Scorpio Tankers Announces Updates on the 4Q2018 TCE Rates, 2019 Capital Expenditures, and Securities Buyback Program

ScorpioTankers

Scorpio Tankers announced an update on the Fourth Quarter of 2018 TCE Rates, 2019 Capital Expenditures, and Securities Buyback Program.

Fourth Quarter of 2018 Time Charter Equivalent (“TCE”) Revenue Per Day (1)

Below is a summary of the average daily Time Charter Equivalent (TCE) revenue and duration for voyages fixed for the Company’s vessels thus far in the fourth quarter of 2018:

Q3 2018 Q4 2018 as of 30-Oct-18 31-Oct-18 to 10-Dec-18 Q4 2018 as of 10-Dec-18
TCE % TCE % TCE % TCE %
LR2 $ 12,160 100 % $ 13,000 45 % $ 17,500 46 % $ 15,250 91 %
LR1 8,335 100 % 12,750 46 % 11,700 40 % 12,250 86 %
MR 9,494 100 % 12,000 46 % 15,250 40 % 13,500 86 %
Handymax 8,852 100 % 11,000 42 % 16,100 41 % 13,500 83 %

Emanuele Lauro, Chairman and Chief Executive Officer commented “We have seen a significant improvement in the spot market for product tankers during the latter half of the fourth quarter of 2018.  While this positive development is beginning to materialize in our fourth quarter figures, we expect to realize the full benefit of these fixtures throughout the remainder of December and into the first quarter of 2019.”

(1) Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned or chartered-in less the number of days the vessel is off-hire for drydock and repairs.

Drydock, Scrubber and Ballast Water Treatment Update

Set forth below are the expected, estimated payments through the fourth quarter of 2019 for the Company’s drydocks, ballast water treatment system installations, and scrubber installations:

In millions of USD As of December 10, 2018(2)
Q4 2018 $ 22.4
Q1 2019 19.8
Q2 2019 52.7
Q3 2019 70.9
Q4 2019 86.8

(2) Includes estimated cash payments for drydock, ballast water treatment systems and scrubbers.  These amounts include installment payments that are due in advance of the scheduled service and may be scheduled to occur in quarters prior to the actual installation.  The timing of the payments set forth are estimates only and may vary as the timing of the related drydocks and installations finalize.

Set forth below are the expected, estimated number of ships and estimated offhire days for the Company’s drydocks, ballast water treatment installations (“BWTS”), and scrubber installations (3):

Q4 2018
Ships Scheduled for: Offhire
Drydock BWTS Scrubbers Days
LR2
LR1
MR 2 40
Handymax
Q4 2018 2 40
Q1 2019
Ships Scheduled for: Offhire
Drydock BWTS Scrubbers Days
LR2 2 56
LR1
MR 1 20
Handymax
Q1 2019 1 2 76
Q2 2019
Ships Scheduled for: Offhire
Drydock BWTS Scrubbers Days
LR2 6 168
LR1 3 84
MR 7 5 8 196
Handymax 2 2 40
Q2 2019 9 7 17 488
Q3 2019
Ships Scheduled for: Offhire
Drydock BWTS Scrubbers Days
LR2 6 4 10 306
LR1 3 84
MR 6 4 7 162
Handymax 5 5 100
Q3 Total 17 13 20 652
Q4 2019
Ships Scheduled for: Offhire
Drydock BWTS Scrubbers Days
LR2 9 8 12 302
LR1 1 28
MR 10 9 10 270
Handymax 5 5 100
Q4 Total 24 22 23 700
2019 Total 51 42 62 1,916

(3) The number of vessels in these tables reflect a certain amount of overlap where certain vessels maybe drydocked and have ballast water treatment systems and/or scrubbers installed simultaneously.  Additionally, the timing set forth may vary as drydock, ballast water treatment system installation and scrubber installation times are finalized.

$250 Million Securities Repurchase Program

In May 2015, the Company’s Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company’s securities which, in addition to its common shares, currently consist of its (i) Convertible Notes due 2019, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, (iii) Unsecured Senior Notes Due 2019 (NYSE: SBBC), which were issued in March 2017, and (iv) Convertible Notes due 2022, which were issued in May and July 2018.

The Company has repurchased an aggregate of 4,636,493 of its common shares at an average price of $1.78 per share during the fourth quarter of 2018; the repurchased shares are being held as treasury shares.

As of the date hereof, the Company has the authority to purchase up to an additional $138.8 million of its securities under its Securities Repurchase Program. The Company expects to repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.

 

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