Zabrocky says Shell agreement “puts Seaways on our future path”
Written by Nick Blenkey
Lois Zabrocky, President and Chief Executive Officer, International Seaways, Inc.: “With enhanced scale, financial strength and commercial expertise, we have markedly strengthened our position to capitalize on favorable long-term industry fundamentals.”
In an earnings call with analysts, March 12, Lois Zabrocky, president and CEO of New York City headquartered tanker giant International Seaways, Inc. (NYSE:INSW) said that the company’s agreement to build three LNG-fueled dual fuel VLCCs at Korean shipyard DSME backed by charters from Shell “puts Seaways on our future path.”
She said the agreement enables the company to achieve a number of critical strategic objectives.
“First, adding these vessels to our fleet on seven-year time charters to market leading customer Shell provides strong stable cash flows with added upside,” said Zabrocky. “We are pleased to once again renew our fleet at the cyclical low and to accept very competitive financing, combined with a favorable payment schedule ….
“Second, these VLCCs being 40% more efficient than a 10-year old vessel and 20% more efficient than the most modern ECO VLCCs on the water today. We expect they will remain well suited to adhere to future environmental regulations throughout their life.
“Importantly, these are highly efficient ships that will not just surpass today’s IMO Energy Efficiency Design Index, but also substantially outperform the 2025 EEDI targets. The environmental benefits of these three ships substantially reduces our carbon footprint and are in keeping with our commitment to ESG focused corporate citizenship. We’re proud to continue to be at the forefront of sustainability initiatives in the maritime sector. This builds on our last year’s signing of the first sustainability-linked refinancing in the industry.”
TRIO COST $290 MILLION
In the Q&A section of the call, analyst Omar Nokta of Clarksons Platou Securities said that he’s seen from International Seaways 10-K filing that the total cost of the three ships is $290 million, which comes out to about $96 million, $97 million apiece.
“This seems like a fairly good deal, I’d say, considering the LNG capability,” said Nokta. “Now there were a small handful of orders last spring, done closer to like $105 million, with the LNG piece kind of being around that $12 million to $15 million and you’ve obviously paying less than that. How much of the construction costs would you say that should be rolled to the LNG component?”
Zabrocky: “I guess what I would say, Omar, is that and we have to give credit to the customer as well. I think that the ordering of these vessels absolutely captured the down—the lowest point in the cycle and so you have to take that into consideration. I don’t think that the additional cost for LNG has changed very much. I think it is still in that range that you were noting somewhere $13 million to $15 million for the LNG capability.”
