NAT Improves Earnings, Makes Fleet More Fuel Efficient

NAT's 163,455 dwt Suezmax tanker Nordic Freedom

Despite continuing to make a loss in the second quarter of 2012, Nordic American Tankers Limited (NAT) [NYSE:NAT] has announced improved earnings per share of -$0.15 versus -$0.18 in Q1 2011, and declared a dividend to be paid from cash in hand of $0.30 per share, matching the payout for the previous four quarters and making it the 60th consecutive quarter of dividend payment.

Operating cash flow was $10.3m for Q2 2012, down from $11.4m for Q1 2012, with the firm saying it "is in a strong financial position and should be differentiated from shipping companies with weak balance sheets."

NAT said its earnings improvement was helped by better fleet utilisation and access to cargoes through establishment of the Orion Tanker Pool, maximising cash flows by employing all of its vessels in the spot market through the pool.

Net voyage revenue per vessel per day was down to "about $16,200" though, compared to $17,500 per vessel per day in Q1 2012, with NAT saying it has a cash break-even level of a relatively low $11,000 per day per vessel.

Bunker Fuel Costs

NAT said it was taking a "proactive approach" to reducing fuel costs for its fleet of 20 Suezmax tankers, and although it is in a position to buy vessels inexpensively by historical standards, it believes that in today's market overhauling the current fleet at a "modest cost" was preferable to ordering new "Eco-design" ships.

To that end, the company said Alpha Lubricators had already been installed on all its vessels resulting in "important cost savings," and in addition, within the coming months will have finished installing sliding valves on the main engines of the entire fleet allowing a reduction in fuel consumption by safe slow steaming.

"We are currently in the process of testing other fuel saving measures and expect to implement those measures having demonstrable gains in efficiency," it added.

NAT detailed that based on a daily bunker consumption of 50 tonnes, a fall in bunker prices of $100 per tonne represents a $5,000 per day saving per vessel for the firm.

Looking ahead the firm said the world economy is uncertain with tanker market rates being affected by newbuilds, noting the current order book stands at 72 vessels representing 17% of the Suezmax fleet, although it also expected to see a further increase in scrapping activity, which was 13 Suezmax scrapings in the last 6 months compared to 8 during the whole of 2011.