ships free until Aug. 16, compared with 124 cargoes scheduled for collection this month.

``There are too many ships at the moment, and still some left over from July,'' Per Mansson, a broker at Sweden's Nor Ocean Stockholm AB, said by mobile telephone. ``It's fairly gloomy.''

Rates on the route between the Persian Gulf and Asia, the world's busiest, were at 59.4 Worldscale points yesterday, according to London's Baltic Exchange.

At that rate, owners of modern, very large crude carriers, or VLCCs, can earn about $28,434 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices. That compares with the $29,500 that Frontline Ltd., the biggest operator by capacity, says it needs in order to break even.

Hire rates have declined 15 percent since June 16 as reduced imports by Asian refiners during the maintenance phase in May created a backlog of vessels.

Bookings of supertankers sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP.

Frankly Speaking

Fearnleys has some excellent articles under this heading. This is some of the best analysis I've read for free on the web. I don't necessarily agree with the numbers in some cases, but overall they look at things from an angle you don't see in the weekly Worldscale reviews.

Here is the link:
http://www.fearnleys.com/index.gan?id=35

Poten & Partners Tackle Peak Oil

I'm always interested when what I call "the rest of the world" addresses peak-oil. This is certainly important for tankers. I hesitate to endorse Poten's view, however. The second sentence is fabulous - and confusing. I skipped a few lines on price and their charts. You can see those for yourself in the link I provided. I just didn't feel they added much. Two paragraphs is a start. I'm looking forward to more...

Prolonging the Peak
July 13, 2007

The notion of ‘peak oil’ has received frequent commentary for the past couple of years. Although often touted as a soon-to-be economic reality, its definition tends to remain subjective and it’s relevance in today’s oil market is quite nebulous. One interpretation of the term ‘peak oil’ would be to define it as the point at which it is no longer economically favorable to consume oil. Bearing that definition in mind, it is safe to assume that we have yet to reach this point. In the recently published, “Medium Term Oil Market Report,” IEA tackles the issues surrounding ‘peak oil’ and the general supply outlook over the next several years. The agency assesses that demand has risen nearly 4.0 million barrels per day since 2004, as shown in the chart below. There is even more tightness to be expected beyond 2010.

The IEA’s analysis suggests that new supplies are going to face an even harder time keeping pace with demand in the years ahead.

The IEA finds that the non-OPEC supply of oil from conventional sources in today’s market has essentially plateaued. The agency is suggesting that the obstacles facing
producers in terms of actual crudeoil recovery are only going to become greater in the longer-term. Thehurdles are more likely linked to scarceness of skilled labor and oil rigsas well as political considerations – a few components that are not necessarily aligned with the growth in oil demand. Sustained creativity and hard work by all parties will be necessary to avoid project delays that could prevent ample supply from being brought to market.

Link to original article
http://www.poten.com/attachments/071307.pdf

The Dhando Investor

The Dhandho Investor : The Low - Risk Value Method to High Returns
by Mohnish Pabrai

This book is a bit pricey for its length and content, but it contains an extremely interesting case study on Knightsbridge (VLCCF) and Frontline (FRO) in 2002. Short enough to read over a cup of coffee in your local Barnes and Noble. Highly recommended. It's too bad this account wasn't available in 2001.

Link to Amazon for Dhando Investor

Imarex Closing Prices 07.16.07

TD3: WS63 (no change) - VLCC - Ras Tanura (Saudi Arabia) to Chiba (Japan), 260,000mt

TC2: WS243 (-2) - MR2 - Rotterdam to New York (USAC)

Asian Aframax Rates May Extend Decline

Asian Aframax Rates May Extend Decline Before August Bookings
By Katherine Espina
July 16 (Bloomberg)

The rate for shipping fuel on tankers that can carry between 80,000 metric tons and 120,000 tons on Asian routes may extend a decline until refiners and traders increase vessel bookings for August.

The cost of shipping 80,000 tons of crude oil on so-called aframax tankers to Singapore from Kuwait dropped 0.6 percent to Worldscale 135.58 on July 13, according to the London-based Baltic Exchange. It fell for a third week, losing 5.2 percent in the week ended July 13.

``July liftings are nearly finished but we have not seen any August loading cargoes yet,'' said London-based shipbroker Galbraith's Ltd. in its weekly report. ``Until August liftings start actively, the trend looks to remain the same at present.''

Aframax tanker rate has fallen 9 percent on the Kuwait- Singapore route so far this month on shrinking cargo volume. Six ships, with a total capacity of 605,880 tons, are expected to sail to Singapore this week, according to AISLive data on Bloomberg. That compares with five arrivals in the week ended July 15.

The cost of shipping a barrel of oil on an aframax vessel on the Kuwait-to-Singapore route was unchanged for a second day at $1.94 on July 13, according to Bloomberg data.

Aframax vessels, which can typically carry 600,000 barrels of crude oil, are predominantly deployed on short-haul routes or intra-regional trade. The aframax tanker is among the preferred vessels by non-Organization of Petroleum Exporting Countries in recent years as the harbors and canals that these nations use to export their oil are too small to accommodate supertankers.

Indonesia-to-Japan

The aframax tanker rate on the Indonesia-to-Japan route was steady for a fourth day at Worldscale 145 on July 13, according to Bloomberg data. Shipping a barrel of oil on the route costs $1.70, unchanged from July 10.

The cost of shipping gasoline and other so-called clean petroleum products to Asia on medium-to-large range tankers rose on July 13, according to the Baltic Exchange.

The rate of shipping 55,000 tons of oil products to Japan from the Middle East surged 1.9 percent to Worldscale 193.65 on July 13. It rose 8.7 percent in the week ended July 13, the second week of gains, based on data from the Baltic Exchange.

Frontline Downgraded by UBS

Frontline Shares Downgraded by UBS on Outlook for Rental Rates
By Alaric Nightingale
July 13 (Bloomberg)

Shares of Frontline Ltd., the world's largest oil-tanker company by capacity, were downgraded by UBS AG, which said ship-rental rates are poised to fall, cutting the shipping line's ability to pay dividends.

UBS analysts led by Dominic Eldridge in London cut their rating on the stock to ``reduce 2'' from ``neutral 2'' in a note to clients today.

The ``12-month trend'' for tanker-rental rates is ``poor'' because of the supply and demand outlook, the analysts wrote.

Frontline's dividend payout, calculated by UBS at about 11 percent for this year, is ``totally dependent on earnings, which are themselves almost totally dependent upon the level of spot tanker rates,'' they said.

Interview with Nicholas Tsakos

Interview with Nicholas Tsakos (TNP)
March 23, 2007

http://www.webcast.capitallink.com/webcast/shipping2007/video/Tsakos-Energy-Navigation.asx

IEA Medium Term Oil Market Report - Tanker Market

IEA Medium Term Oil Market Report (MTOMR) July 2007
Implications for the Tanker Market

A crude trade forecast slightly ahead of crude demand growth (in percentage terms) should theoretically suggest an increase in tanker employment, if the trend also applies to seaborne trade. Reconciling approximate seaborne crude trade volumes with a distance matrix reveals that tanker tonne-mile demand (trade volume multiplied by distance that cargoes are shipped, an indicator of tanker demand) should rise even more steeply, by 3.5%. The principal contributors to increased tonne-mile demand are higher long-haul exports to China and the US from Saudi Arabia and West Africa, outpacing the countering effect from lower long-haul exports from Middle East to OECD Europe and OECD Pacific.

While increasing volumes of long-haul crude will essentially be shipped in two million-barrel (or larger) VLCCs, demand for million-barrel suezmax tankers should be supported by higher exports from FSU and North Africa via the Mediterranean and increased volumes leaving West Africa. Growth in Russian exports to Europe could boost employment of aframaxes, which carry around half a million barrels.

The tanker trade should be well placed to meet these challenges: there are more tankers on order than at any point since the shipbuilding boom of the early 1970s. A current orderbook of around 140 million tonnes carrying capacity compares with just 73 million at the end of 2003. Today’s orderbook implies that tankers to be delivered by the end of 2010 equate to almost 38% of existing fleet supply in cargo-carrying terms.

Orders for mid-range and smaller tankers are notably strong, alongside historically high orders for new VLCCs, Suezmaxes and Aframaxes. Massive demand, rising steel costs (plus safety requirements to use more steel in tanker design) and increased competition for shipyard space from other shipping sectors (amid a surge in orders for non-tanker ship types) have pushed tanker newbuild costs to record highs. This is despite ongoing growth in world shipbuilding capacity. A brand new VLCC constructed in Korea now costs around $133 million compared with an average $68 million in 2003. Shipyards in Korea, Japan and China are full until at least 2010.


click on image for larger view

A brimming orderbook provides the potential to redress the prevailing vessel undersupply, prompted by weak tanker ordering early this decade, which has supported freight rates over the last three years. However, this depends on how many vessels are scrapped.

High vessel earnings have kept scrappings at record lows over the last three years. No VLCC has been scrapped since 2004. While sustained lower freight rates would prompt an upswing in scrapping, a different, clearer threat to vessel supply is the 2010 (IMO) deadline for the phasing-out of all singlehulled tankers. In the VLCC sector, this would translate into a reduction in the current operational fleet by as much as 28%, as vessels are scrapped or converted into dedicated floating storage units, offshore oil production vessels or even dry-bulk carriers. However, certain exceptions may dilute this figure (such as for vessels with double-bottoms or double sides) and some vessels may continue to operate outside IMO signatory waters. Simpson, Spence and Young forecast vessel deletions to correspond to around 3% of the current tanker fleet annually through 2010, with the most pronounced declines in VLCC tonnage. When combined with orderbook data, SSY fleet projections suggest net annual expansions of the tanker fleet of around 6% by end-2010.

Despite potential support from firm trade growth and vessel phase-outs, freight rates in the medium term face genuine downside risk from an expanding fleet. However, perhaps a greater threat to freight rates is the downside risk from oil market fundamentals. Demand dented by an economic downturn or by higher prices following underperforming supply could significantly undermine oil trade and tanker demand.

Here is the report itself (80 pages)http://online.wsj.com/public/resources/documents/iea20070707.pdf

Frontline and Friends on Fire

Frontline and Friends on Fire
by Toby Shute
July 10, 2007 (Motley Fool)

Thursday's spike in Frontline (FRO) shares reminded me that I hadn't looked at any of the crude oil shippers in a while. After a little digging, I turned up a few potential explanations for the pop, one of which can be safely ignored -- and one that can't.

Around the time I reviewed the first-quarter results of Nordic American Tanker (NAT), overcapacity started weakening freight rates for crude carriers. One explanation pegs the capacity glut on slowed import demand from China, which was busily executing refinery turnarounds. This maintenance work's seasonal, routine nature makes me think that spot rates' pre-summer softening shouldn't have surprised anyone. Sure enough, these companies' stocks have shown no significant weakness. Tiny Top Tankers (TOPT), for one, has seen shares surge since mid-May.

Not everyone is celebrating the group's buoyancy. Citigroup analyst John Kartsonas noted in early June "that currently there is limited value in any of the tanker stocks we cover, as valuations have reached unsustainable levels."

If that's the case, why has Frontline, the bellwether of the group, ramped higher in the past week?

Ignore the recently resurfaced buyout rumors involving ExxonMobil. Frontline is Norwegian billionaire John Fredriksen's golden goose, and he's not likely to take a gander at any takeover offer.

Any theoretical buyout premium is a pittance compared to the massive cash flows this world-leading tanker operation consistently pumps out.

Instead, concern yourself with the supply and demand outlook for tankers and crude oil. The two factors are related, but have their own individual dynamics. Tanker oversupply seems to be kept in check right now by both the phasing out of single-hulled units, and the usage of some units to store oil rather than deliver it. With oil futures in contango - i.e., pointing higher in future months -- it becomes economic to sit on the oil for a while.

As far as the crude oil market goes, increases in supply and demand alike are a recipe for higher freight rates. Futures contracts on the benchmark supertanker route are pointing higher -- roughly double their present level, according to Imarex. This outlook seems to be supporting Frontline, Overseas Shipholding Group (OSG), and Tsakos Energy Navigation (TNP), even as they float near 52-week highs.

http://www.fool.com/investing/general/2007/07/10/frontline-and-friends-on-fire.aspx

Weekly Oil Tanker Rates - July 6th, 2007 (update)

weighted average of weekly oil tanker rates
chart, graph, crude oil, oil tanker, oil tankers, tanker rates, freight

click on image for full screen view

Supertanker Rates May Fall This Quarter

Supertanker Rates May Fall This Quarter on OPEC Supply Squeeze
By Alaric Nightingale
July 9 (Bloomberg)

The cost of hiring supertankers on the world's busiest shipping lanes may slump this quarter as OPEC, supplier of 40 percent of the world's crude, works to reduce a glut of crude in the U.S.

Daily earnings for carriers able to haul 2 million-barrel cargoes of Middle East crude on the main supertanker route to Asia will drop 42 percent to $47,500 a day, according to the median estimate of seven analysts polled by Bloomberg News July 5 and 6. They were about $82,000 in the same quarter last year.

Crude stockpiles in the U.S., the world's biggest oil- consumer, have soared to a nine-year high. The glut may prompt the Organization of Petroleum Exporting Countries to curb shipments, swelling the number of supertankers available to transport loads and hurting earnings at owners such as Frontline Ltd., according to Finn Engelsen of Laurentzen & Stemoco A/S.

``As far as OPEC are concerned, there's only one choice and that's to work for a reduction of stocks in the U.S.,'' said Engelsen, managing director at the Oslo-based shipping consultant, who correctly predicted tanker-rental rates would halve at the end of last year when other analysts forecast smaller declines and even gains.

U.S. refineries account for about a quarter of demand for the world's largest crude carriers, according to data from New York-based McQuilling Brokerage Services LLP. When shipments to the U.S. decline, it frees up tankers for other routes, reducing hire rates globally.

Below-normal refinery processing, caused by fires and extended maintenance programs, left U.S. oil companies with about 300,000 barrels a day of crude they didn't need in the second quarter, according to Ole-Rikard Hammer, senior analyst at Oslo-based PF Bassoe AS, who has tracked tanker markets for 20 years.

`Extraordinary Situation'

``The problem is the extraordinary U.S. refinery situation,'' said Hammer. ``Inventories are high and they don't need to bring in more crude for the moment.''

OPEC began trimming production in October last year, pushing average tanker-rental rates down to 39 percent less than their year-earlier levels. U.S. crude-oil inventories climbed to 354 million barrels in the second quarter, the most since 1998, according to the Energy Department in Washington.

A growing global fleet of tankers is stoking declines in rates. So far this year, the number of vessels has expanded by about 4.5 percent to 495, according to data from London-based shipbroker Galbraith's Ltd.

At the same time, OPEC's cutbacks have helped to trim the volume of crude carried by tankers by 5.2 percent to 466 million barrels, according to estimates from Halifax, England-based consultant Oil Movements Ltd.

``That's simply because of OPEC cut production,'' said Oil Movements founder Roy Mason. ``OPEC produces less oil, so there are fewer shipments.''

Dahlman Rose sees IPOs from 30 shippers by end '08

Dahlman Rose sees IPOs from 30 shippers by end '08
Jun 19, 2007
By Nick Carey

Within the next 18 months the maritime shipping sector could generate up to 30 initial public offerings due to global demand for everything from coal to consumer goods, an industry financier said on Tuesday.

"What's interesting in this sector is that we're seeing rising production combined with rapidly growing demand," said Simon Rose, chief executive of Dahlman Rose, a New York-based boutique investment bank for the energy supply chain sector.

He added that within a year the U.S. markets should see their first IPO from the operator of a fleet of special tankers used to store or move oil from offshore platforms.

Dahlman Rose is currently working on two other offerings that will be announced by the end of June, one in the coal industry, one in offshore drilling. Rose declined to give details.

He said the maritime shipping IPOs over the next 18 months will be primarily focused on the dry bulk sector, with a handful of container shipping companies that haul consumer goods in containers and oil tanker companies.

Dry bulk ships haul bulk commodities like coal, iron ore and agricultural products, with demand driven in part by rapidly growing Asian economies like China and India.

"We've seen a huge growth in iron ore and coal production, and ports are struggling to deal with the extra demand," Rose said. "We expect this situation will continue for some time."

Since Dahlman Rose was founded in 2004 -- Simon Rose is co-founder along with Ernest Dahlman -- the firm has lead managed or co-managed some 20 IPOs or secondary offerings worth around $3.8 billion, primarily in maritime shipping.

At the end of May, the firm opened a new group focused on exploration and production plus oilfield services, which Rose said reflected the global drive for new energy sources.

"We're going to see more deep sea drilling further offshore," Rose said. "Onshore, we're going to see opportunities for companies using different technologies to drill for oil."

Offshore platforms will require Floating Production, Storage and Offloading vessels (FPSOs) -- tankers specially designed to safely take and store oil from these platforms at sea, then transfer them to shuttle tankers to transport to shore.

Rose said there is investor interest in the United States in seeing an FPSO operator -- most operators are currently based in Norway -- either launch an IPO here or dual-list its stock on a U.S. market.

Earlier this month Dahlman Rose arranged the sale of 25.5 million shares of FPSO operator Sea Production, which were owned by Norwegian tanker company Frontline Ltd. , to institutional investors.

The investment bank is also lead manager on the sale of 2.05 million shares in a secondary offering for Tulsa, Oklahoma-based oil and gas exploration company Arena Resources Inc. , which should close Wednesday.

"Arena has done some tremendous work using new technologies in oilfields that were not worth drilling when oil was trading at far lower levels," Rose said.

Seven Changes to Tanker Company Forecasts

Overseas Shipholding Upgraded by JPMorgan on Valuation Change
By Alaric Nightingale
July 6 (Bloomberg)

Shares of Overseas Shipholding Group Inc., the largest U.S.-based oil-tanker owner, were upgraded by analysts at JPMorgan Chase & Co., who said they previously valued the company's fleet of ships incorrectly.

Analysts in New York led by Jonathan Chappell raised their rating to ``overweight'' amid seven changes to their forecasts for tanker companies. The bank's recommendation on Overseas Shipholding had been ``neutral,'' according to data compiled by Bloomberg.

Management meetings uncovered value ``previously ignored by us'' in the vessels New York-based Overseas Shipholding has leased from other shipping lines, ``rendering the shares still inexpensive,'' the analysts wrote in a report published today.

JPMorgan's other actions were all changes to profit estimates. Frontline Ltd., the world's biggest oil-tanker company by capacity, is likely to have made more in the second quarter than the bank previously expected because of higher-than-estimated rental rates for its vessels.

JPMorgan cut its earnings estimates for General Maritime Corp., Tsakos Energy Navigation Ltd. and Top Tankers Inc., and raised the estimates for Nordic American Tanker Shipping Ltd. and Double Hull Tankers Inc.

FRO, GMR, OSG, TNP, DHT, NAT, TOPT

Frontline Shares Rise Most in a Month (FRO)

Frontline Shares Rise Most in a Month on Expected OPEC Supply
By Grant Smith
July 4 (Bloomberg)

Shares of Frontline Ltd., the world's biggest oil-tanker company by carrying capacity, rose the most in more than a month on expectations of increased OPEC supply and as futures contracts indicated freight rates will rally.

The Organization of Petroleum Exporting Countries will probably accede to calls for increased output in the second half of the year as countries in the northern hemisphere seek to bolster stockpiles in preparation for winter fuel demand, according to Anders Kirkhorn Rosenlund, an analyst at ABG Sundal Collier ASA.

``We think OPEC will increase production,'' Rosenlund, who has a ``hold'' recommendation on Frontline shares, said in a telephone interview from Oslo. The share gain was aided by trading in tanker futures contracts, which ``suggest freight rates will more than double'' over the next five months, Rosenlund said.

Futures contracts on the benchmark route between the Persian Gulf and Japan show an increase of 119.2 percent between the front and fifth months, according to data provided by Oslo-based derivatives broker Imarex NOS ASA.

Shares of Hamilton, Bermuda-based Frontline closed up 15.5 kroner, or 5.7 percent, at 287 kroner in Oslo, their biggest gain since May 31. The shares have advanced 5 percent this week, valuing the company at 21.5 billion kroner ($3.69 billion).

Frontline Is Upgraded (FRO)

Frontline Is Upgraded by Fondsfinans on OPEC Outlook
By Alaric Nightingale
June 19 (Bloomberg)

Shares of Frontline Ltd., the world's biggest oil-tanker company by carrying capacity, were upgraded by Norwegian stockbroker Fondsfinans ASA on expectations OPEC will pump more oil, boosting shipping demand.

Analysts led by Arne Roenning in Oslo raised their recommendation on Frontline's shares to ``buy'' from ``sell'' in a note to clients today.

They also increased their share-price target for the Hamilton, Bermuda-based shipping line to 350 Norwegian kroner ($58.12) from 250 kroner. The stock rose 4 kroner, or 1.5 percent, to 276 kroner in Oslo.

``We expect OPEC to open up the tap in the second half to keep crude prices at sustainable levels,'' the analysts wrote. ``The effect will be rising tanker demand and freight rates.''

The Organization of Petroleum Exporting Countries will have to produce an extra 1.7 million barrels a day next year to keep global supply and demand balanced, Fondsfinans said, citing estimates by Energy Market Consultants.

``Last time we saw an increase of this magnitude was in 2004,'' the analysts said. ``The effect was record-high tanker rates'' of $250,000 a day for the largest class of supertankers known as very large crude carriers, or VLCCs.

FRO

Worldscale VLCC Freight Rates Yearly Chart

Wordscale Chart of VLCC Freight Rates July 2006 - June 2007


click on image for larger view

(source: Simpson, Spence & Young)

VLCC Chart of Average Earnings US$/day

VLCC Chart of Average Earnings US$/day


click on image for larger view

(source: BRS Annual Review 2007)

No collapse forecast as tanker rates fall near year lows

The world's leading crude oil freight routes from the Gulf were close to their lows for this year on Monday but analysts said the freight market was not on the brink of collapse.Industry sources also said there was no sign that crude demand was faltering, blaming the weakness on the dynamics of the tanker market instead. Ship brokers said VLCC freight rates from the Gulf to Japan, the world's benchmark crude route, were trading at an average of WS60, close to a year low of WS52 hit in January. Rates for double-hulled units were trading five Worldscale points higher and single-hulled tonnage up to 10 points lower. Below that level, a three-and-a-half year low was in sight at WS50.5, struck in October 2003, according to Reuters data. Analysts said rates were pressured by long-standing Opec cuts, refinery maintenance in Asia, high stocks in the United States and bulging ship supply. They said there was no evidence that crude oil demand was being eroded, pointing instead to strong demand for long-haul oil into China, which was buoying rates. "We wouldn't speak of it as a freight collapse...but it does seem to have moved into a softer summer trading market that we've had in previous years," said Claire Grierson, an analyst with Simpson, Spence & Young in London.

E.A. Gibson shipbrokers said VLCC voyage rates to Japan were trading at WS105 or $67,200 a day in June 2006 compared with WS59 or $34,750 on Monday.

In a report it also cited the VLCC and ULCC fleet rising to 494 by mid-2007 from 477 in mid-2006.

Rates for VLCCs from the Gulf to the US were similarly pressured, trading at an average of WS50, five points short of a low for the year.

Beyond that, costs on the major route were close to a four-year low of WS42.50 hit in August 2003.

Brokers said that the rates averaged $30,000 to $40,000 a day to Asia, down from closer to $50,000 in the last couple of weeks.

Source: Reuters
July 5th, 2007

Overseas Shipholding Shares Rise

Overseas Shipholding Shares Rise to Record on Outlook
By Todd Zeranski
July 5 (Bloomberg)

Shares of Overseas Shipholding Group Inc., the largest U.S.-based oil-tanker owner, rose for a third day this week, touching a record, on improved earnings prospects because of high oil prices and strong demand for vessels to supply refiners.

The company has been helped by an ``underlying bullishness on the outlook for the second half for tankers,'' Omar Nokta, an analyst at Dahlman Rose & Co. in New York, said today in an e- mailed message. Nokta rates Overseas Shipholding shares a ``buy'' and owns none.

Shares of New-York based Overseas Shipholding rose $1.82, or 2.1 percent, to $88.27 in New York Stock Exchange composite trading after touching a record $88.77 earlier in the day. The stock has risen 8.4 percent this week and is 48 percent higher than at this time last year.

Crude oil for August delivery rose to a 10-month high of $71.81 a barrel today on the New York Mercantile Exchange, extending an 18 percent rally this year on strong demand for gasoline and concern over possible supply disruptions.

G. Scott Burk, an analyst at Bear Stearns Cos., raised his second-quarter and full-year earnings estimates for Overseas Shipholding on July 2, citing high rates for the company's Very Large Crude Carriers, or VLCCs, and Aframax tankers.

Slightly more than half of the company's ships have yet to be booked for 2008, enabling it to benefit from an expected increase in rates, Burk said in a note to clients.

The analyst raised his second-quarter profit estimate to $1.64 per share from $1.32 and his full-year estimate to $7.08 from $6.86. Burk rates the company's stock at ``peerperform.''

Persian Gulf Tanker Rates Snap Nine-Day Slump

Persian Gulf Tanker Rates Snap Nine-Day Slump on Ship Supplies
By Grant Smith
July 2 (Bloomberg)

The cost of transporting Middle East crude to Asia on supertankers snapped a nine-day slide as the number of spare vessels dwindled.

The number of vessels available for hire next month has shrunk about 8 percent since June 29 because of a series of bookings that day, according to a report e-mailed today by Paris- based shipbrokers Barry Rogliano Salles. There are 99 tankers free today, compared with 108 on June 29.

``It looks like it's bottomed out,'' shipbroker Halvor Ellefsen of Sealeague AS said in an e-mail from Oslo.

Freight rates for very large crude carriers, or VLCCs, on the benchmark route to Japan rose to 60.1 Worldscale points on June 29, the last assessment available from London's Baltic Exchange. Rates fell 21 percent last month as Asian refiners reduced imports while performing seasonal maintenance.

At 60.1 Worldscale points, owners of modern VLCCs can earn about $31,037 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest oil-tanker company by capacity, said on May 30 that it needs more than $29,500 a day to be profitable on each of its VLCCs.