Euronav Says 21 Scrapped VLCCs During First Quarter Period Bodes Well for the Tanker Market

Euronav NV yesterday reported its non-audited financial results for the three months ended 31 March 2018.

Paddy Rodgers, CEO of Euronav said: “Oil demand has been consistently upgraded over the past six months which along with increased levels of recycling (21 VLCC YTD) are encouraging developments for all tanker operators. However, the rebalancing of the tanker market requires further affirmative action in reducing primarily older tonnage, restraint from contracting and a supportive oil price structure. Freight rates will remain under pressure until this process of rebalancing is much further advanced. Euronav retains both now and going forward substantial balance sheet capacity and fixed income visibility to navigate through such periods and remains confident on the medium-term trends for the crude tanker market.”

  The most important key figures (unaudited) are:            
  (in thousands of USD)       First quarter 2018     First quarter 2017  
  Revenue       98,136     164,158  
  Other operating income       1,178     1,285  
  Voyage expenses and commissions       (19,809)     (16,170)  
  Vessel operating expenses       (36,895)     (38,876)  
  Charter hire expenses       (7,673)     (7,637)  
  General and administrative expenses       (13,750)     (10,679)  
  Net gain (loss) on disposal of tangible assets             9  
  Depreciation       (53,509)     (57,570)  
  Net finance expenses       (11,328)     (9,436)  
  Share of profit (loss) of equity accounted investees       4,574     9,161  
  Result before taxation       (39,076)     34,245  
  Tax benefit (expense)       (15)     79  
  Profit (loss) for the period       (39,091)     34,324  
  Attributable to:  Owners of the company       (39,091)     34,324  
  The contribution to the result is as follows:                
  (in thousands of USD)       First quarter 2018     First quarter 2017  
  Tankers       (43,671)     25,188  
  FSO       4,580     9,136  
  Result after taxation       (39,091)     34,324  
  Information per share:                
  (in USD per share)       First quarter 2018     First quarter 2017  
  Weighted average number of shares (basic) *       158,166,534     158,166,534  
  Result after taxation       (0.25)     0.22  

* The number of shares issued on 31 March 2018 is 159,208,949.
All figures have been prepared under IFRS as adopted by the EU (International Financial Reporting Standards) and have not been audited nor reviewed by the statutory auditor.

EBITDA reconciliation (unaudited):                
  (in thousands of USD)       First quarter 2018     First quarter 2017      
  Profit (loss) for the period       (39,091)     34,324      
  + Depreciation       53,509     57,570      
  + Net finance expenses       11,328     9,436      
  + Tax expense (benefit)       15     (79)      
  EBITDA       25,761     101,251      
  + Depreciation equity accounted investees       4,456     4,456      
  + Net finance expenses equity accounted investees       (15)     396      
  + Tax expense (benefit) equity accounted investees       469            
  Proportionate EBITDA       30,671     106,103      
  Proportionate EBITDA per share (unaudited):                    
  (in USD per share)       First quarter 2018     First quarter 2017      
  Weighted average number of shares (basic)       158,166,534     158,166,534      
  Proportionate EBITDA       0.19     0.67      

For the first quarter of 2018 the Company had a net loss of USD -39.1 million (first quarter 2017: net profit of USD 34.3 million) or USD -0.25 per share (first quarter 2017: USD 0.22 per share). Proportionate EBITDA (a non-IFRS measure) for the same period was USD 30.7 million (first quarter 2017: USD 106.1 million).

The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarized as follows:

In USD per day



First quarter 2018 First quarter 2017
Average spot rate (in TI pool)* 18,725 40,525
Average time charter rate** 34,000 41,150
Average spot rate*** 14,000 24,000
Average time charter rate** 23,850 23,875

*Euronav owned ships in TI Pool 
**Including profit share where applicable
*** Excluding technical offhire days


During March, the Suezmax Cap Quebec (2018 – 156,600 dwt) was delivered into the Euronav fleet. This vessel is the first of four Ice Class Suezmax vessels which progressively are each starting seven-year contracts with a leading global refinery player from delivery during 2018.

When taking delivery of the Cap Quebec, the Company paid USD 45.5 million (including the final instalment). In addition the Company paid for a total of USD 12.4 million worth of instalments towards the construction of the three remaining Suezmax vessels at Hyundai Heavy Industries which are due for delivery between now and September of this year. The remaining capex for these vessels is USD 130 million against which USD 130 million will be borrowed under a new facility (see below ‘Financing’).

These vessel orders are accompanied by four seven-year time charter contracts.


On March 22, 2018, the Company signed a senior secured credit facility for an amount of USD 173.6 million with Kexim, BNP and Credit Agricole Corporate and Investment bank acting also as Agent and Security Trustee. The purpose of the loan is to finance up to 70 per cent of the aggregate contract price of the four Ice Class Suezmax vessels that will be delivered over the course of 2018.

On March 29, 2018, TI Asia Ltd and TI Africa Ltd concluded a USD 220.0 senior secured credit facility. The facility consists of a term loan of USD 110.0 million and a revolving loan of USD 110.0 million for the purpose of refinancing the two FSOs as well as for general corporate purposes. The Company provided a guarantee for the revolving credit facility tranche.

The Company retained around USD 817 million of liquidity as at the end of March 2018.


On December 21, 2017, the boards of Euronav and Gener8 Maritime announced agreement on a stock-for-stock merger for the entire issued and outstanding share capital of Gener8 pursuant to which Gener8 would become a wholly-owned subsidiary of Euronav (the “Combined Entity”). The merger will create the leading independent large crude tanker operator with 74 crude tankers, of which 44 VLCCs and 28 Suezmax crude tankers representing over 18 million dwt in the aggregate.

The Combined Entity balance sheet assets of over USD 4 billion will have marked-to-market leverage of less than 50% and a liquidity position estimated at more than USD 750 million, including cash on hand and undrawn amounts available under existing credit facilities.

Work on the transaction is proceeding as planned with an anticipated closing in the second quarter of 2018. Full details on the proposed transaction can be found on our website: www.euronav.com. Gener8 Shareholders will vote at a special meeting expected to take place at the end of the second quarter 2018.


In January 2018 Euronav was selected from ten sectors and the only Belgian listed company to join the inaugural 2018 Bloomberg Gender-Equality Index (“GEI”). This reference index measures gender equality across internal company statistics, employee policies, external community support and engagement, and gender-conscious product offerings.

Euronav submitted a social survey created by Bloomberg in partnership with third-party experts, including Women’s World Banking, Catalyst, and Working Mother Media. Those included on this year’s index scored at or above a global threshold established by Bloomberg to reflect disclosure and the achievement or adoption of best-in-class statistics and policies. Both the survey and the GEI are voluntary and have no associated costs. The index is not ranked.


Euronav will propose to the shareholders to approve a final dividend covering the second half of the 2017 financial year of USD 0.06 per share during the Annual General Meeting of Shareholders that will be held in Antwerp on 9 May 2018. This follows the USD 0.06 dividend per share paid in September 2017 covering the first half of the year, bringing the total dividend for 2017 to USD 0.12 per share. Following the approval, it is anticipated that the ex-dividend date shall be 14 May 2018 with a record date of 15 May 2018 and a payment date as of 23 May 2018.


Sustained freight rate pressure continued throughout the first quarter. This reflected an oversupply of largely older tonnage compounding both a restriction in supply of barrels from the extended OPEC export cuts and new vessel supply entering the fleet. Recycling has become a strong and welcome feature with 21 VLCCs removed from the global fleet year to date. However, the fleet also had to absorb 8 new VLCCs during the same period and since the second quarter of 2017, the return to the global trading fleet of around 20-30 VLCCs from logistical storage as the oil price structure has moved into backwardation. This level of vessel supply combined with the concentrated nature of the order book, with 49 VLCCs due for delivery before the end of 2018, provides a challenging headwind for tanker operators.

Other drivers of the crude tanker market however remain constructive. Asset prices at both the new build and scrap end of the spectrum have been consistently pushing higher since the third quarter of 2017. U.S. crude exports have remained strong at 1.5m bpd during the first quarter with further infrastructure plans announced during the quarter to maintain and grow this new trading route. Annual forecasts for crude demand have been, unusually for this early part of a calendar year, upgraded with consensus growth for 2018 already at 1.6m bpd – the same level recorded in both 2016 and 2017.


Demand for crude overall and expansion of ton miles remain positive for the tanker sector. The prospect for oil supply also remains supportive with a higher (and relatively stable) oil price driving new supply from Brazil, Russia and most notably U.S. shale. However, the concentrated nature of the order book combined with a current oversupply of tonnage are likely to provide a challenging backdrop for tanker operators until the world fleet can sufficiently rebalance.

An elevated level of recycling activity is positively impacting a large tanker fleet, which is at a level of maturity in terms of average fleet age not seen since the early 2000s, and will provide a supportive medium-term dynamic. However, the rebalancing of the tanker market requires further affirmative action in reducing, primarily, older tonnage and continued restraint from contracting new buildings before the freight market can gain traction.

Since the second half of 2016 Euronav has undertaken a number of proactive measures to bolster its capital structure to retain the capability to navigate the tanker cycle. The structure of the proposed merger transaction with Gener8 Maritime maintains those robust capital ratios. This structure should allow the Combined Entity post-merger to continue to have some resilience to a challenging freight rate market yet retain exposure to any potential upside when the freight rate environment improves.

So far in the second quarter of 2018, the Euronav VLCC fleet operated in the Tankers International Pool has earned about USD 13,187 and 42% of the available days have been fixed. Euronav’s Suezmax fleet trading on the spot market has earned about USD 12,300 per day on average with 46% of the available days fixed.

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