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Kirby reports third quarter results

Consolidated revenues for the 2015 third quarter were $532.6 million compared with $680.7 million for the 2014 third quarter.

President and CEO David Grzebinski said the results were “largely in line with our expectations.”

“Demand across the majority of the products we carry in the inland marine transportation market remained stable with utilization in the 90% to 95% range,” he said. “Market pressure from inland tank barges shifting out of crude oil service led to continued modest pressure on contract renewal pricing. Spot prices were generally around contract price levels throughout the quarter. In the coastal marine transportation market, pricing for term contract renewals increased modestly. Our results also reflected the anticipated earnings impact from heavy coastal equipment shipyard activity.”

Mr. Grzebinski called market conditions in Kirby’s land-based diesel engine services business, as continuing to be challenging due to the decline in the price of crude oil and, consequently, the low utilization levels of the oilfield service industry pressure pumping fleet.

In the marine diesel engine services and power generation markets, results reflect continuing soft activity in the Gulf of Mexico oilfield service market, but otherwise stable levels of demand.

MARINE TRANSPORTATION

Marine transportation revenues for the 2015 third quarter were $418.3 million compared with $448.7 million for the 2014 third quarter. Operating income for the 2015 third quarter was $93.7 million compared with $112.1 million for the 2014 third quarter.

Kirby’s inland marine transportation business maintained tank barge utilization in the 90% to 95% range.

Demand for inland barge transportation of petrochemicals, refined products and black oil products, excluding crude oil, was consistent with the second quarter. Demand for barges moving crude oil and condensate during the quarter was lower both sequentially and year over year.

Operating conditions were challenging due to scheduled lock closures along the Gulf Intracoastal Waterway and high water conditions during the first part of the third quarter. Delays related to lock outages contributed to a 40% increase in delay days relative to the prior year quarter and a decline in ton miles. In addition to increased delay days, fuel prices, which were down 38% year-over-year, contributed to the year over year decline in revenue.

Demand in the coastal marine transportation market for the transportation of refined petroleum products, black oil, and petrochemicals was relatively stable, although demand for equipment for crude oil transportation declined sequentially and year over year.

Coastal fleet utilization remained in the 90% to 95% range and operating conditions were seasonally normal during the third quarter. A continued heavy shipyard schedule impacted operating results.

The marine transportation segment’s 2015 third quarter operating margin was 22.4% compared with 25.0% for the third quarter of 2014 as a result of higher labor costs, including pension, lower inland marine transportation rates, increased shipyard activity and higher depreciation expense in the coastal business, and the impact of fuel price escalators on inland marine affreightment contracts.

CASH FLOW

Kirby continued to generate strong cash flow during the 2015 first nine months with EBITDA of $437.5 million compared with $484.6 million for the 2014 first nine months. Operating cash flow was used in part to fund capital expenditures of $265.2 million for the 2015 first nine months, including $66.6 million for new inland tank barge and towboat construction, $75.2 million for progress payments on the construction of four new coastal articulated tank barge and tugboat units (“ATBs”), $3.4 million for progress payments on the construction of two 4900 horsepower coastal tugboats, $1.6 million for progress payments on the construction of a new coastal petrochemical barge and $118.4 million primarily for upgrades to existing inland and coastal fleets.

Additionally, Kirby spent $41.3 million to acquire six pressure barges in the first quarter and a total of $202.2 million on share repurchases in the first nine months of 2015.

Total debt as of September 30, 2015 was $810.4 million versus $716.7 million on December 31, 2014, and Kirby’s debt-to-capitalization ratio was 26.4%.

OUTLOOK

Mr. Grzebinski said, “Our earnings guidance range for the 2015 fourth quarter is $0.93 to $1.03 per share and we are revising our full year 2015 guidance range to $4.10 to $4.20 per share [down from the prior guidance of $4.10 to $4.35 per share]. In our inland marine transportation market, our fourth quarter outlook reflects continued modest pricing pressure. Utilization in Kirby’s inland fleet, however, is projected to remain in the 90% to 95% range. In our coastal marine transportation market, although we’ve seen some industry spot availability related to the uncertainty around crude supplies, we expect supply and demand to remain consistent with the first nine months of the year and Kirby’s fleet utilization to remain above 90%. Our guidance assumes normal fourth quarter operating conditions for both the inland and coastal marine transportation markets, including the winter cessation of most operations in Alaska.”

Mr. Grzebinski said demand is expected to remain weak in the land-based diesel engine services market and the offshore oil services portion of the marine diesel engine services market, but is expected to remain relatively stable in the marine and power generation markets.

CAPITAL SPENDING

Kirby expects 2015 capital spending to be in the $320 to $330 million range, an increase of $5 million from earlier capital spending guidance. Contributing to this is a shipbuilding contract entered into the quarter for a 35,000 barrel coastal petrochemical tank barge. The vessel will enter service under contract with an existing customer on delivery, expected in early 2017.

The capital spending guidance range includes approximately $70 million for the construction of 38 inland tank barges and three inland towboats, all expected to be delivered in 2015.The capital spending guidance range also includes approximately $100 million in progress payments on new coastal equipment, including two 185,000 barrel coastal ATBs, two 155,000 barrel coastal ATBs, two 4900 horsepower coastal tugboats and the new coastal petrochemical tank barge.The balance of $150 to $160 million is primarily for capital upgrades and improvements to existing inland and coastal marine equipment and facilities, as well as diesel engine services facilities.

  • News

New LNG containment system makes progress

  The joint venture group comprises Braemar Engineering, Honghua Group EnTX and Jamestown Marine Metals.

The FSP system – a new flat-panel, semi-membrane, prismatic-shaped LNG tank-containment system Type B – uses new flat plate technology to overcome the issues associated with partial filling and sloshing. The system employs  the ‘riction stir welding technique, used in the aerospace industry, for optimum integral strength. 

FSP can be used in a wide range of applications: Floating Production and Storage (FPSO); Floating Storage Regasification Units (FSRU), LNG transportation and LNG marine fuel tanks. It can also be used as offshore storage. 

The new Type B containment system has been designed to be constructed, outfitted, insulated and tested off hull and lifted complete onto the platform. The use of on shore construction facilities ensures the highest standards of quality care and repeatability.

In a joint statement, Chairman Zhang Mi, Chairman and President of Honghua Group, and Geoff Green, Managing Director of Braemar Engineering, said that “substantial progress has been made to date, and this is expected to continue going forward”. 

They added that GDA and Tank Specific Approval are moving forward in parallel, and that approval, construction and test-completion of an initial tank is projected for March 2016.

  • News

Barge mounted solution brings LNG to challenging locations

The Wärtsilä Mobile LNG solution has been developed for challenging locations where pipelines and large-scale LNG receiving terminals are not feasible, or where the quantities of LNG needed are smaller. It is well-suited for shallow water areas where access for larger vessels would not be possible without major jetty constructions or dredging operations.

The all-in-one solution includes a jetty-based LNG receiving system receiving system, LNG storage and a regasification barge. The barge can be used in combination with a fixed or floating power plant with an installed capacity of up to 250 MW, which is ideal for many medium-sized communities. Its capacity can be ramped up by floating a second barge next to it

Compared to constructing conventional land-based terminals in difficult soil conditions and areas with an undeveloped infrastructure, the barge can mean a significantly lower capital investment (capex) and faster delivery. And, being mobile, it can be easily re-located giving it a high resale value.

The Wärtsilä Mobile LNG solution will make LNG available to new consumer segments, and will benefit both utilities and end-users. The flexibility of location it provides can bring clean energy to areas that have only limited or no access to a national electrical grid.

“Wärtsilä’s solutions support the entire gas value chain, from drilling and production, to delivery, liquefaction, regasification, storage, and power generation. This latest innovation is one more important step towards completing our LNG infrastructure offering. Most existing facilities are geared for larger-scale users, whereas the Wärtsilä Mobile LNG offers a flexible and mobile option for small to medium requirements,” says Timo Koponen, Vice President, Flow and Gas Solutions, Wärtsilä Marine Solutions.

The LNG is transferred by a small scale LNG carrier.

mobile LNG 2

  • News

LNG bunkering: GTT concept tanker puts the pressure on

Granted Approval in Principle by classification society Bureau Veritas, the bunker tank uses tanks with a GTT Mark III Flex Cargo Containment system operating up to a pressure of 2 barg to deliver LNG as ships’ fuel. Combining the membrane containment system with the ability to store LNG at pressures up to 2 barg allows the bunker vessel to have a higher capacity and increased operational flexibility.

“Practical LNG bunker tankers are the key to building a viable LNG supply chain on which to develop LNG as a ship’s fuel,” says Philippe Donche-Gay, Executive Vice President and head of BV’s Marine and Offshore Division.”This pressurized membrane tank concept from GTT means LNG bunker tankers can manage Boil Off Gas (BOG) better and increase loading and delivery flow rates. Our studies show it is both safe and practical. We look forward to seeing the concept taken forward to a new construction.”

Under GTT’s system. the BOG management during loading and bunkering operations is made more flexible because of the wide vapor pressure operating range. Vapor can be buffered and condensed in the tanks to help the fueled ship or feeding facility handle the vapour. Condensation may be performed by spraying LNG into the vapor phase.

The higher pressure also means that during voyage and stand-by mode, the duration before gas pressure in the bunker tanker’s tanks reaches the upper limit is longer. This improves the holding time when BOG is not being consumed and reduces the use of reliquefaction plant, diminishing costs.

  • News

LNG fuel tanks installed in first Crowley ConRo

Another important milestone was marked last week, with the installation of three LNG fuel tanks in the first ship.

The double-walled, stainless steel tanks – which are 110 feet in length and 20.6 feet in diameter – weigh 225 metric tons and will hold more than enough LNG fuel for two round-trip voyages between the vessel’s future ports of call, Jacksonville, FL, and San Juan, Puerto Rico.

“While we are all excitedly watching these ships take shape, we are particularly proud of the role we, as a company, are playing to bring the most modern, technologically advanced and environmentally friendly ConRo ships in the world to the Jones Act market of Puerto Rico,” said Tom Crowley, company chairman and CEO. “There are no other ships of their kind being built anywhere else in the world today, and they are being constructed right here at home – in the United States of America. Having that shipbuilding capability here is essential to our national defense and an important reason we as a country need the Jones Act to be maintained and strengthened.”

Crowley’s two Jones Act ConRo ships, which will be named El Coquí (ko-kee) and Taíno (tahy-noh), are are scheduled for delivery second and fourth quarter 2017 respectively.

“It’s very impressive to see these new state-of-the-art Commitment Class ships take shape,” said John Hourihan, senior vice president and general manager, Puerto Rico services. “Seeing those LNG tanks being placed into El Coquí really resonates with me because we are setting a new standard for environmentally responsible shipping.”

The Commitment Class ships have been designed to maximize the carriage of 53-foot, 102-inch-wide containers, which offer the most cubic cargo capacity in the trade.

The ships will be 219.5 meters long, 32.3 meters wide , have a deep draft of 10 meters, and an approximate deadweight capacity of 26,500 metric tonnes. Cargo capacity will be approximately 2,400 TEUs (20-foot-equivalent-units), with additional space for nearly 400 vehicles in an enclosed Ro/Ro garage.

Each ship will be powered by an MAN B&W 8S70ME-GI8.2 main engine and three MAN 9L28/32DF auxiliary engines, all fueled by LNG .

The ship design is provided by Wartsila Ship Design in conjunction with Crowley subsidiary Jensen Maritime.

ceowleyLNG vert

  • News

World’s largest LNG fleet owner reports increased profits

It said the results reflected its “strategic development, the success of its joint ventures, and the company’s resilience in the challenging economic climate.”

The Nakilat board said that Nakilat is in an enviable position as its ships are on long-term charter hire contracts that are not impacted by temporary fluctuations in oil prices. The board also affirmed its continued commitment to Nakilat’s growth and development strategy, in line with Qatar’s National Vision 2030.

“Nakilat continues to show robust profits and growth,” said Managing Director Eng. Abdullah Al Sulaiti. “Despite regional challenges, our policy of making prudent investments for achieving higher economic benefit in the short and long-term, and seeking sustainable growth opportunities continues to work in our favor. We have also lowered our operating costs, and our financing costs are decreasing as we have repaid a suitable amount of our loans.”

Mr. Al Sulaiti added: “We have also seen increased profits from our joint ventures, particularly since the launch of new two vessels during the year, along with an additional five vessels that became fully operational. Nakilat’s place as the lynchpin in the Qatari marine services sector will continue to grow unabated.”

Credit rating agency Standard & Poor’s (S&P) has reaffirmed Nakilat’s senior debt credit rating at “AA-” with a stable outlook, which Nakilat says is indicative of its strong capability to meet its financial commitments.

In addition to owning  63 LNG vessels  Nakilat also manages and operates four large LPG carriers via two strategic joint ventures: N-KOM and NDSQ.  It also operates the ship repair and construction facilities at Erhama Bin Jaber Al Jalahma Shipyard in Ras Laffan Industrial City and offers a full range of marine support services to vessels operating in Qatari waters.

Damen and Delta develop DP2 Renewables Service Vessel

Delta has awarded Damen a construction contract that will see the first of the vessels launched in early 2017. Following fabrication of the hull in Poland, Damen Shipyards Hardinxveld in the Netherlands will complete the final outfitting process.

“For the last couple of years we’ve been working on this new design with Damen Shipyards Hardinxveld,” says Delta Marine General Manager Dave McNaughtan. “We came up with concepts – gave them to Damen, who would put those ideas on the drawing board. They gave their expertise – adding the engineering for example – and then came back to us.”

“Client feedback is very important to us,” says Damen Shipyards Hardinxveld Managing Director Jos van Woerkum. “It has been great to work so closely with Delta Marine to develop this new design.”

“Damen are very good at developing their vessels,” continues Mr. McNaughtan. “Even their established vessels like Multi Cats and Shoalbusters are continually getting better.”

The new design has evolved from the Multi Cat.

“We have changed the design by moving the wheelhouse forward and leaving the aft deck open,” says Mr. McNaughtan. “We’ve managed to keep it under the 500-tonne mark. This was a critical factor – one that will help keep the costs down.”The Renewables Service Vessel 3315 will be able to take on a lot of the work larger offshore construction vessels currently perform, says Mr. McNaughtan.

“We’ll have full DP2 capability and, with such a wide deck, we’ll be able to fit a cable lay carousel, work class ROVs or cable trenching machines,” he says.

The vessel will also be fitted with two large HS Marine cranes and a 4-point mooring system.

Ingalls authenticates keel of Paul Ignatius (DDG 117)

The Aegis guided missile destroyer, Paul Ignatius (DDG 117). DDG 117 is the 31st ship in the Arleigh Burke (DDG 51) class of destroyers Ingalls is building for the U.S. Navy.

“The keel authentication is an important milestone in a ship’s life and it’s really a foundation upon which the ship is made,” said Ingalls Shipbuilding President Brian Cuccias. “Paul Ignatius epitomizes the leadership and agility that has propelled our nation forward – I couldn’t think of a better namesake for DDG 117. Over the coming years as we build this great ship, our shipbuilders know what we do is important. We are building great ships to defend our nation, to protect the brave men and women who will serve on this ship and come back safely home to their families.”

Ingalls welder Reginald Whisenhunt welded the initials of two authenticators — the ship’s namesake Paul Ignatius and 26-year shipbuilder Bill Jones, an Ingalls hull superintendent —onto a steel plate signifying the keel of DDG 117 to be “truly and fairly laid.”

The plate will remain affixed to the ship throughout the ship’s lifetime.

“It is a pleasure for me to be here with Huntington Ingalls officials and the men and women who are building DDG 117,” said Mr. Ignatius, whose wife, Nancy Ignatius, is the ship’s sponsor. “DDG 117 will become part of our country’s proud destroyer tradition. Built tougher than steel by one of America’s leading shipbuilders, constructed by dedicated and skilled shipyard technicians and manned eventually by the world’s finest naval officers and seamen, this new ship will sail for many decades into the future.”

“Every time the men and women of Ingalls craft another destroyer, they build a living, lasting remembrance of either the courage, the leadership or the intellectual contribution of the very best that the Navy and Marine Corps have to offer,” said Capt. Mark Vandroff, the Navy’s DDG 51 program manager.

Ingalls is building three other destroyers — John Finn (DDG 113), which is scheduled to be delivered in 2016, Ralph Johnson (DDG 114), which will launch by the end of the year and Delbert D. Black (DDG 119), which started construction in July.

To date, Ingalls has delivered 28 DDG 51 destroyers to the U.S. Navy. .

NASSCO christens first Kinder Morgan ECO tanker

San Diego Mayor Kevin Faulconer spoke at the ceremony, and the ship’s sponsor, Mrs. Helen Downs, christened the ship with the traditional breaking of a champagne bottle.

 

The ECO tanker, the Lone Star State, is the first of a five-tanker contract between NASSCO and APT, which calls for the design and construction of five 50,000 deadweight ton, LNG-conversion-ready product carriers with a 330,000 barrel cargo capacity. The 610-foot-long tankers are a new “ECO” design, offering improved fuel efficiency and the latest environmental protection features including a Ballast Water Treatment System.

The ships were designed by DSEC, a subsidiary of Daewoo Shipbuilding & Marine Engineering (DSME) of Busan, South Korea. The design incorporates improved fuel efficiency concepts through several features, including a G-series MAN ME slow-speed main engine and an optimized hull form. The tankers will also have dual-fuel-capable auxiliary engines and the ability to accommodate future installation of an LNG fuel system.

“Incorporating new and innovative green ship technology, these tankers are the future of American petroleum shipping. When delivered they will be among the most fuel-efficient and environmentally friendly tankers anywhere in the world,” said Kevin Graney, general manager and vice president for General Dynamics NASSCO.

“This christening ceremony is an important step forward for Kinder Morgan’s expanding fleet of Jones Act product tankers and demonstrates the strong demand for domestic waterborne transportation to move petroleum products and crude oil,” said Robert Kurz, vice president of Kinder Morgan Terminals and president of American Petroleum Tankers. “We look forward to taking delivery of this vessel next month and, along with our seven other operating tankers, providing first-class service to our growing customer base.”

In September 2014, Mayor Faulconer signaled the start of construction of the ECO tanker. In March 2015, San Diego’s First Lady and wife of Mayor Faulconer, Mrs. Katherine Faulconer, laid the keel.

“The Lone Star State is a great example of the kind of innovative technology being employed by NASSCO and our blue tech industry. Its construction has employed hundreds of San Diegans and helped sustain jobs for thousands more,” Mayor Faulconer said. “This ship is a symbol of the jobs and opportunities the maritime industry brings to our city.”

On Friday, October 16, NASSCO shipbuilders began construction on a fifth tanker for APT.