International Seaways expands fleet with 2nd LNG-fueled supertanker chartered by Shell

New York-based tanker company International Seaways has taken delivery of the second dual-fuel LNG very large crude carrier from the South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME).

The 300,000 dwt vessel, named Seaways Enterprise, was delivered in April 2023, a month after the delivery of the first vessel from the batch, Seaways Endeavor.

International Seaways has one more dual-fuel vessel under construction at DSME and it is expected to deliver in the second quarter of 2023. Each vessel is employed on a long-term time charter with oil major Shell and is financed under a sale and leaseback arrangement with a fixed interest rate of approximately 425 bps. The three LNG-powered VLCCs were ordered in 2021.

Once delivered, all three vessels will be managed by UK-based ship management company V.Group and deployed on seven-year time charters with Shell.

In addition to LNG-powered engines, the ships also feature optimised hull forms and propellers, wake improvement ducts, and rudder bulbs to further improve vessel efficiency. 

“Seaways has successfully invested at low points in the cycle, including when we partnered with an oil major in 2021 to build three dual-fuel LNG VLCCs at prices over 35% below current values. We are pleased to have taken delivery of the first two vessels and expect the remaining vessel to join the fleet later this quarter,” said Lois K. Zabrocky, International Seaways’ President and CEO.

The tanker owner has also been active on the second-hand market, having purchased two, 2009-built Aframaxes pursuant to options under sale leaseback arrangement at a discount of over 45% to current market prices. One vessel delivered in March 2023; the other in April 2023.

International Seaways has also disposed of a 2008-built MR in the first quarter earning $10 million.

The shipping company reported a net income for the first quarter of $173 million, compared to a net loss of $13 million in the first quarter of 2022. Cumulative net income over the last three quarters is over $500 million.

“During the quarter, we pulled every possible lever in a capital allocation strategy: we invested in the fleet with the deliveries from our newbuilding program, purchase of two Aframaxes and sale of an MR; we de-levered with the amendment to our credit facility that prepaid $97 million of the term loan which saves more than $600 per day through reduced amortization and interest; and we paid a combined dividend of $2.00 per share,” Jeff Pribor, the company’s CFO, said.

“After executing our capital allocation strategy, we ended the quarter with ample liquidity of $519 million and a net loan-to-value ratio of 21%. Together with our operating leverage and strong financial position, Seaways is ideally positioned to continue building our track record as good stewards of capital.”

Shipping revenues for the first quarter were $287.1 million, compared to $101.5 million for the first quarter of 2022. Consolidated TCE revenues for the first quarter were $283.3 million, compared to $98.0 million for the first quarter of 2022.

“At a time when we expect positive fundamentals to continue to drive strong tanker earnings, we are poised to benefit from their attractive charter rates, with added upside due to profit sharing above the base rate. While we are monitoring the impacts of recessionary pressures on oil demand in the near term, we are confident that higher tanker utilization from the shifting global energy trade, combined with the lowest orderbook in more than 30 years, will underpin a robust market during 2023,” Zabrocky added.