Nordic American Tankers issued an announcement according to which the company has fixed one of its suezmax tankers on a 1-year charter as “insurance policy”.
The announcement reads:
Dear Shareholders and Investors,
Tanker markets have been down in 2021. This was also the case for the third quarter. There are now improved conditions for our Suezmax vessels. During the last two weeks, we have concluded contracts reflecting this.
We wish to share the following with you:
1. Improving market conditions
We are concluding contracts almost daily for individual vessels in our 25 ship fleet. The shortest duration last week is for an inter-European voyage for about 20 days and the longest is a term contract with an oil company that starts in November 2021 for one year ($20,000 per day) plus options for two more years at significantly higher rates. The spot contracts are about $20,000 per day for each ship, reflecting the recent rise in daily rates. The operating cash break-even for our vessels are $8,000 per day per ship.
Most of our ships trade in the spot market. A term contract of one year or more is an “insurance policy” from a risk management standpoint, producing positive cash flow. Our strategy of trading in the spot market, while also locking some ships into profitable long term contracts, allows us peak flexibility.
2. Cash from insurance premium
We are members of the mutual War Risk Association (WRA), located in Oslo, Norway. The WRA has obtained approval from the regulators in Norway to return $300 million of its capital of $1 billion to its members. NAT is expected to receive $4 million to maximum $6 million in cash before the end of 2021 or early in the first quarter of 2022.
3. Ballast Water Treatment Systems
NAT has installed Ballast Water Treatment Systems on several of our ships, and will be installing such systems on all our ships, in accordance with regulations of the International Maritime Organization (IMO), London. NAT is taking the necessary steps to ensure our vessels are fully compliant with national and international regulations, enabling the NAT vessels to operate all over the world.
Our strategy has always been to run NAT with two objectives in mind: To be the best tanker company for both our shareholders and our clients. As the world emerges from the pandemic, both parties will profit from our proven expertise and attention to market conditions.
Our 3Q 2021 results will be released Tuesday November 30, 2021 before NYSE opening.
Sincerely,
Herbjorn Hansson
Founder, Chairman & CEO
