Euronav NV (NYSE: EURN & Euronext: EURN) (Euronav) announces that it has signed an additional two long-term time charter contracts of seven years each with Valero Energy Inc. for Suezmax vessels with specialised Ice Class 1C capability starting in late 2018. This brings to four the number of long-term (seven years) Suezmax time charter contracts the Company has within its portfolio.
Image (for illustrative purposes only) courtesy of Euronav
In order to fulfil these contracts, Euronav has ordered two high specification Ice Class Suezmax vessels from Hyundai Heavy Industries shipyard in South Korea. Additional specifications for these vessels include substantially increased steel structure, specific emissions controls and other bespoke operational capabilities. Delivery of these vessels is expected in the second half of 2018 when each of the time charter contracts will begin.
According to Euronav, the Company has secured an excellent price for the two high specification vessels in line with its policy of not adding speculative new capacity to the global tanker fleet. Euronav anticipates the new vessels on order will replace its older Suezmax vessels hence this order will not add net tonnage to the global Suezmax tanker fleet.
During our recent first quarter results commentary, the Company stated its belief that asset values are approaching a low point supported by reduced immediate newbuilding berths at the yards and fewer speculative buyers. This transaction underlines this belief. The addition of a further two seven-year contracts greatly increases our fixed income contribution to EBITDA in 2018 and onwards which differentiates the Company from its peer group.
CEO Paddy Rodgers said: “By extending our strong partnership with a key customer, Euronav is also providing high quality and long duration earnings visibility for our stakeholders. Such fixed income capability provides Euronav with enhanced financial optionality as we move forward. ”