Omar Nokta upgrades FRO, OSG, NAT

Oil Tankers Owe Strength to OPEC
Ruthie Ackerman
11.26.07
Forbes.com

Increased oil production has sent spot charter rates surging on oil tankers in the last week, helping to keep the stocks of crude oil tankers and operators above water.

On Monday, Dahlman Rose & Co. analyst Omar Nokta, upgraded three tanker companies because they are the most exposed to the strong spot rates. Nokta raised his rating on Frontline, Overseas Shipholding Group, and Nordic American Tanker Shipping to “buy” from “hold” and reiterated his “buy” rating on General Maritime, Tsakos Energy Navigation, Ship Finance International, and Omega Navigation Enterprises.

But even with the upgrade oil tanker stocks were a mixed bag at the close on Monday, indicating investors didn't share Nokta's optimism.

Notka said the spot rates on the Very Large Crude Carriers, or VLCC’s, have jumped in the Arabian Gulf in the past few days. Last week, VLCC’s averaged $33,000 per day. On Monday morning they spiked to $84,000 per day, a level not seen since August 2006. The number of vessels being chartered has jumped significantly, limiting the supply of ships, Nokta said.

The strength in the oil tanker market has spread to West Africa and the Mediterranean as well, he added.

The problem for oil tanker lines over the last year has been that the supply of ships outstripped the demand for oil. With oil prices at record highs since OPEC's production cut in Nov. 2006, demand for oil tankers fell.

But Nokta believes the strong demand for oil tankers over the last few weeks is a result of increased production from the Organization of Petroleum Exporting Countries. As global oil stock levels have fallen over the past six months, OPEC has been under pressure to increase production. OPEC appears to have raised production by 750,000 barrels, Nokta said, which is more than the 500,000 barrel boost it previously announced.

Nokta believes the increased production is a sign that a formal boost should come when OPEC meets on Dec. 5. With gasoline, U.S. heating oil, and crude oil stockpiles down substantially there should be a significant amount of imports through the winter and into the spring, boosting the demand for oil tankers, Nokta said.

The conversion of 60 VLCCs into dry bulk carriers for 2008 and 2009 should offset a significant number of the 36 new VLCCs being built and the 69 more being delivered in 2009. With increased production in the Arabian Gulf demand will increase helping the tanker market to outperform expectations, Nokta said.

Route Rates 3 - Test

route	class	size	Days	WS	TCE - equiv	breakeven	Date
TD1	VLCC	280 kmt	64 days	120.00	$xx,000	$30,000	Nov. 29th
TD2	VLCC	260 kmt	xxxx	185.00	$130,000+	$30,000	Nov. 29th
TD3	VLCC	250 kmt	38 days	182.50	$130,000+	$30,000	Nov. 29th
TD4	VLCC	260 kmt	xxxx	135.00	$xx,000	$30,000	Nov. 29th
TD5	Suezmax	130 kmt	xxxx	200.00	$27,406	$22,100	Oct. 23rd
TD6	Suezmax	135 kmt	xxxx	155.68	$63,000	$22,100	Oct. 23rd
TD7	Aframax	80 kmt	xxxx	150.00	$xx,000	xx,000	Nov. 29th
TD8	Aframax	80 kmt	xxxx	190.00	xxx	xxx	Nov. 30th
TD9	Aframax	70 kmt	xxxx	170.00	$x,000	$xx,000	Nov. 29th
TD10	Panamax	50 kmt	xxxx	215.00	$xx,000	xx,000	Nov. 28th
TD11	Aframax	80 kmt	xxxx	120.45	$18,613	$15,000	Oct. 11th
TD12	Panamax	55 kmt	xxxx	xxxx	$xx,000	xx,000	xxx
TD14	Aframax	80 kmt	xxxx	180.00	xxx	xxx	Nov.29th

---	From	To	Size	Class
TD1	MEG	USG	280,000mt	VLCC
TD2	MEG	Singapore	260,000mt	VLCC
TD3	MEG	Japan	250,000mt	VLCC
TD4	WAF	USG	260,000mt	VLCC
TD5	WAF	USAC	130,000mt	Suezmax
TD6	Black Sea	Mediterranean	135,000mt	Suezmax
TD7	North Sea	Eur Continent	80,000mt	Aframax
TD8	Kuwait	Singapore	80,000mt	Aframax
TD9	Caribbean	USG	70,000mt	Aframax
TD10	Caribbean	USAC	50,000mt	Panamax
TD11	Mediterranean	Mediterranean	80,000mt	Aframax
TD12	Antwerp	Houston	55,000mt	Panamax
TD14	Indonesia	Japan	80,000mt	Aframax

updated Nov. 30th

Dahlman Rose Upgrades FRO and OSG

Crude Oil Declines as Reports Show OPEC Production Increase
By Mark Shenk
Nov. 26 (Bloomberg)

Crude oil fell on speculation that OPEC is increasing production to reduce record prices and keep the global economy from slowing.

The 12 members of the Organization of Petroleum Exporting Countries will probably increase output 1.1 percent to 31.6 million barrels a day this month, according to preliminary estimates by PetroLogistics Ltd. OPEC agreed in September to raise production targets for the 10 members with quotas by 1.9 percent starting Nov. 1.

``The Petrologistics numbers are showing a good-size build in OPEC output,'' said Tim Evans, an analyst with Citigroup Global Markets Inc. in New York. ``Most of the increase is from Iraq, which is fairly encouraging.''

Crude oil for January delivery fell 48 cents, or 0.5 percent, to settle at $97.70 a barrel at 2:44 p.m. on the New York Mercantile Exchange. Futures touched $99.11 today, the highest since reaching a record $99.29 on Nov. 21. Oil futures trading began in 1983. Prices are up 65 percent from a year ago.

Iraq, which last month resumed exports from Kirkuk through its northern pipeline network, will make the biggest contribution to the supply increase, raising output by 20 percent to 2.15 million barrels a day, according to PetroLogistics, which assesses supply by tracking tankers.

Iraqi Recovery

``This is the highest we've seen since the U.S. invasion in 2003 and may be a sign that the Iraqi oil industry is finally recovering,'' said Evans.

Iraqi production has yet to recover from the unrest that followed the U.S.-led invasion in March 2003. Iraq produced 2.48 million barrels a day in February 2003, the last month before the invasion. The Persian Gulf country has the world's third-biggest proved oil reserves, according to BP Plc.

Saudi Arabia is producing more than 9 million barrels a day, CNBC reported, citing unidentified people at the Saudi oil ministry. The country, which is OPEC's largest producer and the world's top oil exporter, pumped an average 8.75 million barrels a day in October, the highest since November 2006, a Bloomberg News survey showed.

Prices also fell on signs that slowing economic growth in the U.S., Europe and Japan will curb fuel consumption. Investor optimism about financial markets in the U.S., which consumes a quarter of the world's oil, fell this month to the lowest in two years after concern grew that the country is heading toward a recession, according to a UBS AG poll.

The UBS/Gallup Index of Investor Optimism dropped to 44 in November from 70 last month. The sentiment gauge declined to the lowest level since Hurricane Katrina struck the U.S. Gulf Coast and is down from a three-year high of 103 in January.

Frontline Ltd., the world's biggest supertanker operator, and Overseas Shipholding Group Inc. had their ratings raised by Dahlman Rose & Co. because of increasing OPEC shipments. Ship- hire rates on tankers sailing to Asia from the Middle East, the world's busiest market for supertankers, more than doubled since Nov. 9, according to data from the London-based Baltic Exchange. Dahlman is an investment bank that specializes in marine transport companies and related industries.

OPEC will load 24.5 million barrels a day onto tankers in the four weeks to Dec. 8, compared with 23.8 million barrels in the month ended Nov. 10, Oil Movements said on Nov. 22. It will be OPEC's 14th consecutive weekly increase and the biggest this year, according to the company, which tracks shipments.

Upcoming Meeting

The group, which produces more than 40 percent of the world's oil, is scheduled to discuss crude-oil production for the first quarter of 2008 at a meeting in Abu Dhabi on Dec. 5.

``We are primed to make another run for $100,'' said Eric Wittenauer, an analyst at A.G. Edwards & Sons Inc. in St. Louis. ``There's a good shot we will make it this time but once that occurs there is no telling what will happen.''

The dollar dropped to a record low against the euro earlier today on concern U.S. credit-market losses may prompt the Federal Reserve to keep reducing interest rates. The U.S. currency recovered against the euro later in the session.

``On one hand there's growing evidence that demand will drop,'' Wittenauer said. ``Economic concerns are being reflected in a number of markets. At the same time, we are seeing weakness in the dollar, which tends to push commodity prices higher.''

Persian Gulf Rates Surge Most in Three Years

Persian Gulf Oil-Tanker Rates Surge Most in Almost Three Years
By Alaric Nightingale
Nov. 23 (Bloomberg)

The cost of shipping Middle East crude oil to Asia, the world's busiest market for supertankers, climbed by the most in almost three years as demand eliminated a glut of ships that were competing for cargoes.

Hire rates for the key benchmark voyage to Japan climbed 29.5 percent today, the biggest one-day increase since Jan. 30, 2005, according to data from the London-based Baltic Exchange.

Supply of tankers to load in the first half of December is getting ``tighter and tighter,'' Atsuto Otani, a London-based broker at Galbraith's Ltd., said by phone today. ``Sometimes when cargoes rush into the market, charterers just panic and pay up.''

PTT Pcl, Thailand's biggest energy company, hired the vessel Asian Progress II at a rate of 134 Worldscale points, Oslo-based shipbroker PF Bassoe A/S said in a report today. The Baltic Exchange's benchmark rate for a comparable voyage to Singapore rose to 130 points.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, 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.

Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.

At 130 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $85,498 a day on a 25- day round trip from Saudi Arabia to Singapore, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine fuel prices.

`Plenty' of Vessels

Gains may be tempered once refineries start booking ships to load after Dec. 20 when ``plenty'' of vessels will become available, Otani said. Out of the 64 tankers so far hired to load in December, none have been arranged to load after the 20th of the month, Paris-based shipbroker Barry Rogliano said in an e- mailed report today.

There are 52 carriers available for hire up to Dec. 23, according to Barry Rogliano. That compares with 52 likely outstanding cargoes for the remainder of the month.

Demand for crude oil will rise 2.8 percent in the first quarter of 2008, the biggest year-on-year gain since the first three months of 2005, according to data from the Paris-based International Energy Agency.

Frontline Ltd., the world's biggest VLCC operator, said Nov. 15 it needs $30,000 a day to break even on each of its supertankers.

Bookings for VLCCs 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. Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.

Asian Aframax Rates May Rise a Sixth Week on December Cargoes
By Katherine Espina
Nov. 23 (Bloomberg)

Asian aframax rates may extend gains for a sixth week on increased demand for December cargoes before the Northern Hemisphere winter.

The rate to transport 80,000 metric tons of fuel from Kuwait to Singapore, the world's fourth-busiest route for such ships, rose 0.9 percent to Worldscale 148.86 yesterday, the highest since July 3, according to the London-based Baltic Exchange. Shipping a ton of fuel on the route costs $13.96, based on Bloomberg data.

Aframax rates on the Middle East-Singapore route have gained 27 percent in the past five weeks, boosted by higher bunker prices and shipments of November cargoes. The surge in rates of supertankers, also known as very large crude carriers or VLCCs, may boost charter fees of smaller ships like aframaxes.

The hiring rate of supertankers for the benchmark voyage to Japan climbed 20 percent yesterday, the biggest one-day increase since March 11, 2005, according to data from the Baltic Exchange. A supertanker can transport 2 million barrels of oil.

``The jump in the VLCC market will initially boost sentiment,'' Channa Munasinghe, director at Singapore-based shipbroker Alliance Tanker Chartering Pte, said in a phone interview today. Cargoes for supertankers may eventually be split for transport into smaller vessels.

That ``could potentially create a jump, not immediately but in about two to three weeks,'' Munasinghe said. Rates for aframaxes may rise 5 to 10 points next week, he said.

Exxon Mobil

``The stronger VLCC market should in turn lead to an improved sentiment for smaller tanker tonnage,'' Henrik With and Glenn Lodden, analysts at Oslo-based DnB NOR Markets, said in a weekly report.

Four aframaxes, which are able to transport a combined 439,703 deadweight tons of cargo, are scheduled to arrive in Singapore this week, and one, capable of moving 98,570 tons, next week, according to Bloomberg data.

Exxon Mobil Corp. hired the tanker Aegean Harmony to transport 90,000 tons of fuel oil on Nov. 22 at the rate of Worldscale 170, Seatown Shipbroking Pte in Singapore said in a report today.

At that rate, moving 80,000 tons of fuel oil will cost Worldscale 151.10, a 1.5 percent premium to prices quoted on the Baltic Exchange for the Middle-East to Singapore route.

The double-hulled Aegean Harmony was built in 2007 by South Korea's Samsung Heavy Industries Co., according to Bloomberg data. Exxon is the world's largest oil company.

Southeast Asia is the world's busiest aframax market after the Mediterranean. The Caribbean is the third busiest.

Earnings Releases Third Quarter 2007

Arlington	ATB	Oct. 23rd	loss
Overseas	OSG	Oct. 29th	profit falls 71%
General Maritime	GMR	Oct. 31st	profit falls 54%
Teekay	TK	Oct. 31st	profit falls 78%
Tsakos	TNP	Nov. 5th	profit rises
Top Tankers	TOPT	Nov. 9th	loss
Nordic American	NAT	Nov. 5th	loss
Double Hull	DHT	Mon, Nov. 19	???
Knightsbridge	VLCCF	Fri, Nov. 30th	confirmed
Ship Finance	SFL	Nov. 15th	profit falls 55%
Frontline	FRO	Nov. 15th	profit falls 78%
Euronav	[Europe]	Oct. 23rd	loss
MISC	[Malaysia]	Date	Result
---	---	---	---

updated Nov 18th

Ship Finance 3Q Profit Falls 55 Percent

Ship Finance 3rd-Qtr Profit Falls 55 Percent As Revenue Falls Faster Than Expenses
November 15 (AP)

Ship Finance International Ltd. said Thursday its net income fell more than half in the third quarter, as revenue fell at a higher rate than expenses and its spot-tanker business delivered lower profits.
Profit fell 55 percent to $20.6 million, or 28 cents per share, from $45.7 million, or 63 cents per share, a year earlier. Revenue fell 23.3 percent to $93.4 million from $121.8 million.

Analysts polled by Thomson Financial expected earnings of 43 cents per share on revenue of $97.5 million, on average.

Though operating expenses also fell, they used up about 36 percent of revenue last quarter compared with 29 percent in the year-ago period. Results also included a loss of $7.2 million or 10 cents per share, from a noncash accounting adjustment.

The company also said the spot-tanker market has been "substantially weaker" and negatively impacted earnings.

Ship Finance shares fell 55 cents, or 2.1 percent, to $25.80 in afternoon trading.

Frontline Third-Quarter Profit Falls 76%

Frontline Third-Quarter Profit Tumbles on Hire Rates
By Alaric Nightingale
Nov. 15 (Bloomberg)

Frontline Ltd., the world's biggest operator of supertankers, said third-quarter profit tumbled 76 percent as it leased out ships for less and fuel costs surged.

Net income fell to $24.2 million, or 32 cents a share, from $98.8 million, or $1.32, a year earlier, Hamilton, Bermuda-based Frontline said in a statement to the Oslo stock exchange today. That missed the $40 million, or 53-cents-a-share, median estimate of seven analysts surveyed by Bloomberg.

Refineries are cutting crude-oil imports because of reduced processing margins, Frontline said. At the same time, fuel costs for shipping lines are increasing as oil prices reach a record. Tanker-rental rates also shrank because of the ``high availability'' of ships, the company said.

``They are hardly making any money,'' said Siri Evjemo Nysveen, a broker at Kaupthing Ltd. in London, who until September covered Frontline as an analyst at the bank. ``This is a very negative report.'' The company may be forced to cut its profit outlook for 2008, she said.

The shares closed down 3.5 kroner, or 1.6 percent, to 213 kroner in Oslo trading, the lowest since April 26. The slide pared the stock's advance this year to 19 percent, valuing the company at 15.9 billion kroner ($2.9 billion).

Earnings from Frontline's very large crude carriers, or VLCCs, declined 39 percent to $36,000 a day, while those from its 1 million-barrel carriers declined 37.5 percent to $25,000 a day. Breakeven levels are $30,000 and $22,100 respectively.

Independent Tankers

Frontline's third-quarter sales slumped 32 percent to $276 million. Profit included a gain of $4.8 million on the sale of the tanker Front Horizon. Excluding that transaction, net income was $19.3 million, less than the $28 million, or 38.5-cent-a- share, median estimate from 10 analysts.

The company is continuing to investigate ``alternatives and options'' for its Independent Tankers Corp., a Cayman Islands- based business that owns 10 tankers leased out on fixed-rate charters to BP Plc and Chevron Corp., Chief Executive Officer Bjoern Sjaastad said on a conference call today.

Frontline would have to make a deal with bondholders and the oil companies who are leasing the ships before it could sell the company or the vessels it owns, Sjaastad said. ITC's outstanding debt is $469.7 million and it is paying an 8.5 percent interest rate to finance its ships.

Tanker Sale

Operating performance in the final three months of the year will be ``in line'' with the third quarter, Frontline said. Net income will be buoyed by the sale of shares of Imarex NOS ASA, an Oslo-based derivatives broker, and Dockwise Ltd., a company that hauls oil rigs.

World oil demand will rise 2.3 percent next year, Frontline said, citing data from the International Energy Agency, an adviser to 26 nations.

The carrying capacity of the global fleet of VLCCs will climb almost 6 percent to about 156.5 million tons in 2008, from about 148 million tons at the end of this year, according to estimates from London-based shipbroker Galbraith's Ltd.

The Galbraith's assessment assumes 40 new VLCCs will enter service next year, each with a capacity of about 310,000 tons, and 15 carriers that can each haul about 260,000 tons will be switched to other trades.

At least 38 VLCCs will be converted to ``non-trading purposes'' worldwide by the end of 2008, Frontline said today. Of those ships, 90 percent will become iron-ore carriers, and 10 percent will be turned into storage and production vessels.

The company plans a dividend of $1.50 a share for the third quarter. Frontline has said it plans to pay about 100 percent of profits to shareholders in the form of dividends.

About 40 percent of Frontline's fleet is protected from possible declines next year in the single-voyage, or spot, market through shipping contracts with oil companies that pay a fixed daily amount.

Baltic Dirty Tanker Index

Six Month Chart

Top Tankers Q3 loss widens

Top Tankers Q3 loss widens; shares hit year-low
Nov 8th, 2007
(Reuters)

Top Tankers Inc. (TOPT), which transports refined petroleum products and crude oil, reported a wider third-quarter loss on lower demand and rates for its vessels, sending shares down as much as 12 percent to a new year-low.

Prolonged warm weather in most parts of Europe and the United States, higher-than-anticipated fuel-oil inventories at the beginning of the period and constant rise of oil prices, led to a softer demand for crude oil during the quarter, the Greek company said.

Total available ship days fell to 1,987 during the latest third quarter, from 2,484 in the year-ago quarter. Total average time charter equivalent fell 20 percent to $22,467 per ship per day.

For the third quarter, the company reported a net loss of $18.4 million, or 50 cents a share, compared with a net loss of $11.4 million, or 35 cents a share, in the same quarter last year.

Voyage revenue fell 27 percent to $51.2 million.

Analysts on average were expecting the company to post a loss of 41 cents a share, before special items, on revenue of $46.3 million.

The stock was trading down 5 percent at $4.79 in late morning trade on the Nasdaq, after hitting a low of $4.41 earlier in the session. (Reporting by Hezron Selvi in Bangalore; Editing by Gopakumar Warrier)

Nordic American posts third quarter loss

Nordic American to buy two new vessels, posts loss
Nov 5th, 2007
(Reuters)

Oil tanker operator Nordic American Tanker Shipping Ltd (NAT) on Monday said it will buy two new vessels for $90 million each.

The company said the two suezmax new-buildings are expected to be delivered in the fourth quarter of 2009 and by April 2010. Nordic American said the transactions will be financed by borrowings under its $500 million credit line.

The company also posted a third-quarter loss of $1.2 million, or 4 cents a share, compared with net income of $20.3 million, or 97 cents a share a year earlier.

Tsakos third quarter profit rises

Tsakos Energy Navigation 3rd-Quarter Profit Increases on Larger Fleet, Capital Gains
Nov 5th, 2007
(AP)

Greek tanker owner Tsakos Energy Navigation Ltd. reported higher third-quarter net income Monday as an expanded fleet and a large capital gain lifted earnings above Wall Street expectations.

Net income for the three months ended Sept. 30 rose to $50 million, or $2.61 per share, from $44.5 million, or $2.33 per share, during the same period a year earlier. The latest quarter included capital gains of $31.8 million, compared with similar gains of just $13.3 million a year ago.

Revenue increased to $122.5 million from $115.2 million a year ago.

Analysts polled by Thomson Financial forecast earnings excluding items of $1.12 per share on revenue of $106 million.

Tsakos' fleet grew to an average of 43.6 vessels during the quarter, compared with 37.1 a year ago. That increased revenue after commissions and costs by 3.9 percent, the company said, though depreciation and financing costs also increased.

The company did say its time charter equivalent per ship per day was $26,467 in the third quarter of 2007, down from $29,779 in the third quarter of 2006.

Tsakos said that though the seasonally weak third quarter, when refiners scale back crude demand ahead of the switch-over to heating oil, has ended, spot rates for both crude and product tankers have not yet reached the levels typically expected for the seasonally strong fourth quarter.

Tsakos shares rose $3.58, or 5.4 percent, to $69.56 in midday trading.

Teekay third quarter profit falls 78%

Teekay third-quarter profit falls as rates drop
Oct 31
(Reuters)

Oil tanker operator Teekay Corp (TK) said on Wednesday its quarterly profit fell as tanker charter rates and tanker freight rates declined.

The company said net income fell to $17 million, or 23 cents per share, from $79.8 million, or $1.07 per share, in the same period a year ago.

Seasonal oil field maintenance in the North Sea, and hurricane-related oil field outages led to lower oil export volumes and lower rates, the company said.

Net revenue rose to $462.3 million from $344.3 million in the third quarter a year earlier, the company said.