Performance Shipping Inc. Reports First Quarter Net Loss
Performance Shipping Inc., a global shipping company specializing in the ownership of tanker vessels, yesterday reported a net loss from continuing and discontinued operations of $2.1 million and net loss from continuing and discontinued operations attributable to common stockholders of $11.5 million for the first quarter of 2022, compared to a net loss from continuing and discontinued operations and net loss from continuing and discontinued operations attributable to common stockholders of $2.9 million for the same period in 2021. Net loss from continuing and discontinued operations attributable to common stockholders for the three-month period ended March 31, 2022 included a one-time non-cash deemed dividend of $9.3 million, stemming from the exchange of shares of certain holders of our common stock for shares of Series B preferred stock at the closing of the tender offer in January 2022.
Revenue from continuing and discontinued operations was $8.6 million ($5.2 million net of voyage expenses) for the first quarter of 2022, compared to $8.4 million ($3.5 million net of voyage expenses) for the same period in 2021. This increase was attributable to the increased time-charter equivalent rates (TCE rates) achieved during the quarter. Fleetwide, the average time charter equivalent rate for the first quarter of 2022 was $12,352, compared with an average rate of $7,691 for the same period in 2021. During the first quarter of 2022, net cash used in operating activities of continuing and discontinued operations was $3.9 million, compared with net cash used in operating activities of continuing and discontinued operations of $1.4 million for the first quarter of 2021.
As of March 31, 2022, the Company’s number of common shares issued and outstanding was 2,592,421. As of the date hereof, the number of common shares issued and outstanding is 10,395,030. During the first quarter of 2022 and up to the date hereof, the Company sold in its previously announced at-the-market offering an aggregate of 526,916 common shares at a weighted average sales price of $2.94, for total proceeds of approximately $1.5 million, net of commissions and other expenses. In addition, in the second quarter of 2022, the Company sold in an underwritten public offering 7,620,000 units at a price of $1.05 per unit, with each unit consisting of one common share and one warrant to purchase one common share, for total proceeds of approximately $7.4 million, net of underwriters’ fees and commissions.
On June 21, 2022, the Company announced its agreement to acquire its sixth Aframax tanker with expected delivery on or about July 5, 2022. The acquisition cost of approximately $27.6 million will be financed with cash on hand and the incurrence of debt through a new senior secured facility that the Company anticipates it will enter into prior to delivery of the vessel.
Commenting on the results of the first quarter of 2022 and subsequent developments, Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:
“The first two months of 2022 saw a continuation of the very soft charter rates that prevailed throughout 2021. In March 2022, we saw a marked improvement in rates due to the unfortunate Russian invasion of Ukraine, which resulted in higher volumes of crude oil being transported over longer distances to meet increasing global crude oil demand. We gradually took advantage of the improved spot charter market as we undertook positioning voyages, resulting in fleetwide average time charter equivalent rates of $12,352 per day during the first quarter and in a net loss of $2.1 million from our fleet operations. The one-time non-cash deemed dividend from our exchange offer has no impact on our results from operations or the cash position of the Company. So far, during the second quarter of 2022, our fleetwide average time charter rates are significantly above those of the first quarter of 2022.
“We believe that the encouraging freight rate developments experienced during the latter part of the first quarter of 2022, and continuing into the current quarter, point toward a sustainable charter rate recovery in the medium term that we now expect to take advantage of with our expanded fleet of six Aframax tankers. Positive crude oil demand prospects and the urgent need for global crude oil inventory restocking are resulting in increased crude oil production. We expect the rising demand for seaborne transportation coupled with low expected fleet growth and emission-related supply constraints to support higher charter rates for our vessels.
“During the first quarter of 2022, we completed the special survey and the installation of the ballast water treatment system (BWTS) on the M/T Blue Moon, and we intend to complete the same works on our M/T P. Kikuma during the fourth quarter of this year. Based on this plan, having 100% of our existing fleet BWTS fitted by the end of this year and no scheduled special surveys for 2023 will allow full utilization of our vessels.
“As a result of our financial results, and in accordance with our dividend policy, we will not declare a dividend for our Q1 2022 results from operations.”
Tanker Market Update for the first quarter of 2022:
Tanker fleet supply was 658.2 million dwt, up 0.9% from 652.3 million dwt from the previous quarter and up 1.7% from Q1 2021 levels of 647.5 million dwt.
Tanker demand in billion tonne-miles is projected to increase by a firm 7.6% in 2022, supported by the continued easing of OPEC crude oil production cuts along with a shift in trading patterns to longer-haul distances emerging due to the Russia-Ukraine war.
Tanker fleet supply in deadweight terms is estimated to grow by a moderate 2.4% in 2022.
Crude oil tanker fleet utilization was estimated at 78.0%, slightly down from 79.0% in the previous quarter and at the same levels of 78.0% in Q1 2021.
Newbuilding tanker contracting was just 0.6 million dwt in the first quarter, resulting in a tanker orderbook to fleet ratio of 6.1%, the lowest level seen since 1996.
Daily spot charter rates for Aframax tankers averaged $32,266, up 190.9% from the previous quarter average of $11,093 and up 206.5% from the Q1 2021 average of $10,527.
The value of a 10-year-old Aframax tanker at the end of the first quarter was $27.5 million, up 1.9% from $27.0 million in the previous quarter, and up 17.0% from $23.5 million in Q1 2021.
The number of tankers used for floating storage (excluding dedicated storage) was 146 (21.3 million dwt), down 13.6% from 169 (25.6 million dwt) from the previous quarter and down 12.6% from Q1 2021 levels of 167 (26.4 million dwt).
Global oil consumption was 98.9 million bpd, down 1.6% from the previous quarter level of 100.4 million bpd, and up 4.9% from Q1 2021 levels of 94.2 million bpd.
Global oil production was 98.8 million bpd, up 0.6% from the previous quarter level of 98.3 million bpd and up 6.8% from Q1 2021 levels of 92.5 million bpd.
OECD commercial inventories were 2,623.8 million barrels, down 3.0% from the previous quarter level of 2,704.2 million barrels, and down 11.5% from Q1 2021 levels of 2,965.9 million barrels.
During the global gradual recovery from COVID-19, we continue to take proactive measures to ensure the health and wellness of our crew and onshore employees while endeavoring to maintain effective business continuity and uninterrupted service to our customers. While the situation is improving, we continue to incur increased costs as a result of the restrictions imposed in various jurisdictions creating delays and additional complexities with respect to port calls and crew rotations.
The above market outlook update is based on information, data, and estimates derived from industry sources. There can be no assurances that such trends will continue or that anticipated developments in tanker demand, fleet supply or other market indicators will materialize. While we believe the market and industry information included in this release to be generally reliable, we have not independently verified any third-party information or verified that more recent information is not available.
Source: Performance Shipping Inc.