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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