Nordic American Tankers Ltd (NYSE: NAT) – Third quarter 2021. Third quarter touched the bottom. The tide has now turned
There is so much confusing day-to-day noise in the markets about oil and gas prices that we think many investors have decided to steer clear of the tanker sector entirely. All markets are volatile, and as history has shown volatility can be our friend when rates rise suddenly and the company’s stock price benefits. We firmly believe that successful investors buy quality companies and profit handsomely when the tide turns.
A main feature of the NAT strategy is that NAT has suezmaxes only. No other public company has this feature. Asset values continue to rise.
The International Energy Agency in Paris confirms that global oil demand is nearing pre-pandemic levels of early 2020 and more importantly, oil supply is now rising fast. This is good news for the NAT suezmaxes and provide confidence that a turn-around for the NAT fleet is getting closer by the day.
During recent months we have secured term contracts with prompt delivery for six months or longer at rates above $20,000/day or more for four of our vessels. The time charter rates for these ships were substantially higher than the spot market at the time and still are. These four contracts work as a hedge. Our fleet of 24 ships has significant upside.
We undertook planned maintenance of three ships during 3Q 2021, withdrawing them from the market for a large part of the quarter.
On November 5, 2021 the “Nordic Sirius” was delivered to new owners. The price to us was between $14 – 15 million. After the transaction our fleet counts 24 units, including 2 newbuildings. The estimated value for our two newbuildings is now about $70 million per ship. They were ordered at about $55 million per ship.
The proceeds from the above mentioned sale has been used to pay down part of our $306 million senior secured facility with CLMG/Beal Bank of Texas. The company’s total net debt per 3Q 2021 is $259.6 million or $11.8 million per vessel (based on 22 ships). Our objective is to become debt free.
The pandemic has lasted longer than we anticipated at the outset in early 2020. The third quarter of 2021 was the low point. The average time charter equivalent (TCE) for our active fleet during 3Q 2021 came in at $5,800 per day per ship – this was down from 2Q 2021 at $7,800 per day. NAT is through the low point. The average earnings for a Suezmax tanker for the last 30 years has been close to $30,000 per day per ship.
The third quarter of 2021 produced a net loss of -$44.7 million or a earnings per share (EPS) of -$0.27. Adjusted for an impairment of $8.4 million (non-cash) the net loss was -$36.3 million and adjusted EPS of -$0.22. This compares to the previous quarter, that came in at a net loss of -$28.7 million or an EPS of -$0.18.
Dividend is a priority for NAT and a reflection of our earnings. The dividend for 3Q 2021 is 1 cent ($0.01) per share, payable on Tuesday December 21, 2021, to shareholders on record Tuesday December 7, 2021. This is our 97th consecutive quarterly dividend payment. When earnings improve, higher dividends will be distributed.
We have an excellent vetting record on our vessels, perhaps the best sign of a tanker company’s reliability. Vetting is the scorecard provided by our customers.
NAT has sound corporate governance principles. The Company has zero tolerance for corruption. Our policy is to underpromise and overdeliver.
Source: Nordic American Tankers