Scorpio Ends 6 Month Newbuilding Order Spree with 16 More Vessels

Scorpio now has 54 new vessels on order.

Scorpio Tankers Inc. [NYSE:SNG] (Scorpio) today brought to an end its recent newbuild order spree by placing final orders at five shipyards for a total of 16 more fuel efficient vessels.

The announcement means the company has placed newbuilding orders every month for the last 6 months, and now has a total of 54 new vessels on order.

"We are observing attenuated capacity at quality shipyards, meaning that prices have moved up 8-12% and expected deliveries for new orders are moving beyond 2015. Under these circumstances, we have no plans for further newbuilding contracts," said Scorpio chief executive officer and chairman of the board Emanuele Lauro.

The orders consist of eight LR2, four MR, and four Handymax ice class-1A product tankers, and as with the company's previous orders, were all placed at shipyards in South Korea.

The 114,000 dwt LR2 newbuildings were placed at a cost of approximately $52.0 million each, with Samsung Heavy Industries Co., Ltd. (SHI) receiving four of the orders, and orders for two vessels placed with each of Hyundai Samho Heavy Industries Co., Ltd. (HSHI) and Daewoo Shipbuilding and Marine Engineering Co., Ltd. (DSME).

The four 52,000 dwt MR product tankers will be built by SPP Shipbuilding Co., Ltd. (SPP) for approximately $32.5 million each.

Hyundai Mipo Dockyard Co., Ltd. (HMD) will build the four 37,000 dwt Handymax ice class-1A product tankers for approximately $31.6 million each.

Overall, Scorpio says its 54 newbuilding agreements consist of 26 MR, 16 LR2, and 12 Handymax ice class-1A vessels all at HMD, SPP, HSHI, DSME, and SHI.

Four of the newbuildings are expected to be delivered by September 2013, 38 within 2014, and the remaining 12 in the first half of 2015.

The company also said that syndication of it's previously announced $267 million credit facility has been heavily over-subscribed resulting in an increase of the overall commitments received to $525 million.

"These 16 orders for fuel efficient vessels, and, as significantly, the over-subscription of our 2013 credit facility, have solidified our unique position in front of an improving cycle in product tankers. We are pleased that our shareholders and lenders alike are showing their support of our strategy," commented Lauro.