During its meeting, Euronav’s (EURONEXT BRUSSELS: EURN) board of directors approved the final consolidated financial statement for the period ended 31 December 2011:
Given the current circumstances in the tanker market, the board of Euronav NV has carefully reviewed all potential impairment indicators such as the current low freight rates environment as well as the current market value of the fleet compared to its carrying amount. The board tested the assets for impairment and at this point does not believe that an impairment loss needs to be recorded on its tankers. The board has continuously monitored developments in the tanker market throughout 2011 and will continue to do so throughout 2012.
The board of directors, represented by Marc Saverys, its Chairman, and the executive committee, represented by Paddy Rodgers, Chief Executive Officer and Hugo De Stoop, Chief Financial Officer, hereby confirm, in the name and for account of Euronav that, to the best of their knowledge the financial statements as of 31 December 2011 presented herein were established in accordance with applicable accounting standards (IFRS or Belgian GAAP) and give a true and fair view, as defined by these standards, of the assets, liabilities, financial position and results of Euronav NV.
Events occurred after the end of the financial year ending 31 December 2011
On 9 January 2012, Euronav took delivery of the Suezmax Maria (2012 – 157,523 dwt) which is owned in joint venture (50%-50%) with JM Maritime.
On 31 January 2012, Euronav took delivery of the Suezmax Cpt. Michael (2012 – 157,523 dwt) which is owned in joint venture (50%-50%) with JM Maritime.
On 28 February 2012, Euronav took delivery of the newbuilding VLCC Alsace (2012 – 320,350 dwt) which immediately commenced trading in the TI pool.
On 2 March 2012, the VLCC Luxembourg (1999 – 299,150 dwt) has been fixed on time charter contract for a period of 11 months with an option to extend up to an additional 8 months.
On 19 March 2012, Euronav drew down part of the revolving credit facility (RCF) and the full term loan of the USD 750 million forward start senior secured credit facility concluded in June 2011. The credit facility is comprised of (i) a USD 250 million non-amortising revolving credit facility and (ii) a USD 500 million term loan facility. On the same day the USD 1,600 million facility signed in April 2005 was fully repaid. The USD 750 million senior secured credit facilities is secured by 22 of the wholly-owned vessels of the company’s fleet, comprising of 1 ULCC, 7 VLCCs and 14 Suezmaxes.
Prospects for 2012
The global tanker market appears to have an oversupply of available tonnage. High bunker prices have reduced net voyage revenues, which owners have sought to improve by slowing down ships to reduce fuel consumption. This has in turn an impact in absorbing tonnage supply. Delays in delivery, cancellation of newbuilding orders, and scrapping of older tonnage will be necessary to fundamentally rebalance the market. Demand for crude oil is constrained by its high price. Even though crude oil demand is expected to keep growing, it will not, of itself, be enough to offset the expected steep increase in the trading fleet. Nevertheless, the charterers of crude oil need quality ships, crews and financially strong counterparties to move their ever more valuable cargo. This requirement rules out a large number of ships from use. The number can never be exactly calculated, but the current sudden explosion in charter rates in March reflects just this issue. This remains a volatile market subject to extreme market correction. Today the upside potential is demonstrated just as six month ago the downside risk was so very apparent.
The high oil price, discourages demand, but also encourages and finances exploration and production of oil in difficult environments and, in particular, offshore. Floating production offshore is going to play a more important role in the years to come. The two major drivers of floating production activity, oil prices and exploration and production technologies in deepwater regions, paint a promising picture for the future of the sector. The market fundamentals point to a robust demand for oil in the years to come as the gradual importance of offshore production increases. More and larger FPSOs and FSOs are required as part of this development and so Euronav has increased its focus in the provision of these services.
Source: Euronav