Tsakos Eenergy Navigation Reports Second Quarter and First Half 2007 Results

En este reporte se pueden observar las tendencias mundiales de los buques tanques petroleros, así como el costo del arrendamiento diario internacional, los costos de operación, etc. y se puede ver cuan rentable es el negocio del fletamento de estos buques.

Source: marineis

Athens, Greece – August 3, 2007 – Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) reported today results (unaudited) for the second quarter and first half of 2007.

SECOND QUARTER RESULTS

Revenues, net of voyage expenses and commissions, were $107.22 million in the second quarter of 2007 up from $80.26 million in the 2006 period. TEN deployed on average 42.3 vessels versus 33.9 vessels in the year earlier quarter. Fleet utilization was 97.6% as compared with 96.8% in the second quarter of 2006. TCE per day, per ship rose to $30,021 from $28,557. Vessel operating costs were $7,266 per ship, per day, up from $6,659 primarily due to higher lubricant prices, crew costs and the impact of further dollar weakness. In addition, the integration of the LNG carrier Neo Energy contributed to this increase due to the higher expenses required to operate such a high specification vessel.

Depreciation and dry-docking amortization costs rose to $21.65 million from $16.14 million with the fleet at 44 vessels at June 30, 2007 as compared with 37 vessels a year earlier. Management fees mainly reflected the increased number of ships while overheads rose as a result of professional fees and expenses related to a staff compensation program.

Interest and finance costs net of interest income rose sharply to $12.54 million from $5.61 million reflecting additional borrowings related to the expansion of the fleet. However, the impact was muted by the benefits of interest rate swaps and capitalized interest. Net income in the 2007 period was $37.52 million versus $33.03 million in the second quarter of 2006. Diluted earnings per share were $1.96 versus $1.73 in the 2006 quarter. There were no vessel sales this quarter.

FIRST HALF RESULTS
Revenues, net of voyage expenses and commissions, were $203.71 million in the first six months of 2007 up from $155.88 million in the 2006 period. TEN operated on average 40.0 ships as compared with 30.5 a year earlier. TCE per ship, per day increased to $30,770 from $30,603 while operating expenses increased to $7,278 from $6,777. General and administrative expenses were $1.85 million, up from $1.46 million in the same period last year. Management fees rose in line with fleet expansion and contractual fee increases.

Interest and finance costs, net of interest income, rose to $22.08 million from $6.45 million from the impact of rising interest rates and borrowings to fund fleet expansion. However, the benefits of higher interest income, interest capitalization, and interest rate swaps reduced the impact. Depreciation and drydocking amortization costs rose to $40.52 million from $28.24 million as a result of fleet expansion.

Net income in the first half of 2007, enhanced by capital gains of $6.40 million, reached $80.99 million; whereas, net income in the 2006 period was $74.80 million without the benefit of capital gains from vessel sales. On a per share basis, the first half of 2007 produced diluted earnings of $4.24, including capital gains of $0.33, while the first six months of 2006 had diluted earnings per share of $3.92.

SUBSEQUENT - OTHER EVENTS

As announced in a press release on July 10, 2007, TEN agreed to sell the 1998-built aframax tankers Maria Tsakos and Athens 2004 to an independent shipowning concern. The Maria Tsakos was delivered to her new owners on July 11th while the Athens 2004 is expected to be delivered to her new owners in October this year. From these sales, the Company will record a $31 million capital gain in the third quarter of this year and another $31 million in the final quarter of the year. Additionally these sales will release approximately $50 million in cash after repayment of debt associated with these two vessels.

On July 28, 2007 the 1991-built Aframax tanker Vergina II, recently converted to double hull was delivered and time-chartered for two years to a major South American oil concern. The gross revenue from this charter is expected to reach $23 million. There are no profit sharing arrangements from this charter.

FLEET STRATEGY

TEN’s strategy of growing the fleet organically has continued in the latest quarter with four vessels entering the fleet to join the four delivered in the first quarter of this year. With nine more vessels still to join the fleet, including three this year, TEN’s further fleet modernization and renewal remains on track. The deliveries this quarter were one 1A ice-class suezmax (Antarctic), one DNA design aframax (Sakura Princess) and one 1A and one 1B ice-class handysize product tankers (Aegeas, Byzantion). The Sakura Princess, the Aegeas and the Byzantion all entered long term time charters with profit sharing arrangements while the Antarctic was strategically placed to operate in the spot market.

These newbuilding introductions, supported by various sale and purchase activities that occurred since this quarter last year, have elevated TEN’s average fleet from 33.9 to 42.3 vessels. In terms of deadweight, TEN experienced a 19.4% increase, reaching 4.8 million, while it achieved a further reduction in the average age of its fleet from 6.0 years to 5.3 years, an 11.7% reduction.

Along with expanding the fleet through its newbuilding program, TEN remains committed to exploring other opportunities that may become available in the sectors it operates, which the Company expects will not jeopardize the fleet’s structure or age profile, nor place an excessive burden on the Company’s financial position. In addition, and in line with previous practice, TEN will continue to explore opportunities in the greater sales and purchase market and will occasionally entertain offers for the timely disposal of certain tonnage. As in the past, TEN has used the sales and purchase market to strategically profile its fleet in order to safeguard its attractiveness to the chartering community. This exercise has enabled TEN to not only renew the fleet in terms of type, size and age but to also release cash for further reinvestment.

“Critical mass, balanced employment and caliber of charterer are important components in strategy formulation,” stated Mr. Nikolas P. Tsakos, President & CEO of TEN. “We believe the quality and size of our fleet and our flexible chartering strategy in tandem with new vessel deliveries and strategic vessel disposals, will continue to fuel our drive for greater returns and enhanced shareholder value,” Mr. Tsakos concluded.

TANKER INDUSTRY

The strong global economic expansion is continuing. On July 25, 2007, the IMF (International Monetary Fund) revised its forecast of global economic growth from 4.9% to 5.2% for both 2007 and 2008. This revision was due to the continuing strength of emerging markets and developing countries. GDP growth for China was revised to 11.2%, India to 9.0% and Russia to 7.0%. Among the developed economies, GDP growth in the USA is expected at 2.0% (0.2% lower than earlier projections) but forecast to grow at 2.8% in 2008. Growth in the Euro-zone and Japan has been revised upward by 0.3% and is expected to remain relatively strong at 2.6% for 2008. Inflation remains, in general, well contained although some emerging markets and developing economies are facing inflation pressures, especially from rising prices in energy and food.

Oil demand remains strong despite oil prices creeping back to record highs. The IEA (International Energy Agency) in its July report marginally revised downwards (by 0.10/mbpd) the 2007 global oil demand to 86.0/mbpd, due to minor baseline revisions to OECD figures, which still represents a 1.8% growth in oil demand over the previous year’s figure of 84.5/mbpd. In 2008, world oil demand is expected to rise by a robust 2.5% to 88.2/mbpd with the OECD contributing roughly a third (0.8/mbpd) of this demand growth. The growth in non-OECD demand is expected to derive primarily from China and the Middle East.

Year to date the freight rate environment for both crude and product tankers is in line with 2006 levels despite the strong influx of newbuilding tankers, which is above historical levels, and expected to remain so until 2010. About 25% of the world tanker fleet is still of single hull design with limited trading prospects as the 2010 IMO phase-out deadline approaches.

Conversion of these single hull tankers to FPSOs and FSOs and dry bulk carriers could further restrict shipyard capacity for building new tankers until 2011. Steel recycling could be another option due to historically high scrap prices (currently over $500 per lightweight ton). Forward fixing at healthy rates of crude and product tankers by oil majors and commodity traders remains strong while the general landscape of the energy and the tanker markets continues to be influenced by the same variables that are responsible for the volatile nature of the markets. These are: global refinery constraints and glitches, ton/mile demand (expansion of trading routes), level of OECD stocks, arbitrage trade opportunities, geopolitical and weather related risks and internationally imposed regulations.

The set of challenges that owners and operators face include capital commitments to fund newbuilding and second-hand vessels, potentially higher interest rates and insurance premiums, personnel expenses, increases in lubricant and bunker prices, maintenance needs and a weakening dollar. These have not changed significantly nor are expected to change materially in the third and fourth quarter of this year. Despite these challenges, TEN expects 2007 to be another healthy year with high fleet utilization rates, a freight market well above mid-cycle levels, and capital returns around the levels of 2006.

OUTLOOK FOR TEN

With worldwide demand for crude and refined petroleum products on the rise, chartering and other investment opportunities will abound. TEN’s fleet and overall condition of its balance sheet provide a solid base for further growth while its versatile and balanced chartering strategy affords the necessary buffer to counteract possible market imbalances.

In the second quarter, the Company was successful in fixing five vessels, including its first LNG carrier, four with profit sharing agreements, four charters stretching from 12-months to three years, guaranteeing at least $81 million in gross revenues over that period. This earnings visibility which is further enhanced when one considers the whole time-chartered fleet under consideration, provides additional comfort for the future. In particular, for the remaining half of the year 87% has been fixed securing at least $160 million in gross revenues while for 2008 67% of the available days have been fixed guaranteeing at least $226 million for that year.


a€œOur results this quarter, placed in the context of the meandering markets recently, is a prime indication that our operating model works,” Mr. Tsakos continued. “It is a model designed for the long run and expected to further solidify our foundations for further growth, both in terms of size and returns. “With the market expected to remain healthy for the foreseeable future, and with the continuous stream of newbuildings we expect to join our fleet, in conjunction with our active involvement in the sales and purchase markets, TEN’s position to efficiently service its clients and actively participate in world maritime trades remains strong.

” TEN’s remaining newbuilding program: Vessel Dwt Design Delivery

Handysize (Product)
1. Bosporos 37,340 Ice-Class (1B) 21 August 2007

Panamax (Product)
1. Selecao 73,000 15 November 2007
2. Socrates 73,000 30 November 2007

Aframax (Crude)
1. Maria Princess 105,000 DNA November 2008
2. Nikkon Princess 105,000 DNA November 2008
3. Ise Princess 105,000 DNA Q3 2009
4. Asahi Princess 105,000 DNA Q4 2009
5. Sapporo Princess 105,000 DNA Q4 2009
6. Uraga Princess 105,000 DNA Q1 2010


ABOUT TSAKOS ENERGY NAVIGATIONTEN’s proforma fleet consist of 52 vessels of 5.6 million dwt. Today TEN operates a fleet of 43 double-hull vessels. Additionally, its newbuilding program of 9 vessels includes six Aframax crude carriers, two Panamax tankers and one Handysize product carrier representing 815,000 dwt.

The strategy of a balanced diverse fleet is reflected in 27 crude transporters ranging from VLCCs to Aframaxes and 24 product carriers ranging from Handysize to Aframaxes; complemented by one LNG.

FORWARD-LOOKING STATEMENTS

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. TEN undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.