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Wednesday, May 10,
2000
OSG results reflect improving tanker
market
Overseas Shipholding Group, Inc. reported net income for the
quarter ended March 31, 2000 of $5,013,000, or $.15 per share,
compared with net income of $3,058,000, or $.08 per share, in
the first quarter of 1999.
OSG says that,
in the first quarter, increasing production and shipments of
crude oil from Middle East, North Sea and Latin American producers
resulted in steady improvement in time charter equivalent rates
(TCE) from the severely depressed levels that prevailed for its
VLCCs and Aframax crude carriers during the fourth quarter of
1999. From January through April 2000, average monthly TCE rates
for VLCCs steadily improved rising from $14,000 to $35,000 per
day at the end of the period. OSG says its first quarter figures
reflect "only a portion of this dramatic improvement,"
since they predominantly reflect fixtures made in the lower rate
environment at the end of 1999 and early 2000. Nevertheless,
pre-tax income from vessel operations increased by $11.1 million
over the last quarter of 1999 reflecting an improvement in average
VLCC and Aframax TCE earnings of $10,000 per day and $7,500 per
day, respectively. First quarter VLCC TCE earnings, however,
remain approximately $5,000 per day below the rates earned in
the prior year's quarter.
Since February,
all of OSG's VLCCs, with the exception of three vessels on long-term
charter, have been trading in the Tankers International (TI)
pool established by OSG and five other leading tanker companies.
The TI pool fleet now includes 43 modern VLCCs and is expected
to exceed 50 vessels by 2002 as participants take delivery of
newbuildings and vessels are redelivered from time charters.
Since its inception, TI has been able to improve vessel utilization
through backhauls and other efficiencies facilitated by the size
and quality of its modern VLCC fleet. TI also offers participating
owners opportunities for cost savings and other synergies based
upon the scale of its operations.
OSG says its
20-vessel Aframax pool with PDV Marina continues to enjoy a leading
market position in the Atlantic Basin crude trade. Since it began
in 1996, the Aframax pool has developed a growing portfolio of
contracts of affreightment and backhauls that complement its
base of Venezuelan cargoes and enable pool vessels to achieve
a premium over market rates. OSG will increase the number of
vessels in the pool through the addition of its four wide-bodied,
shallow draft Aframax newbuildings delivering in 2001 and 2002.
OSG says that
strengthening tanker markets reflect increased production quotas
set by OPEC and other major oil producers to meet pent-up demand
for oil created by the strong economic performance of most of
the industrialized world, and by the resurgence of growth in
the Pacific Rim. Increased demand for oil in these regions is
further strengthened by the need to rebuild inventories depleted
by the past two years of production cutbacks.
In the wake of
the Erika spill off France last year, markets are reflecting
an increasing preference for more modern tonnage, says OSG. This
coupled with IMO rules limiting trading of older tonnage and
the higher fuel consumption of such older tonnage has caused
an acceleration of scrapping. In the first quarter, 14 VLCCs
were sold for scrap versus 34 scrapped for all of 1999. Over
the next couple of years, these trends are likely to result in
a significant tightening of crude tanker markets. With shipyard
capacity essentially committed through a large part of 2002,
most orders being placed today will not be available for trading
before 2003.
Kvaerner shipbuilding operations back
in black
While the Anglo-Norwegian Kvaerner Group remains committed to
its long term objective of getting out of shipbuilding, first
quarter results show its remaining shipyards are making an operating
profit.
The operating profit for the period was NOK 74 million, compared
to a loss of NOK 43 million in the preceding quarter, and a loss
of NOK 68 million for the corresponding period last year.
The major contributor
to the profit , says Kvaerner, was a good result at the Warnow
yard. A rig contract for Stena Line is advancing well, and the
yard can now utilize its full productivity, since rig is not
subject to the capacity restrictions imposed on the yard by the
EC in return for restructuring subsidies.
Kvaerner's shipbuilding
order intake in the first quarter was NOK 3.1 billion, compared
to NOK 145 million in the preceding quarter. The major contracts
booked in the period were a cruise ship for Carnival Cruise Lines,
and two container vessels for German owners.
The order backlog
at the end of the period amounting to NOK 15.1 billion, in line
with the preceding quarter. Additionally, a Letter of Intent
was signed in February to build two more vessels in the Voyager-class
series for Royal Caribbean. If these two vessels are included,
at a total price of NOK 9.4 billion, the order reserve amounts
to NOK 24.5 billion.
Hvide losses continue
Hvide Marine Incorporated reported a net loss of $12.9 million
or $1.29 per diluted share for the quarter ended March 31, 2000
versus a net loss of $9.1 million or $0.59 per diluted share
in the year-earlier period. Revenues of $78.6 million were down
from $90.4 million a year ago, primarily reflecting the year-over-year
decline in offshore activity. Operating income in the 2000 quarter
was $2.0 million versus $4.4 million in the 1999 first quarter.
"As anticipated,
operating results in the first quarter were below our original
projections, but were nonetheless higher than in the previous
quarter,'' commented Gerhard E. Kurz, who jumped into the CEO
hot seat last month. "We are in the process of turning this
company around, and the new Hvide team is determined to meet
its challenging goals. These goals include winning new contracts,
consolidating facilities and functions, paying down debt, extracting
the maximum amount of value from our current asset base, and
making our numbers from one quarter to the next. We look forward
to delivering on this program in the year ahead.''
The first quarter
results show revenues from Hvide's Seabulk Offshore unit falling
to $34.2 million from $45.7 million a year earlier, reflecting
substantially lower year-over-year day rates and, in certain
regions, reduced utilization. In the Gulf of Mexico, day rates
for Seabulk Offshore's fleet of 21 supply boats averaged $3,740
versus the comparable 1999 figure of $4,530, while utilization
stood at 71% against 70% in 1999. Seabulk Offshore's 33 Gulf
of Mexico-based crewboats averaged $1,850 and a 78% utilization
rate against $2,097 and 69% a year earlier. Internationally,
where the company has major operations in West Africa, the Middle
East and Far East, day rates for Seabulk Offshore's fleet of
67 anchor handling tug and tug supply vessels averaged $4,290
versus $4,817 in the 1999 quarter, while utilization declined
to 56% from 61%. Day rates for the company's international fleet
of 39 crew/utility vessels averaged $1,551 versus $1,543 in the
1999 quarter, while utilization fell to 40% from 65%.
Hvide Marine
Towing's revenues declined to $8.7 million in the first quarter
of 2000 from $11.1 million a year ago as a result of increased
competition in the port of Tampa, continued softness in the offshore
towing market, and four fewer vessels than a year ago.
In marine transportation,
where Hvide operates a fleet of 11 Jones Act chemical and petroleum
product carriers, including five new double-hull, state-of-the-art
tankers, revenues rose to $35.7 million from $33.5 million a
year ago. One of the new double-hull tankers, the HMI Cape Lookout
Shoals, begins a new three-year charter with Tesoro Petroleum
this summer.
Mobex acquires Watercom from American
Commercial Lines
Mobex Communications Inc. has entered into an agreement with
American Commercial Lines LLC (ACL) to acquire ACL subsidiary
Waterway Communications System LLC (Watercom), a provider of
automated ship-to-shore voice, data and telecommunication services.
Headquartered
in Jeffersonville, Ind., Watercom provides communications for
towboats, yachts, dredges, survey vessels, cruise/dinner boats,
gaming vessels, government vessels, as well as offshore workboats
and oil rigs. Its scope of operations covers 20 states on the
Gulf of Mexico and along the Mississippi, Illinois, and Ohio
rivers.
The acquisition
gives Mobex control of Watercom's spectrum, covering 80 channels
in each of 33 markets, broadcasting at 217 MHz under the Automated
Marine Telecommunications Service (AMTS). The transmission sites
in each market can be linked to create a contiguous wide area
network, providing coverage along the waterways and serving communities
in the Midwest and Gulf coast.
Under the terms
of the agreement between Mobex and ACL, Watercom will continue
to provide services to ACL, which will be a key Watercom customer.
Mobex officials
stressed that existing Watercom customers can expect to see the
same level of quality service to which they are currently accustomed
and that they "can expect costs to remain stable as there
are no pricing changes planned.''
Headquartered
in Lafayette, Calif., Mobex Communications Inc. is one of the
nation's fastest-growing specialized mobile radio (SMR) companies,
wireless integrators and network services providers with more
than 500 employees and operations in 20 states. Mobex serves
the wireless telecommunications needs of many local commercial
service companies in addition to major utility companies, public
safety organizations, governmental agencies, and telecommunications
companies. Its clients include San Diego Power & Electric,
Pacific Gas & Electric, and the Dallas-Fort Worth Airport.
Mobex owns and operates spectrum in the 900, 800 and 450 and
now 217 AMTS MHz frequencies and has more than 65,000 subscribers.
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